In Turkish deal practice, a non-compete clause is often one of the most heavily negotiated parts of the transaction documents. Buyers usually argue that they are not only acquiring shares or assets, but also the target’s customer base, goodwill, know-how, management relationships, and market position. Sellers, on the other hand, usually want enough freedom to remain active in adjacent sectors, invest in other businesses, or continue their professional careers after closing. This tension is especially visible in founder-led sales, partial exits, carve-outs, management buyouts, private equity transactions, and joint ventures. Under Turkish law, non-compete clauses in M&A transactions are generally possible, but they are not unlimited. Their validity and enforceability depend on which legal regime applies, how the restriction is drafted, and whether it remains proportionate in duration, subject matter, geography, and personal scope.
A critical starting point in Türkiye is that there is no single, standalone “M&A non-compete law.” Instead, two different legal frameworks matter most. First, there is the general contract-law framework under the Turkish Code of Obligations, which gives parties broad freedom to determine contractual content, but also invalidates arrangements contrary to mandatory law and prevents advance exclusions of liability for gross fault. Second, there is the competition-law framework applied by the Turkish Competition Authority, which treats seller non-competes in acquisition transactions as potential ancillary restraints if they are directly related to and necessary for the implementation of the concentration. In addition, where the restrained person is not merely a seller but an employee or manager bound by an employment-type covenant, Turkish employment-specific non-compete rules become highly relevant.
This dual structure explains why a non-compete clause in a Turkish SPA cannot be drafted as if every restriction were governed by the same test. A covenant imposed on a seller as part of a share or asset acquisition is not analyzed in the same way as a post-employment non-compete imposed on a continuing manager or employee. In M&A, the key legal question is usually whether the restriction is necessary to protect the value of what was acquired. In employment relationships, the key legal question is whether the employee had meaningful access to customer circles, production secrets, or business information and whether the restriction unfairly endangers the employee’s economic future. Turkish practice therefore requires careful separation of seller non-competes and employee/manager non-competes, even when the same person is both a selling founder and a continuing manager after closing.
Why non-compete clauses matter in Turkish M&A
The commercial logic of a non-compete clause in a Turkish acquisition is straightforward. If a buyer acquires a business and the seller is immediately free to re-enter the same market, solicit the same customers, exploit the same know-how, and rebuild the same competitive platform, the value transferred to the buyer may be substantially reduced. The Turkish Competition Authority’s ancillary-restraints guideline states this openly: in acquisitions, the seller may need to be placed under an obligation not to compete with the buyer for a certain period in order to ensure that the value of the right or asset acquired is fully transferred. The guideline specifically notes that this issue arises especially in relation to building up a clientele and sufficiently exploiting the know-how acquired.
But Turkish law does not treat every post-sale restriction as automatically valid merely because the parties call it an M&A non-compete. The same guideline makes clear that, for a non-compete obligation placed on the seller to qualify as an ancillary restraint, its scope in terms of duration, subject, geographic area, and persons must not exceed the reasonably necessary level. This is a proportionality test, not a formalistic one. A clause that is broader than what is needed to protect the transferred business may fall outside the ancillary-restraint framework and become vulnerable under general competition-law analysis. For deal lawyers, this means that non-compete drafting is not only a corporate drafting exercise; it is also a competition-law exercise.
This is also why the exact structure of the transaction matters. The Turkish merger-control communiqué states that acquisitions of direct or indirect control over all or part of one or more undertakings through the purchase of shares or assets, through a contract, or through any other means are treated as mergers or acquisitions when they create a permanent change in control. In other words, the non-compete question usually becomes most legally important when the underlying deal itself qualifies as a concentration. The existence of a real acquisition of business value helps explain why the law is willing to tolerate some degree of post-sale restraint.
The contract-law framework under the Turkish Code of Obligations
The Turkish Code of Obligations provides the contractual foundation for M&A non-competes. Article 26 states that parties may freely determine the content of a contract within the limits prescribed by law, and Article 27 states that contracts contrary to mandatory provisions, morality, public order, personality rights, or impossibility are null. For Turkish M&A, these provisions are highly important. They confirm that parties are free to create non-compete obligations, but also that freedom is not limitless. If the restriction goes beyond what the law can tolerate, the clause may be cut back or invalidated.
Turkish law also imposes a specific limit on aggressive exculpation. Article 115 states that any prior agreement excluding liability for gross fault is absolutely null, and it also invalidates advance non-liability arrangements arising from service-contract obligations. This matters in M&A because parties sometimes try to combine broad non-compete obligations with very aggressive waiver language or very seller-favorable limitations on post-closing liability. Turkish law allows sophisticated allocation of contractual risk, but it does not permit parties to contract away responsibility for gross fault in advance. That principle can become important when a seller breaches a non-compete while also engaging in concealment, misuse of know-how, or bad-faith diversion of business.
