Competition Law Issues in Turkish Arbitration Proceedings

Competition law issues in Turkish arbitration proceedings may arise in distribution, franchise, licensing, joint venture, supply, technology, energy, banking, construction, merger and acquisition disputes.

A claimant may request payment under a contractual clause, while the respondent argues that the clause unlawfully fixes resale prices, restricts online sales, divides customers or prevents market entry. A distributor may claim wrongful termination, while the supplier alleges that exclusivity and non-compete provisions must be enforced. A joint venture partner may seek performance of a market-allocation arrangement. A technology platform may defend a discrimination or tying claim by relying on contractual freedom.

These disputes require the arbitral tribunal to consider two legal systems simultaneously.

The tribunal must determine the parties’ private contractual rights. At the same time, it must respect mandatory rules protecting competition in Turkish markets.

The principal Turkish statute is Law No. 4054 on the Protection of Competition. Its territorial scope extends to agreements, decisions, practices, abuses of dominance and qualifying transactions involving undertakings operating in or affecting markets for goods or services within Türkiye. This effects-based scope means that Turkish competition law may become relevant even where the contract is governed by foreign law or one of the parties is established outside Türkiye.

Competition law does not make every commercial dispute non-arbitrable.

Arbitral tribunals can generally decide contractual invalidity, payment, restitution and damages claims between parties that consented to arbitration. They cannot impose administrative fines, authorise mergers, invalidate Competition Board decisions or replace the Turkish Competition Authority in the exercise of public enforcement powers.

The most important distinction is therefore between:

• Private-law consequences of a competition infringement, which may be examined in arbitration; and
• Public enforcement and regulatory powers, which remain with the Competition Board and the competent administrative courts.

This article examines arbitrability, mandatory competition rules, restricted agreements, exemptions, dominant-position claims, evidence, parallel investigations, damages, confidentiality and the effect of public policy on the annulment and enforcement of arbitral awards.

Turkish Competition Law Framework

Law No. 4054 is built principally around three substantive prohibitions:

1. Anticompetitive agreements, concerted practices and decisions of associations of undertakings under Article 4;
2. Abuse of dominant position under Article 6;
3. Mergers and acquisitions capable of significantly reducing effective competition under Article 7.

Article 4 prohibits agreements, concerted practices and association decisions whose object, effect or likely effect is the direct or indirect prevention, distortion or restriction of competition in a market for goods or services. The statutory examples include price fixing, market allocation, restriction of output, exclusion of competitors, discriminatory conditions and certain forms of tying.

Article 5 provides an exemption where four cumulative requirements are satisfied. The arrangement must create economic or technical improvements, provide consumers with a benefit, avoid eliminating competition in a significant part of the relevant market and refrain from imposing restrictions beyond what is necessary.

Article 6 prohibits the abuse of a dominant position. Dominance itself is not prohibited. The unlawful element is abusive conduct, such as exclusionary behaviour, discriminatory conditions, tying or practices that restrict production, marketing or technical development to the detriment of consumers.

These rules may become decisive even where neither party referred expressly to Law No. 4054 in the original contract.

Are Competition Law Disputes Arbitrable in Turkey?

The expression “competition law dispute” may describe several different claims.

Some are clearly private-law disputes:

• A claim for payment under an allegedly restrictive distribution agreement;
• A defence that a non-compete clause is invalid;
• A request for restitution of amounts paid under an unlawful arrangement;
• A claim for loss suffered because of price fixing;
• A claim that a dominant undertaking breached a supply agreement through discriminatory conduct;
• A dispute concerning responsibility for obtaining merger clearance.

Other matters involve public authority:

• Determining whether an administrative fine should be imposed;
• Conducting an on-site inspection;
• Granting binding merger approval;
• Annulment of a Competition Board decision;
• Acceptance of commitments or settlement in an investigation;
• Granting immunity or reduction under the leniency regime.

A private arbitral tribunal cannot exercise the second category of powers.

International Arbitration Law No. 4686 excludes matters that are not subject to the parties’ free disposition. At the same time, it recognises arbitration agreements covering disputes arising from defined legal relationships and preserves the tribunal’s authority to rule on its own jurisdiction.

The better view is therefore not that “competition law is non-arbitrable,” but that the tribunal’s authority is limited to the private consequences falling within the arbitration agreement.

