1. Introduction
Labour markets are dynamic markets where wages and other working conditions are determined based on market equilibrium, i.e. the balance between supply and demand. While competition law has traditionally focused on goods and services markets, there have been an increasing number of interventions in labour markets from a competition law perspective in recent years. In this context, competition authorities have started focusing on practices that restrict employee mobility and agreements that limit competition among employers.
The Turkish Competition Authority (the “TCA“) has also begun closely examining such practices and issued significant decisions in this area. In line with the global developments1, in 2021, the TCA published an announcement2 related to the undertakings operating in the labour market were assessed by the Turkish Competition Board (the TCA’s decisive body, the “TCB“) for engaging in gentlemen’s agreements that restricted labour mobility. The TCB determined that such agreements constituted an infringement under Article 4 of Law No. 4054. The TCB imposed administrative monetary fines on the relevant undertakings and concluded that the undertakings participated in anti-competitive agreements that limited workforce mobility and found that these agreements did not qualify for an individual exemption under Article 5 of Law No. 4054.
Moreover, recently the TCB has imposed considerably high administrative monetary fines on undertakings operating in various sectors3 on the grounds that they have entered into agreements4 to prevent the transfer of employees and/or exchanged of information regarding salaries and benefits. The most recent development on this topic is the TCB’s French High School (Lycées) Cartels5 decision.
More importantly, on December 3, 2024, the TCA’s Guidelines on Competition Infringements in Labour Markets (the “Guidelines“) was published on the official website6 of the TCA following its adoption by the TCB on November 21, 2024 under its decision no. 24-49/1087-RM(4). The Guidelines aim to clarify the practices that constitute competition infringements in labour markets and to outline key considerations in the detection and implementation of such infringements. According to the Guidelines, ensuring competition in labour markets is crucial not only to protect employees’ bargaining power but also to maintain competition among employers.
2. The Importance of Competition in Labour Markets and the Definition of “Competitor”
Pursuant to Article 4 of the Law on the Protection of Competition No. 4054 (“Law No. 4054“), “Agreements and concerted practices between undertakings, and decisions and practices of associations of undertakings which have as their object or effect or likely effect the prevention, distortion or restriction of competition directly or indirectly in a particular market for goods or services are illegal and prohibited.” Within this scope, the TCB considers certain agreements and practices among employers as violations of competition law.
In labour markets, employers compete to attract and retain employees, while employees exercise their bargaining power to secure better employment conditions. According to the Guidelines, given that the labour supply typically exceeds the demand, maintaining effective competition is essential to ensure a well-functioning labour market. If employees are unable to transition to better working conditions, the following consequences may arise:
- complete withdrawal from the workforce,
- a decline in labour force participation rates,
- employers’ inability to attract skilled employees,
- a slowdown in innovation and technological development.
For these reasons, protecting competition in labour markets is of utmost importance not only for employees but also for employers and the overall economy.
The Guidelines adopt a broad perspective regarding the definition of “competitor” in the context of competition infringements in labour markets, considering companies to be competitors regardless of their sector. Accordingly, companies deemed as competitors in terms of labour markets are not limited to those companies which are direct competitors operating within the same product markets7.
3. Labour Markets Under Law No. 4054
According to the Guidelines, the prohibitions concerning labour markets under the Law No. 4054 include the following:
A. Wage-Fixing Agreements
Wage-fixing agreements are defined as agreements under which undertakings jointly determine their employees’ wages, wage increases, working hours, fringe benefits, compensation, leave entitlements, non-compete obligations, and other working conditions. It should be noted that working conditions are not limited to those listed above, and the TCB may conduct case-by-case analysis depending on each case.
The Guidelines clearly indicate that wage-fixing agreements constitute a restriction of competition by object and are classified as cartels. Furthermore, it is emphasized that if a third party facilitates or mediates in such an agreement, they will also be considered a party to the infringement depending on the characteristics of the concrete case.
Accordingly, in the French Lycées Cartels decision8, the TCB found that certain high schools violated Law No. 4054 by jointly determining teachers’ salaries, in addition to tuition fees. It was found that the relevant high schools held joint meetings to set teachers’ salaries and shared sensitive information such as salary calculations. It was determined that collaboration in teachers’ salaries eliminated competition in labour markets. As a result of these infringements, the Board imposed a total administrative fine of approximately 21 million Turkish Liras on the relevant schools.
