Non-compete Obligations in Turkish Competition Law

Under Article 3(d) of Block Exemption Communiqué No. 2002/2 on Vertical Agreements (Communiqué No. 2002/2), a non-compete obligation is defined as any kind of direct or indirect obligation preventing the buyer from producing, purchasing, selling or reselling products or services that compete with the products and services subject to the agreement. Furthermore, any contractual imposition that directly or indirectly obliges the buyer to purchase more than 80% of the products or services (or substitutes) in the relevant market (based on their previous calendar year purchases) from that particular supplier (or another undertaking designated by the same) is also considered as non-compete obligation. Non-compete obligations are beneficial for the suppliers as they prevent the buyers from selling other products by taking advantage of the suppliers’ reputation and thus becoming competitors for the suppliers. As the main purpose of Law No. 4054 on the Protection of Competition (Law No. 4054) is to ensure competition in the market, it is clear that a non-compete obligation may constitute competition law violation as it may restrict the entry of different actors in the market and the commercial independence of the buyer. However, under certain circumstances, such provisions are permitted.

Non-compete obligations that do not exceed the scope of the agreement and are restricted to the undertakings party to the agreement can usually benefit from the block exemption under the assumption that the two pre-conditions have been fulfilled: (i) the duration of the non-compete obligation (lasting during the term of the agreement) does not exceed five years and (ii) the market share of the undertakings which are party to the vertical agreement is less than 30%.

A non-compete obligation that continues after the termination of the agreement may be more problematic. Article 5(b) of Communiqué No. 2002/2 sets forth the conditions for non-compete obligations that exceed the duration of the agreement. Overall, the evaluation of the scope of the non-compete obligation and its duration is important. According to Article 5 of Communiqué No. 2002/2, the non-compete obligations of the buyers cannot benefit from the exemption granted within the scope of the relevant communiqué if they exceed five years or are indefinite in duration. If the non-compete obligation could be tacitly renewed for a period that would exceed five years, this would be considered as an indefinite non-compete obligation.

For more information on non-compete obligations in Turkish antitrust law, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.