Competition Law as a Defence

Competition law often appears as a defence rather than an independent claim.

For example, a supplier may seek:

• Unpaid contractual penalties;
• Compensation for sales outside an exclusive territory;
• Enforcement of a post-termination non-compete;
• Damages for discounting below a recommended price;
• Payment of minimum-purchase obligations.

The respondent may argue that the clause underlying the claim violates Article 4 and is therefore unenforceable.

Article 56 of Law No. 4054 states that agreements and decisions contrary to Article 4 are invalid and that performance arising from such arrangements may not be demanded. Restitution following invalidity is governed by the statutory rules identified in Article 56.

An arbitral tribunal may therefore need to decide:

• Whether the parties are undertakings;
• Whether the arrangement restricts competition;
• Whether it has an anticompetitive object or effect;
• Whether Turkish markets are affected;
• Whether an exemption applies;
• Whether the unlawful provision can be separated;
• What restitution or damages follow.

The tribunal should not enforce a prohibited obligation merely because the parties voluntarily signed it.

Must Arbitrators Apply Competition Law on Their Own Motion?

Turkish legislation does not contain a detailed article stating that arbitrators must always investigate every possible competition issue on their own initiative.

Nevertheless, Law No. 4054 gives anticompetitive agreements an express private-law consequence of invalidity. International Arbitration Law also permits annulment where the subject matter is not arbitrable or the award conflicts with public policy.

Accordingly, a tribunal faced with facts indicating a serious competition restriction should not ignore the issue solely because the parties framed the dispute as an ordinary payment claim.

The tribunal should proceed carefully.

It should:

1. Identify the potential competition concern;
2. Inform the parties;
3. Allow both sides to submit legal and economic evidence;
4. Avoid deciding the issue through undisclosed reasoning;
5. Address the matter expressly in the award.

Raising the issue does not permit the tribunal to abandon procedural equality. A finding based on a competition theory that neither party had an opportunity to address may itself create due-process concerns.

Separability of the Arbitration Agreement

A respondent may argue that the entire principal contract is invalid under competition law and that the arbitration clause must therefore also be invalid.

That conclusion does not follow automatically.

International Arbitration Law recognises the separability of the arbitration clause. The tribunal may determine its jurisdiction, and invalidity of the main contract does not by itself invalidate the agreement to arbitrate.

This principle is crucial in competition disputes.

The arbitration agreement can remain valid so that the tribunal may decide whether the commercial provisions are unlawful, invalid or severable.

The claimant cannot normally defeat arbitration simply by alleging that the principal contract violates competition law.

Horizontal Restrictions and Cartel Allegations

Horizontal agreements are arrangements between actual or potential competitors.

The most serious restrictions commonly include:

• Price fixing;
• Bid rigging;
• Market or customer allocation;
• Output restrictions;
• Coordination of future commercial strategy;
• Exchange of competitively sensitive information;
• No-poach or wage coordination arrangements.

An arbitration may arise where one participant seeks to enforce obligations forming part of an unlawful horizontal arrangement.

For example, one undertaking may claim compensation because another entered a customer group allegedly reserved to the claimant. A tribunal should not enforce a market-allocation promise prohibited by Article 4.

A more complicated case arises where a lawful cooperation agreement contains potentially restrictive provisions.

Joint production, research and development, procurement, logistics and commercialisation agreements may create efficiencies. The tribunal must distinguish legitimate integration from disguised cartel behaviour.

Relevant questions include:

• Are the parties actual or potential competitors?
• Is the restriction necessary for the cooperation?
• Does it extend beyond the joint activity?
• Are prices determined independently?
• Is sensitive information protected?
• Can the parties compete outside the project?
• Do consumers receive measurable benefits?

The existence of a written contract does not protect the parties from Article 4. Informal coordination and concerted practices may also be prohibited.

Information Exchange in Arbitration

Competition-sensitive information may appear in the arbitral record.

Examples include:

• Future prices;
• Customer-specific discounts;
• Output plans;
• Tender strategies;
• Cost structures;
• Capacity;
• Product launches;
• Future investment;
• Individual customer data.

The risk is particularly significant in joint venture and multiparty proceedings where competing undertakings participate in the same case.

The tribunal should ensure that the arbitration itself does not become a mechanism for unlawful information exchange.