These general rules do not, by themselves, tell parties exactly how long or how broad an M&A non-compete may be. That more specific guidance comes mainly from Turkish competition law in the acquisition context, and from the employee non-compete provisions of the Code where the covenant is linked to a service relationship. The practical lesson is that Turkish law does not reject non-competes. It accepts them, but subjects them to a proportionality and legal-basis analysis that differs depending on who is being restrained and why.
Seller non-competes as ancillary restraints under Turkish competition law
The Turkish Competition Authority’s guideline on undertakings concerned, turnover, and ancillary restraints is the most important official source for seller non-competes in M&A. It states that the authorization granted by the Competition Board concerning a merger or acquisition also covers restraints that are directly related and necessary to the implementation of the transaction. The same guideline defines ancillary restraints as restrictions directly related to the concentration and necessary for implementing the transaction and fully achieving the efficiencies expected from it.
This is the legal basis for treating seller non-competes as potentially acceptable in Turkish M&A. The point is not that all seller non-competes are lawful. The point is that some of them can be justified because a buyer may need protection to receive the full value of the acquired business. The guideline also emphasizes that the test is objective and that the least restrictive restraint capable of attaining the same goal should be preferred among alternatives. So the non-compete must not only be useful; it must be no broader than reasonably necessary.
For practitioners, this means the covenant should always be drafted with a clear transactional rationale. If the buyer is acquiring a customer-based business with strong seller goodwill, a non-compete may be easier to justify. If the buyer is acquiring a passive shareholding or a business where the seller’s future activity poses little real threat to the transferred value, an overly broad covenant becomes harder to defend. Turkish competition law therefore encourages functional drafting: the scope of the covenant should reflect the actual business value being transferred, not the maximum restriction the buyer would ideally like to impose.
Duration: the three-year benchmark in M&A
One of the most important official guideposts in Turkish law is duration. The Competition Authority’s guideline states that non-competition obligations not exceeding three years in duration are generally accepted as reasonable. This is the most cited benchmark for seller non-competes in Turkish M&A. It gives the market a practical default rule: if a seller non-compete is limited to three years or less and is otherwise appropriately scoped, it is more likely to fit within the ancillary-restraint framework.
At the same time, Turkish law does not make three years an absolute ceiling in every acquisition. The same guideline states that a duration longer than three years may still be acceptable where customer tie-in lasts longer or where the nature of the know-how transferred requires a longer period, provided the scale required by the concrete case is not exceeded. This is an important nuance. It means that a Turkish M&A lawyer should not assume that three years is always the maximum possible duration, but should also not assume that anything longer than three years will be automatically valid. Longer periods need a strong, transaction-specific justification.
That transaction-specific logic is especially important in sectors built around specialist know-how, long customer lock-in, industrial trade secrets, or project pipelines that extend beyond ordinary commercial cycles. In such deals, a buyer may argue that the economic value being transferred cannot be realistically protected within only three years. Turkish competition guidance leaves room for that argument, but it still requires that the restraint not exceed what the concrete case genuinely requires. In practice, that means a longer period should be explained in the deal record, not inserted casually as boilerplate.
Subject-matter scope: only the acquired business
Duration is only one part of the Turkish test. The guideline also states that non-compete obligations must, as a rule, be limited to those goods and services comprising the area of operation of the economic unit to be acquired before the transaction. It further adds that goods and services which have mostly completed development but have not yet entered the marketing phase may also be included. This means the covenant should track the actual business perimeter of the acquired undertaking, including near-market products or services closely linked to the transferred business.
This rule is highly important in practice because buyers often try to draft very broad sector definitions. A seller who sold a niche software business may be asked to stay out of “all digital technology” or “all software services,” which is usually much broader than the business actually transferred. Under Turkish competition guidance, that is hard to justify. The restriction should be tied to the target’s real area of operation rather than to an abstract market space the buyer would like to control more generally.
In Turkish M&A, this means that the non-compete clause should usually be drafted from the target upward, not from the buyer downward. The drafter should start by describing the actual business, products, and services of the acquired company or asset package and then determine what post-sale restriction is needed to protect that exact business. A generic “seller shall not compete in any business similar to buyer’s group activities” clause is far more vulnerable than a clause linked to the acquired economic unit’s pre-closing scope.
Geographic scope: where the seller actually operated
Turkish competition guidance also limits the geographic area of a seller non-compete. It states that such obligations must be limited geographically to the area of operation of the seller before the transaction. The guideline adds that, in exceptional circumstances such as where the seller has already made investments to enter new regions, restraints concerning those regions may also be accepted as necessary and reasonable. This again reflects a proportionality logic: the covenant may protect actual or concretely developing business presence, but it should not reach territories unrelated to the acquired business.