In the Container Transportation Drivers decision9, the TCB assessed a labour market competition infringement and emphasized that agreements aimed at fixing employee wages were analogous to buyer-side cartels. The TCB highlighted that the concerted practices of container transportation companies in determining driver wages constitute an infringement under the Law No. 4054 and that anti-competitive agreements in labour markets could also have negative effects on output markets. Based on the allegations examined by the TCB, the undertakings were notified under Article 9(3) of Law No. 4054 that they must cease any practices that could be considered anti-competitive agreements under Article 4 of the same law.
In the Private Schools decision10, the TCB found that private schools operating in Türkiye, along with their association, had engaged in concerted practices regarding teacher salaries and tuition fees. The TCB concluded that information exchanges on school fees, scholarships, and teacher salaries restricted competition, emphasizing that salary data is a key competitive parameter in labour markets. The meetings held by private schools regarding pricing policies and employee recruitment were assessed as potential competition law infringements under Article 4 of Law No. 4054, but it was determined that no investigation was necessary due to the statute of limitations. Consequentially, it was decided to notify the relevant Provincial Directorates of National Education and the Turkish Private Schools Association that such infringements must be ceased.
Similarly, in the GÜSOD decision11, the TCB examined an attempt by undertakings in the private security sector to establish uniform wage standards. It concluded that the proposed benchmark wage list for security personnel was contrary to competition rules and that the collective determination of wages by undertakings constituted an infringement under the Law No. 4054.
Considering the TCB’s decisions, HR teams must make independent decisions on salaries and benefits without being influenced by competitors’ policies. Even discussing wages with competitors poses a serious risk of competition law infringement.
B. Non-Poaching Agreements
Non-poaching agreements refer to agreements under which undertakings commit not to hire or solicit each other’s employees. The Guidelines state that agreements requiring prior approval before hiring another undertaking’s employees may also be considered as non-poaching agreements.
Such agreements are also considered restrictions of competition by object and are categorized as cartels. Moreover, if a non-poaching agreement is facilitated through a third party, that party may also be deemed liable for the infringement.
According to the TV Series Producers decision12, the TCB determined that undertakings operating in the television series production sector had engaged in agreements aimed at restricting actor mobility and fixing actor wages. As there was insufficient evidence to support the allegations that an agreement was made to prevent actor transfers and fix actor wages, the TCB decided to not launch an investigation but to send a written opinion to the relevant undertakings pursuant to Article 9 of Law No. 4054, instructing them to refrain from such anti-competitive practices.
Undertakings and specifically their HR departments, should never engage in any agreements, formal or informal, regarding employee recruitment or mobility with other undertakings, even verbally. Employees must be allowed to switch jobs freely. These coordinated actions will be deemed as competition law infringements, with significant implications for market dynamics.
Additionally, even companies serving the same customers within a supply chain must continue competing in the labour markets. Undertakings must be aware that even informal or verbal agreements can constitute a violation of competition law.
C. Information Exchange
The exchange of competitively sensitive labour market information is also considered an infringement. Such information includes wages, salary increase rates, fringe benefits, and working conditions. The exchange of these data between undertakings can have anti-competitive effects and therefore constitutes a competition law violation.
The risk of anti-competitive effects arising from information exchange is not limited to undertakings that compete in the labour market. Independent market survey organizations and private employment agencies acting as third-party facilitators must also pay attention to this matter. Independent organizations that collect and report employee-related data, particularly salary information, must aggregate the data in a way to prevent the identification of individual sources. The likelihood of anti-competitive effects increases when such data are sourced from a limited number of undertakings.
Within this scope, the exchange of non-aggregated, recent, and/or forward-looking information that allows the identification of the data source or its individual content and is not publicly available may lead to anti-competitive effects.
HR teams should not exchange competitively sensitive information such as salary levels or raise rates within the industry. Information should only be shared in an independent, anonymized, and historical manner.