Protective measures may include:

• External-counsel-only access;
• Expert-only access;
• Redacted documents;
• Aggregated data;
• Historical rather than future information;
• Confidentiality rings;
• Separate data rooms;
• Restrictions on in-house recipients.

ISTAC Rules permit tribunals to issue confidentiality orders and take measures protecting trade secrets and other confidential information. They also require fair treatment and a full opportunity for each party to present its case.

Confidentiality must therefore be designed so that it protects competition without preventing a party from defending itself.

Vertical Agreements

Vertical agreements are concluded between undertakings operating at different levels of a production or distribution chain.

Examples include:

• Manufacturer and distributor;
• Supplier and retailer;
• Franchisor and franchisee;
• Licensor and licensee;
• Platform and business user;
• Wholesaler and dealer.

Vertical restrictions may promote investment, distribution efficiency, brand protection and entry into new markets. They may also restrict intrabrand or interbrand competition.

The Turkish vertical-agreements framework uses a block-exemption system. The official Guidelines explain that the current general framework applies a 30% market-share threshold and provides guidance for arrangements not qualifying for the block exemption or requiring individual assessment under Article 5.

A tribunal should not treat every vertical restriction as automatically unlawful. It must examine the applicable communiqué, market shares, nature of the restriction and possible exemption.

Resale Price Maintenance

Resale price maintenance occurs where a supplier directly or indirectly fixes the price at which a buyer must resell goods or services.

Potential indicators include:

• Minimum resale prices;
• Fixed discounts;
• Threats for reducing prices;
• Suspension of supply;
• Withdrawal of rebates;
• Monitoring followed by pressure;
• Agreements to maintain advertised prices.

A recommended or maximum price may present lower competition risk where it does not operate in practice as a fixed or minimum price.

In arbitration, the issue may arise because a supplier terminated a distributor for discounting or seeks a contractual penalty for failing to maintain prices.

The tribunal should examine actual conduct, not only the label used in the contract.

A clause described as a “recommended retail price” may operate as mandatory where deviation results in sanctions.

Territorial and Customer Restrictions

Distribution agreements commonly allocate territories or customer groups.

The competition analysis may differ depending on whether the restriction concerns:

• Active sales;
• Passive sales;
• Wholesale sales;
• Selective distribution;
• Online sales;
• Sales to unauthorised distributors;
• Sales by the supplier itself.

The Vertical Agreements Communiqué recognises specified exceptions but excludes certain serious territorial and customer restrictions from block-exemption protection. It also regulates selective-distribution restrictions and limitations on sales among authorised members.

An arbitrator should therefore avoid a simplistic conclusion that every exclusive territory is prohibited or that every territorial restriction is valid.

The precise type of sale, market structure, contractual role and exemption conditions must be established.

Online Sales Restrictions

Online sales are a recurring subject in Turkish competition enforcement and commercial arbitration.

A supplier may restrict:

• Use of online marketplaces;
• Website advertising;
• Search-engine advertising;
• Cross-border delivery;
• Online discounting;
• Sales to customers outside a physical territory.

Some restrictions may protect brand quality or prevent free riding. Others may eliminate an effective sales channel or create customer allocation.

A tribunal hearing wrongful termination or contractual penalty claims should examine whether the supplier’s online restrictions are proportionate and compatible with Article 4 and the applicable vertical framework.

Non-Compete Obligations

Non-compete clauses may be found in:

• Distribution agreements;
• Franchise agreements;
• Supply agreements;
• Joint ventures;
• Share purchase agreements;
• Technology licences;
• Agency agreements.

The Vertical Agreements Communiqué generally excludes indefinite non-compete obligations and obligations exceeding five years from block-exemption protection, subject to the specific rules concerning premises or facilities. Post-termination non-competes are generally treated restrictively, with a limited exception where the obligation is necessary to protect transferred know-how and satisfies the other stated conditions.

Failure to qualify for a block exemption does not necessarily mean automatic illegality.

The clause may still require an individual Article 5 analysis.

The tribunal should consider:

• Duration;
• Territory;
• Product scope;
• Market shares;
• Know-how transferred;
• Investment made;
• Availability of alternatives;
• Effect on market entry;
• Whether the restriction is indispensable.