For Turkish transactions, this matters especially in export businesses and regional groups. If the target operated in Türkiye only, a worldwide non-compete may be much harder to defend. If the target had an established export network or had already invested to expand into identified foreign markets, a broader regional clause may be more justifiable. The key point is that the clause should be traceable to the seller’s real commercial footprint before closing. A territorial restriction that exceeds that footprint without good reason is legally weaker.
Personal scope: who can be restrained
The Turkish guideline is also explicit about the persons covered. It states that restraints concerning the seller itself and those economic units and agencies that constitute an economic unit with the seller may be accepted as reasonable, whereas non-compete obligations extending beyond them, especially to the seller’s dealers or users, are not accepted as necessary and related restraints. This is a very practical rule. It means that an M&A non-compete can usually bind the seller and its controlled economic unit, but Turkish competition law is skeptical of clauses trying to restrain a much wider ecosystem of persons not actually party to the sale.
This is particularly relevant in group sales, founder sales, and distributor-heavy sectors. Buyers often want the covenant to reach affiliates, subsidiaries, or other vehicles through which the seller could re-enter the market. That can be justified where those affiliates form an economic unit with the seller. But clauses purporting to reach former distributors, commercial users, or loosely connected third parties are much harder to defend. Turkish drafting should therefore focus on control and economic unity, not on broad associative language.
Non-solicitation, employee poaching, and confidentiality
The Turkish Competition Authority’s guideline also addresses restraints similar or complementary to non-compete obligations. It states that obligations preventing the seller from employing the workers of the undertaking to be acquired, and from disclosing or using the trade secrets of the undertaking, are assessed in a manner similar to non-compete obligations. It further states that where confidentiality is related to know-how, an obligation preventing disclosure and use of the relevant information may be regarded as an essential element of the transaction for as long as the information remains confidential and retains its know-how character.
This is important because Turkish M&A practice often relies on a package of post-closing restraints rather than on a pure non-compete alone. Buyers may seek a customer non-solicit, an employee non-poach, and a confidentiality covenant even where the non-compete itself is modest. Turkish competition guidance suggests that these related protections can be legitimate if they are tied to the same proportionality logic. But it also means that a drafter cannot assume that a no-poach or confidentiality clause escapes scrutiny just because it does not use the words “non-compete.”
In practical terms, Turkish confidentiality obligations can sometimes be the most durable part of the restraint package, especially where genuine know-how is transferred. Unlike the ordinary three-year benchmark for seller non-competes, confidentiality tied to actual know-how can last as long as the information remains confidential and commercially valuable. This is often particularly useful where the buyer is less concerned about the seller opening a competing business generally and more concerned about misuse of technical processes, pricing models, formulations, software logic, or customer intelligence.
Joint ventures: a different non-compete logic
Joint ventures create a somewhat different picture under Turkish competition law. The ancillary-restraints guideline states that, in joint ventures, long-term or even indefinite non-compete obligations preventing the parent undertakings from competing with the joint venture may be accepted as ancillary restraints. This is a notable departure from the ordinary seller-acquisition benchmark. The logic is that where parents create or operate a joint venture intended to function as an independent economic entity, preventing them from undermining that venture may require a longer restraint tied to the life of the JV itself.
Still, this does not mean every indefinite non-compete in a Turkish JV is automatically valid. The general ancillary-restraint test still applies. The restriction must remain directly related to and necessary for the joint venture’s functioning. In practice, this means JV non-competes should be tied closely to the venture’s field of activity and should not be expanded casually into unrelated markets or businesses where the parents can safely continue competing. Turkish law accepts stronger restrictions in JVs because the logic is structural, not because the parties are free to impose any indefinite restraint they want.
Employee and manager non-competes after an M&A transaction
A different legal regime applies when the restrained person is an employee or a continuing manager bound through an employment-type arrangement. Articles 444 to 447 of the Turkish Code of Obligations govern post-employment non-competes. Article 444 states that an employee with full legal capacity may undertake in writing not to compete after the end of employment, but only if the service relationship gave the employee access to the employer’s customer circles, production secrets, or information about the employer’s business, and only if use of that information could cause the employer significant harm. This is a more protective regime than the M&A ancillary-restraint framework because it is specifically concerned with the employee’s livelihood and access to confidential business information.
Article 445 then provides the key limits. It states that the non-compete may not contain restrictions inappropriate in place, time, and type of work in a way that unfairly endangers the employee’s economic future, and that, except in special circumstances, its duration may not exceed two years. The same article also authorizes the judge to reduce an excessive non-compete in scope or duration, taking into account all circumstances and any counter-performance the employer may have assumed. This two-year rule is one of the most important differences between employee non-competes and seller non-competes in Turkish M&A.
