Competition Advocacy Competition Law and Private Law
Competition Law and Private Law
The Act No. 4054 that aims to protect competition includes provisions of a dictating nature and regulations which involve sanctions to be applied in the event of the infringement of such provisions. Articles 4, 6 and 7 that constitute the substance of the Act determine those actions and transactions which are contrary to this Act as the articles that involve dictating provisions, and sanctions of contrariness to the Act are provided in the other articles as a separate matter.

Section 5 of the Act has been dedicated to the subject-matter of the “Consequences of the Restriction of Competition in the Area of Private Law”. In four articles (articles 56-59) that take place in this section, invalidity and damages sanctions have been provided.

Despite the fact that in matters of invalidity and damages, classical principles of the Law of Obligations are largely valid, certain issues where the Act No. 4054 diverges from such principles are remarkable:
  • Article 56/II that article 65 of the Code of Obligations shall not be applied.
  • Article 58 as to the calculation of damages.
  • Article 59 in relation to proving practices that form the subject-matter of tort.
Invalidity sanction provided in article 56 of the Act No. 4054 is the same with the invalidity of unlawful contracts, which takes place in the Law of Obligations. Such kind of legal transactions which are subject to the nullity sanction do not give rise to any effect and consequence from the moment they have been concluded. In order for an agreement or decision to be subject to the invalidity sanction, it is required that it falls under article 4 and does not benefit from the exemption in article 5. Agreements that fall under article 4 are already subject to the absolute nullity sanction which automatically gives rise to an effect. But in order for this sanction to give rise to its consequences, it is required that the agreement does not benefit from the exemption in article 5.

And in the event that a part of the agreement is defective by partial nullity, the parties are obliged to fulfil their rights and obligations arising from the valid provisions of the agreement. But in practice, difficulties may occur in detecting whether the rights and obligations in question are related to the defective part or the valid part of the agreement. Since it would be difficult to set a general rule for such a situation, it would be on the mark that the detection be made on the basis of a concrete agreement or decision.

The first consequence of the invalidity of agreements and decisions is related to the performance of obligations arising from such agreements and decisions. Pursuant to article 56 of the Act, the performance of acts arising from invalid agreements and decisions cannot be asked for. Therefore, the party that fulfilled its own obligation cannot ask the counter party to fulfil its obligation and cannot resort to a court with such kind of a claim. In the event that one of the parties claims for performance, the counter party can raise an objection for invalidity. Since a contract that became defective by absolute nullity shall not give rise to any rights and obligations from the outset, indeed there exists no obligation to perform.

Another consequence of the invalidity of a competition-restricting agreement or decision is the occurrence, as to the party which committed performance according to such agreement or decision, of the right to reclaim the acts fulfilled by it. In article 56 of the Act No. 4054, it has been resolved that in case the acts formerly fulfilled are reclaimed due to invalidity, return obligation of the parties shall be subject to articles 63 and 64 of the Code of Obligations and that article 65 of the Code of Obligations which concerns that the return of things granted for unethical purposes cannot be asked for shall not be applied to disputes arising from this Act. Article 63 of the Code of Obligations contains regulations in relation to the scope of return obligation arising from unjust enrichment. Therefore, the parties can in this situation reclaim what they have given.

When damages-related regulations which take place in the Act on the Protection of Competition No. 4054 are examined, it is seen that in article 57 of the Act, primarily the parties and terms of damages obligation that arises within the scope of this Act are dealt with. Since it is clearly understood from the expression of article 57 that everyone who is injured can bring a damages action, it should be acknowledged that “consumers” tacitly expressed and “competing undertakings” expressly mentioned in article 58 are given as an example, and limited enumeration is not resorted to so as to mention plaintiffs of a damages action. As a matter of fact, the essential purpose of article 58 is to determine how to calculate the amount of damages to be paid, not the parties of a damages action.

In the first sentence of article 58 of the Act, it has been expressed that those injured can claim as a loss the difference between the cost paid by them and the cost to be paid by them if competition was not restricted. And in the last sentence of article 58 that is related to the damages right of competitors, it has been expressed that in calculation of a loss, all profits expected to be obtained by enterprises that incur a loss shall be calculated by having regard to the balance sheets of the past years as well. And the type of this loss incurred by competing undertakings is the profit being deprived of. According to a method utilized in calculation of losses of competing undertakings, the difference between the quantity of the property of undertakings in the existing situation and the quantity it would have reached if competition had not been restricted is taken as the basis.

An extremely important regulation given part in the Act No. 4054 in relation to the calculation of loss is the provision related to triple damages included in article 58 paragraph two. Accordingly; should a loss stems from “agreements” or “decisions”, or “gross negligence” of the parties, the judge may, upon the request of those injured, award damages by three fold of the material loss incurred, or profits obtained or likely to be obtained by those who caused the loss. Such regulation which envisages triple damages has been taken into our Act by having been inspired by the American Competition Law. This rule which is not compatible with the principles of damages law, also displays the nature of a sort of criminal sanction not damages, even though the expression of “triple damages” is used in the article. In the last paragraph of article 58, despite the fact that it is mentioned, in awarding triple damages, that those injured should absolutely have a claim in this direction, it is seen from the expression of “may award” that a discretion is granted to the judge in this matter.

As a rule, a person who claims damages has to prove that the elements of tort have formed, and the quantity of loss that occurred. Despite the fact that this general rule also applies in competition law, in article 59 of the Act, such burden of proof has been reversed by introducing a presumption similar to that in article 4 in relation to concerted practices. In respect of the person who alleges to incur a loss, an ease of proof has been introduced related to concerted practices. In article 59 paragraph two, it has been expressed that agreements, decisions and practices restricting competition can be proven by any kind of evidence. Despite the fact that such provision provides the parties with an ease as to freedom of evidence, merely proving that competition is restricted is not sufficient for a damages claim, and it should not be forgotten that the other elements (fault, loss, causality link etc.) of tort are also required to be proven.