A broad contractual non-compete should not be enforced automatically through an interim injunction merely because the parties signed it.

Exclusive Purchasing and Supply

Exclusive purchasing may require a buyer to obtain all or most of its requirements from one supplier.

Exclusive supply may require the supplier to sell only to one buyer.

These clauses may support investment and supply security. They may also foreclose competitors, particularly where they cover a substantial share of the market or have a long duration.

The tribunal may need economic evidence concerning:

• Market coverage;
• Contract duration;
• Barriers to entry;
• Availability of alternative suppliers;
• Buyer power;
• Network effects;
• Cumulative foreclosure;
• Efficiency justifications.

A dispute about minimum-purchase commitments may therefore require more than a textual interpretation of the contract.

Most-Favoured-Customer Clauses

A most-favoured-customer clause may require a supplier to provide one buyer with terms as favourable as those provided to others.

Such provisions may reduce negotiation costs or protect investment. In some markets, they may weaken price competition, discourage discounts or restrict entry by lower-cost platforms.

The Turkish Vertical Agreements Guidelines expressly identify most-favoured-customer clauses as a category requiring competition analysis.

An arbitral tribunal may need to distinguish between:

• Narrow parity clauses;
• Wide parity clauses;
• Retail-price parity;
• Wholesale-price parity;
• Clauses concerning direct channels;
• Clauses covering competing platforms.

Tying and Bundling

Tying occurs where access to one product or service is conditioned on purchasing another.

The issue may arise under both Article 4 and Article 6.

A technology provider may require use of its own payment, hosting, maintenance or advertising service. A supplier may condition access to a popular product on purchasing a less desired product.

The tribunal should consider:

• Whether the products are distinct;
• Whether customers demand them separately;
• Whether the undertaking is dominant;
• Whether competitors are excluded;
• Whether technical integration is necessary;
• Whether efficiencies justify the arrangement.

A contractual provision should not be enforced without analysing whether it serves a legitimate technical purpose or creates exclusionary foreclosure.

Abuse of Dominant Position

Dominance is not established merely because an undertaking is large or commercially successful.

The analysis requires definition of the relevant product and geographic market and examination of the undertaking’s ability to act independently of competitors and customers.

Article 6 prohibits abuse by one or more dominant undertakings and lists examples such as exclusion of market entry, discrimination, tying and restrictions on production or technical development.

Arbitration claims may involve:

• Refusal to supply;
• Discriminatory pricing;
• Margin squeeze;
• Predatory pricing;
• Loyalty rebates;
• Tying;
• Exclusive access to infrastructure;
• Restrictions on interoperability;
• Data-access denial;
• Termination of an essential commercial relationship.

The tribunal must first establish dominance before characterising conduct as an abuse.

Refusal to Supply

A distributor or service provider may argue that a dominant supplier unlawfully terminated or refused access.

The claimant should not assume that every refusal by a strong undertaking is abusive.

The analysis may include:

• Whether the input is indispensable;
• Whether realistic alternatives exist;
• Whether the refusal eliminates effective competition;
• Whether the supplier has an objective justification;
• Whether access would require disproportionate investment;
• Whether the claimant breached legitimate contractual obligations.

Arbitration can resolve contractual damages and performance claims. It cannot issue an administrative infringement decision binding the market generally.

Discrimination Claims

Article 6 may become relevant where a dominant undertaking applies different conditions to similarly situated customers.

The tribunal should determine:

• Whether the transactions are comparable;
• Whether cost differences justify different terms;
• Whether the claimant suffered a competitive disadvantage;
• Whether the customers operate in the same downstream market;
• Whether the distinction was objectively justified.

Different prices alone do not establish unlawful discrimination.

Merger Control and M&A Arbitration

Competition law frequently arises in post-M&A arbitration.

Disputes may concern:

• Responsibility for filing;
• Accuracy of merger-notification information;
• Efforts required to obtain clearance;
• Compliance with interim operating covenants;
• Long-stop dates;
• Reverse termination fees;
• Divestiture obligations;
• Gun-jumping allegations;
• Failure to obtain approval.

The Turkish merger-control framework treats qualifying transactions as requiring notification and authorisation to gain legal validity. The Communiqué also defines control through rights, contracts or other instruments conferring decisive influence and treats qualifying full-function joint ventures as acquisition transactions.