This distinction matters greatly in transactions where a founder sells the company but remains employed as CEO or general manager after closing. If the restraint is meant to bind that person as a seller, Turkish competition-law ancillary-restraint principles may support a longer non-compete. If the restraint is meant to bind that person as an employee after employment ends, the Turkish Code of Obligations pushes strongly toward the employment non-compete framework and its two-year benchmark. In real Turkish drafting, the safest approach is often to separate the two capacities clearly rather than folding them into one ambiguous clause.
Article 446 adds that an employee who breaches the non-compete must compensate the employer’s entire damage. If the breach is tied to a penalty clause, the employee may, unless the contract states otherwise, free itself from the non-compete obligation by paying the stipulated amount, but remains liable for damage exceeding that amount. The article also allows the employer, if expressly reserved in writing and justified by the importance of the threatened interest and the employee’s conduct, to demand cessation of the violation in addition to the penalty and additional damages. Article 447 further states that the non-compete ends if the employer no longer has a real interest in maintaining it, or if the employment was terminated by the employer without justified reason or by the employee for a reason attributable to the employer. These are powerful reminders that employment-style non-competes in Türkiye are carefully controlled by statute.
Drafting non-competes in Turkish SPAs and SHAs
Because Turkish law applies different tests depending on the restrained person and transaction structure, the safest drafting approach is to define why the non-compete exists before defining how it reads. In a straight acquisition, the clause should identify the transferred business perimeter, the justification in terms of goodwill and know-how, the duration, the geographic scope, and the persons bound. In a joint venture, the clause should tie the restraint to the JV’s field of operation and duration. In an employment or management agreement, the clause should comply with the statutory conditions of Articles 444 to 447 and be drafted separately if necessary.
A Turkish M&A non-compete clause is generally stronger when it is tied to:
the exact goods and services of the acquired business,
the territories where the seller actually operated or had concretely prepared to operate,
the seller and its economic unit rather than loosely associated third parties,
a duration that can be justified under the transaction facts,
and a separate confidentiality and non-solicit package that protects the acquired value without overreaching.
By contrast, Turkish clauses are generally weaker when they attempt to ban competition in all businesses remotely connected to the buyer’s group, across territories where the seller never operated, for periods longer than the deal can realistically justify, or against persons who are not actually part of the seller’s economic unit. Similarly, using a seller-style clause as if it automatically governs post-employment conduct of a continuing executive is risky if the statutory employment non-compete rules are not respected.
Enforcement and dispute risk
In Turkish practice, non-compete disputes usually arise after the buyer claims that the seller or former manager has re-entered the market, contacted customers, recruited staff, or used confidential know-how. The legal outcome then depends heavily on the contract structure. If the clause was drafted as a seller covenant and remains within the ancillary-restraint framework, the buyer’s position is usually stronger. If the clause looks more like an employment restriction but exceeds the Turkish Code’s limits, the restrained person may have powerful defenses. If the clause is ambiguous about whether it applies in seller capacity, manager capacity, or both, then a straightforward breach case can turn into a difficult classification dispute.
Turkish law also makes forum selection important. Where the broader M&A agreement is cross-border, parties often prefer arbitration for post-closing covenant disputes because the issues may involve confidential business information, know-how, and valuation of damage. Turkey’s International Arbitration Law permits parties to choose arbitral procedure in disputes with a foreign element where the seat is Turkey or the law is otherwise chosen, which can be useful for cross-border M&A covenant enforcement. But even with arbitration, the underlying substantive question remains the same: was the non-compete drafted within the limits Turkish law is prepared to enforce?
Conclusion
Non-Compete Clauses in Turkish M&A Transactions are both commercially important and legally manageable, but only when the drafter understands that Turkish law applies more than one framework. Seller non-competes in acquisitions are primarily analyzed through the Turkish Competition Authority’s ancillary-restraint approach, under which restrictions must be directly related to and necessary for the transaction and generally stay within reasonable limits of duration, subject matter, geography, and persons. The Authority’s guideline makes clear that up to three years is generally accepted for seller non-competes, that longer periods require specific justification, that scope must be tied to the acquired business and seller’s operational geography, and that confidentiality and related no-hire obligations are evaluated similarly.
By contrast, employee and manager non-competes are governed by Articles 444 to 447 of the Turkish Code of Obligations, which require a written undertaking, access to customer circles or business secrets, risk of significant employer harm, and proportionate limits in time, place, and type of work. Except in special circumstances, their duration may not exceed two years, and Turkish judges may narrow overly broad clauses. This distinction is the key to drafting enforceable post-closing restrictions in Türkiye. The best Turkish M&A non-compete is not the broadest one. It is the one that fits the right legal regime and protects only what the transaction actually needs to protect
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