The Guidelines outline13 the following criteria for ensuring safe information exchange:
- The information exchange should be conducted by an independent third party,
- It must not be possible to identify individual data sources or individual data content,
- The information exchanged should relate to a period at least three months prior,
- The data should include information from at least ten participants,
- No single participant’s data should account for more than 25% of the total dataset.
These principles will help undertakings and third parties avoid situations that could harm competition when exchanging competitively sensitive labour market information.
D. Ancillary Restraints
According to the Guidelines, ancillary restraints must be directly linked to the main agreement, essential for its execution, and not more restrictive than necessary to achieve the same objective.
The Guidelines further emphasize that the following types of restrictions would fail to meet the proportionality criterion:
- Restrictions with an indefinite duration or those lasting longer than necessary to achieve their intended purpose,
- Restrictions covering employees beyond those critical to the execution of the main agreement or failing to specify which employees are affected,
- Restrictions extending beyond the geographical scope of the main agreement,
- Restrictions imposed on all or additional parties when limiting them to one or some of the parties would be sufficient.
A non-poaching clause that is limited by duration, scope, geographical area, and parties directly related to the project may not be considered as a competition law infringement.
In summary, ancillary restraints must be proportionate and closely aligned with the main agreement’s objectives, avoiding unnecessary restrictions in duration, scope, and applicability.
4. Implementation of Other Articles of the Law No. 4054
The Guidelines state that Articles 5, 6, and 7 of Law No. 4054 may also apply to competition infringements in labour markets14.
Regarding exemptions, wage-fixing agreements, non-poaching agreements, and anti-competitive information exchanges, it is stated that such infringements are generally not eligible for exemption. However, in the KASTDER decision15, the TCB evaluated a contract designed to protect the working standards of artists, intended to be signed between advertising production companies and casting agencies. The TCB determined that certain provisions in the contract related to wage determination functioned as price-setting mechanisms and could have restrictive effects on competition. Nevertheless, the TCB ruled that individual exemption could be granted, provided that the provisions constituting an infringement were removed from the contract.
In the context of abuse of dominance, the TCB will examine whether a company holds a dominant position both in the product/service market and the labour market. Companies with market power may exploit this dominance by imposing unfair terms, such as restrictive wage levels, non-compete clauses, or other conditions that undermine employees’ rights and distort the market.
5. Ensuring Compliance with Competition Law in Labour Markets: What should HR Departments Know?
The TCB’s investigations on labour markets highlight the need for human resources (“HR“) departments to exercise caution in recruitment processes, wage policies, and employee-related agreements. HR professionals should ensure that employee wages and benefits are determined independently, without coordination with other companies. They should also avoid agreements that restrict employee mobility and refrain from exchanging sensitive information regarding wage and employment policies with competitors.
To strengthen compliance in firms, HR teams should collaborate with legal departments to implement competition law training programs, inform managers and employees about potential risks, and establish internal whistleblowing mechanisms to report and prevent anti-competitive practices.
By adhering to these principles, HR departments can help their companies mitigate legal risks, preserve competitive conditions in labour markets, and protect employee rights.
6. Comparative Analysis: The Guidelines vs. DOJ/FTC Labor Market Antitrust Enforcement
It is essential to consider how the TCA’s guidelines align with global trends. In the recent years, there has been a growing convergence between Türkiye and other jurisdictions in tackling anti-competitive conduct in labour markets. In particular, the U.S. DOJ and FTC have intensified enforcement against wage-fixing and no-poach agreements, similar to the TCA’s recent efforts.
Both the TCA and the U.S. DOJ/FTC recognize that labour markets require the same level of competition law protection as product markets. Each emphasizes that collusive practices, such as wage-fixing and no-poach agreements, harm employees by restricting their bargaining power and job mobility. As a result, both jurisdictions categorize such agreements as per se illegal, meaning they are presumed anti-competitive without needing further economic effects analysis.
Despite these similarities, differences exist in enforcement mechanisms. While the TCA imposes administrative fines, the DOJ has the authority to bring criminal charges, potentially leading to imprisonment for executives involved in wage-fixing or no-poach agreements. Moreover, the FTC scrutinizes non-compete clauses and no-poach agreements within franchise contracts, an area that the TCA has not explicitly addressed in its guidelines. These differences highlight the broader scope of U.S. enforcement compared to Türkiye’s more defined framework under the Law No. 4054.