An arbitral tribunal may decide which party breached the transaction agreement or must pay a termination fee.

It cannot grant the Competition Board’s approval or declare that a transaction requiring authorisation may close without it.

Parallel Competition Board and Arbitration Proceedings

An arbitration and a Competition Board investigation may proceed simultaneously.

The two proceedings serve different functions.

The Competition Board examines public-law compliance and may impose administrative consequences. The arbitral tribunal resolves claims between parties to the arbitration agreement.

The commencement of one proceeding does not automatically eliminate the other.

The tribunal may consider whether to:

• Continue the arbitration;
• Stay selected issues;
• Issue a partial award;
• Await a Board decision;
• Decide contractual issues independently;
• Preserve limitation periods and interim rights.

A stay should not be automatic.

Relevant factors include:

• The stage of the investigation;
• Overlap of issues;
• Urgency;
• Risk of inconsistent findings;
• Availability of evidence;
• Whether the Board decision is necessary for the private claim;
• Potential delay.

Is the Competition Board’s Decision Binding on the Tribunal?

A final Competition Board decision may constitute highly significant evidence, particularly where it identifies an infringement, affected market, duration and participants.

However, the arbitral tribunal must determine the legal effect of the decision under the applicable law and procedural circumstances.

The tribunal may still need to decide:

• Whether the claimant suffered loss;
• Whether the infringement caused that loss;
• The amount of damage;
• Whether the claimant passed on an overcharge;
• Whether the respondent before the tribunal is legally responsible;
• Whether the arbitration agreement covers the claim.

The Board does not calculate every private claimant’s loss merely by finding a competition infringement.

Administrative Fines Are outside Arbitral Authority

Article 16 of Law No. 4054 establishes administrative fines for infringements and procedural failures.

A tribunal may consider the risk or contractual allocation of a fine—for example, under an indemnity clause—but it cannot impose or cancel the administrative fine itself.

The current administrative-fine framework was updated through a regulation published in December 2024, followed by an official guideline adopted by the Competition Board in February 2025. These public-enforcement rules remain separate from private arbitral remedies.

A contractual clause requiring one party to reimburse another for competition fines also requires careful analysis. Questions may arise regarding public policy, fault, control over the violation and enforceability of indemnification for unlawful conduct.

Private Damages under Law No. 4054

Articles 57 and 58 establish a statutory basis for private competition damages.

Article 57 requires persons that restrict competition unlawfully or abuse dominance to compensate injured persons. Where several persons caused the damage, the statute provides for joint responsibility.

Article 58 permits recovery of the difference between the price paid and the price that would have been paid without the restriction. Competing undertakings may claim the profits they would have earned, assessed with reference to earlier balance sheets and other evidence.

The provision also refers to compensation up to three times the material loss or the infringer’s profits where the statutory culpability conditions are satisfied.

The English statutory text refers to an award by the “judge.” Whether and under what conditions an arbitral tribunal may grant this enhanced remedy should not be assumed automatically. The tribunal must examine the substantive character of the remedy, the law applicable to the claim, the scope of the arbitration agreement and Turkish public-policy considerations.

Types of Competition Damages

A claimant may seek:

• Overcharge damages;
• Lost profits;
• Loss of market share;
• Increased operating costs;
• Loss caused by exclusion from a distribution network;
• Loss caused by discriminatory terms;
• Wasted investment;
• Restitution of unlawful payments;
• Interest.

The tribunal must distinguish between actual damage and speculative commercial disappointment.

A claimant should establish:

1. The infringement;
2. The relevant affected market;
3. Causation;
4. The counterfactual competitive position;
5. The amount of loss;
6. Mitigation;
7. Absence of double recovery.

The Counterfactual Analysis

Competition damages require comparison between:

• The claimant’s actual financial position; and
• The position it would likely have occupied without the infringement.

The second scenario is hypothetical and often requires economic modelling.

Evidence may include:

• Prices before and after the infringement;
• Prices in comparable markets;
• Cost data;
• Customer records;
• Market shares;
• Tender results;
• Competitor performance;
• Regression analysis;
• Financial forecasts;
• Industry reports.

The tribunal should test whether the proposed counterfactual isolates the effect of the competition infringement from inflation, exchange rates, demand changes, cost shocks and unrelated commercial decisions.

