Market economy anticipates that the individuals act to maximize benefit and undertakings to maximize profits, with their actions then being converted into social welfare, and the main principle it is based on is the assumption that economic relationships are based on free competition. In terms of economics, competition may be defined as the race in which sellers participate in order to acquire more customers to maximize their sales of products and services, and thereby their profits. The competition concept forms the basis of an efficiently-functioning market system; it protects the independence of the decisions of market actors and their actions serving their own benefits, while ensuring social justice and economic efficiency.

In addition, competitive market structure also has dynamic functions. Competition promotes technological development. This is because technological developments play a key role in achieving the position preferred by the undertakings. Moreover, a competitive market structure encourages companies to continually adapt their competitive power to market conditions.

On the other hand, when markets are left to their own devices, undertakings can enter into a destructive race and, instead of competing, can choose to cooperate in a way that can negatively impact social welfare and economic development or to abuse their economic power by engaging in exploitative or exclusionary conduct, rendering state intervention unavoidable. These types of practices also restrict freedom of enterprise, interrupting fundamental democratic rights and freedoms. Eliminating these problems requires supporting the economic system with a competition law and establishing an effective competition authority to enforce that law.

The first legal regulation in the field of competition law was made in the United States of America. The Sherman Act, adopted in 1890, includes regulations aimed at prohibiting the restriction of competition via vertical or horizontal agreements and practices and preventing monopolization. In Europe, the first legal regulation in the field of competition law was introduced with the Treaty of Rome, which entered into force in 1958.

In Türkiye, the Act no 4054 on the Protection of Competition was adopted and entered into force in 1994. The purpose of the Act no 4054 on the Protection of Competition is to prevent agreements, decisions and practices that prevent, distort or restrict competition in markets for goods and services, as well as abuse of dominance by dominant undertakings in the market, and to ensure the protection of competition by performing the necessary regulations and supervisions to this end.

The Enactment Story of the Act no 4054

Article 167 of the Constitution charges the state with the task and responsibility of taking “measures to ensure and promote the sound, orderly functioning of the money, credit, capital, goods and services markets” and preventing “the formation, in practice or by agreement, of monopolies and cartels in the markets". The main factor that led to the preparation of the Act no 4054 on the Protection of Competition is the need to fulfill this Constitutional provision.

The obligations placed upon Türkiye by international agreements served as another factor in the preparation of the Act. The obligations under the framework of the Association Agreement between Türkiye and EEC dated September 12, 1963 (Ankara Agreement) deserve particular emphasis at this point. Article 16 of the Association Agreement specifies that the principles laid out in those provisions in the Treaty of Rome concerning competition, taxes and the harmonization of the legislation should be implemented in the association relationship. As a matter of fact, the Turkish Competition Act is largely based on Article 81 and 82 of the Treaty of Rome. It must also be noted that the positive atmosphere created by the Customs Union between the European Union and Türkiye, which entered into force on January 1, 1996 as a result of the Association Council Decision of March 6, 1995, definitely played a significant role in the adoption process of the Act no 4054 on the Protection of Competition.

Although the Act was adopted and became effective at the end of 1994, the work on creating a legal regulation on the subject has a relatively longer history.

The first action taken towards protecting competition in Türkiye was a symposium organized in 1971, under the leadership of the Ministry of Trade, whose main subject was the protection of the consumer. Following this symposium, a study within the aforementioned Ministry resulted in the “Draft Law on the Regulation of Activities Related to Trade Goods and Services for the Protection of the Consumer”. In essence, this draft law included provisions on consumer protection and regulation of the domestic market.

The second draft prepared by the Ministry of Trade on the subject was the “Draft Law on the Regulation of Trade and the Protection of the Consumer,” dated 1975. This draft law included the first provisions that introduce regulations in the field of competition law in Türkiye.

Another draft law prepared by the Ministry in 1980 was titled “Draft Law on Safeguarding Honesty in Trade”. The draft noted the purpose of the law as “protecting the free market system, eliminating anti-competitive elements...”

The “Draft Law concerning the Regulation of Commercial Activities and the Protection of the Consumer,” prepared by the Ministry of Trade in 1981 essentially included regulations in parallel to the provisions in the previous draft, despite the different name.

The “Draft Laws on the Protection of the Consumer” from October 1983 and March 1984 for the first time addressed the regulations on cartels and monopolies under a separate section.

In addition to the environment created by the new economic model adopted in Türkiye in the 1980s, the 1982 Constitution’s clear imposition of a duty on the State to prevent monopolization and cartelization that may emerge in the market led to the Ministry of Industry and Trade to separate the issues related to the restriction of competition from those related to the protection of the consumer and the regulation of trade, and the Ministry prepared the “Draft Law on Agreements and Practices Restricting Competition” in 1984.

In addition to being the first independent text on competition, this draft also had the distinction of being the first draft to be sent before the Grand National Assembly of Türkiye to be passed into a law. The draft was referred to the National Assembly in December 1985, but since it was not discussed during the 17th legislative year, it became obsolete following the 1987 elections.

After the 1991 general elections, a commission formed under the Ministry of Industry and Trade worked as two separate sub-commissions and prepared the “Draft Law on the Protection of the Consumer” and the “Draft Law on the Protection of Competition”. In preparing the Draft Law on the Protection of Competition, the US, British and EC competition rules were examined to introduce a new text completely different from the previous drafts. This draft was sent to all relevant institutions for review in July 1992, and the final version prepared in light of the opinions and criticisms received was referred to the Grand National Assembly. As mentioned in the introduction, the draft was discussed and adopted by the Plenary on December 7, 1994, and it came into force after its publication in the Official Gazette dated 13/12/1994 and numbered 22140.