The TCB’s decisions in the French Lycées, Container Transportation, and Private Schools cases demonstrate its commitment to tackling anti-competitive agreements in labour markets, particularly regarding wage-fixing and hiring restrictions. Similarly, the DOJ has prosecuted wage-fixing and no-poaching cases, such as U.S. v. Jindal16 and U.S. v. DaVita17. These cases highlight a global trend toward stricter labour market enforcement, signalling that competition authorities worldwide are increasingly focusing on protecting employee mobility.
7. Conclusion
The TCB enforces strict controls and sanctions to ensure fair competition in labour markets. The TCB’s recent decisions and the Guidelines demonstrate that agreements restricting employee mobility, wage-fixing practices, and exchange of sensitive employment information constitute serious competition infringements.
To ensure compliance and avoid sanctions, companies must make independent decisions on employee wages and benefits, avoid agreements that limit employee mobility, and refrain from sharing wage and employment data with competitors.
Additionally, internal audits, compliance programs and regular training are essential in strengthening competition compliance. Closely following the TCA’s Guidelines and the TCB’s case law and adopting a transparent approach in investigations will help companies minimize legal risks.
Footnotes
1. In many countries, particularly in the U.S. and the EU, wage-fixing, non-poaching agreements, and the exchange of sensitive labour market data are subject to severe penalties. In the U.S., the DOJ and the FTC have taken an aggressive stance on labour market competition violations, with 78% of antitrust fines in 2023 targeting this area. The US v. Jindal (2020) decision confirmed that wage-fixing agreements are subject to criminal penalties. In Europe, the Commission and national authorities treat labour market restrictions as equivalent to price-fixing agreements, enforcing strict scrutiny and imposing severe sanctions for violations.
“Portuguese Competition Authority works, which indicate that such agreements lead to the alignment of cost structures in the labour market, reduce strategic uncertainty, restrict labour mobility, and prevent employees from moving to competing firms offering higher wages.”
2. The TCB’s decision dated 26.07.2023 with number 23-34/649-218.
3. The fines have been imposed in sectors such as digital platforms, retail, telecommunications, energy, banking, automotive, and pharmaceuticals.
4. Anti-competitive agreements that restrict labour mobility and facilitate the exchange of competitively sensitive information, such as wage-fixing and no-poach agreements, have been subject to increased scrutiny by competition authorities worldwide, including the DOJ, the FTC, and the European Commission.
See the case Competitive Impact Statement, United States v. Arizona Hosp. & Healthcare Ass’n & AzHHA Service Corp., No. CV 07-1292-PHX-SRB., 03-19-2009
“In the Arizona Hospitals decision, it was assessed that agreements between hospitals and nurse staffing agencies reduced competition and led to lower wages.”
5 The TCB’s decision dated 24.04.2024 with number 24-20/466-196.
6.See https://www.rekabet.gov.tr/tr/Guncel/is-gucu-piyasalarindaki-rekabet-ihlaller-f9036d6367b1ef1193d70050568585c9
7. For instance, in the technology sector, software companies, hardware manufacturers, cybersecurity firms, fintech startups, and IT service providers may compete for the same pool of skilled employees.
8. The TCB’s decision dated 24.04.2024 with number 24-20/466-196.
9. The TCB’s decision dated 02.01.2020 with number 20-01/3-2.
10. The TCB’s decision dated 03.03.2011 with number 11-12/226-76.
11. The TCB’s decision dated 18.03.2015 with number 15-12/166-78.
12. The TCB’s decision dated 28.07.2005 with number 05-49/710-195.
13. The Guidelines, para. 28
14. The Guidelines, para. 42
15. The TCB’s decisions dated 24.03.2020 with number 20-43/588-262, and dated 04.03.2021 with number 21-11/148-61.
16. See case for wage-fixing in healthcare industry, United States v. Jindal, No. 4:20-CR-00358, D. 2022-08-11
17. See case for anti-poaching in the healthcare industry, United States v. DaVita Inc, No. 1:21-CR-00229, D. 01-28-2022
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.