Passing-On

An injured buyer may have passed some or all of an overcharge to its own customers.

The respondent may argue that the claimant did not retain the full loss.

The claimant may answer that passing on the price caused:

• Reduced sales;
• Loss of customers;
• Lower market share;
• Additional downstream loss.

Passing-on analysis therefore cannot be reduced to one accounting calculation.

The tribunal should avoid both overcompensation and undercompensation.

Burden of Proof

Article 59 contains special evidentiary provisions.

Where the claimant submits evidence creating the impression of an agreement or distortion of competition—such as actual market allocation, long-term price stability or closely timed price increases—the burden may shift to defendants to show that they did not participate in concerted practices.

The statute also states that agreements, decisions and practices restricting competition may be proved through any kind of evidence.

In arbitration, this may include:

• Emails;
• Messaging records;
• Meeting notes;
• Pricing spreadsheets;
• Distributor communications;
• Tender documents;
• Witness testimony;
• Economic parallelism;
• Internal audit reports;
• Competition Authority decisions.

The tribunal must still respect authenticity, privilege, confidentiality and the parties’ right to challenge the evidence.

Leniency and Settlement Materials

A party may seek production of documents connected with a Competition Authority leniency or settlement process.

These materials may contain admissions, descriptions of cartel conduct, employee interviews and sensitive evidence.

Disclosure must be approached cautiously because public competition enforcement depends partly on the protection of cooperation mechanisms and confidential information.

The Turkish Competition Authority maintains specific leniency and settlement regimes. Its current leniency guidance addresses confidentiality of applications, while the settlement framework permits investigated undertakings to accept the existence and scope of an infringement within the administrative process.

A tribunal should not order broad production of Authority materials without analysing:

• Legal confidentiality;
• Privilege;
• Regulatory restrictions;
• Relevance;
• Proportionality;
• Availability from another source;
• Protection of third parties.

Economic Experts

Competition disputes commonly require economic expertise.

Experts may address:

• Market definition;
• Market power;
• Dominance;
• Foreclosure;
• Price effects;
• Overcharges;
• Lost profits;
• Efficiencies;
• Passing on;
• Counterfactual scenarios.

International Arbitration Law permits a tribunal to appoint experts, require the parties to provide relevant information and obtain court assistance for evidence collection.

The expert should explain methodology transparently.

The tribunal should require disclosure of:

• Data sources;
• Assumptions;
• Models;
• Sensitivity analysis;
• Treatment of missing data;
• Alternative explanations.

An economic conclusion should not be accepted merely because it is expressed through complex formulas.

Interim Measures

A party may seek urgent enforcement of:

• Exclusivity;
• A non-compete;
• Supply obligations;
• Access to a platform;
• Access to data;
• A prohibition on sales;
• A prohibition on approaching customers.

Interim relief creates special competition risks.

An order enforcing an unlawful exclusivity or non-compete may reinforce market foreclosure before the merits are decided.

The tribunal should assess:

• Prima facie contractual rights;
• Serious competition concerns;
• Market impact;
• Proportionality;
• Availability of narrower relief;
• Duration;
• Harm to third parties and consumers.

International Arbitration Law allows tribunals to grant interim measures between the parties but prevents them from issuing measures requiring state coercion or directly binding third parties. Court assistance remains available without waiver of arbitration.

Confidentiality Does Not Prevent Regulatory Cooperation

Arbitration is often selected because it is confidential.

Confidentiality cannot lawfully be used to:

• Obstruct a Competition Authority investigation;
• Conceal required information;
• Prevent compliance with an official request;
• Prohibit reporting of unlawful conduct where disclosure is legally protected or required;
• Interfere with on-site inspections.

A competition-law compliance clause should therefore include a regulatory-disclosure exception.

The tribunal may protect information within the arbitration while recognising that a party may need to provide the same material to the competent authority.

Public Policy and Annulment

The treatment of competition law affects the durability of the final award.

Under Article 15 of International Arbitration Law No. 4686, a Turkish-seated international award may be annulled where the dispute is not arbitrable under Turkish law or the award conflicts with public policy. These matters may also be examined by the court when determining enforceability.

An award may face risk where it:

• Enforces an obvious price-fixing agreement;
• Orders performance of unlawful market allocation;
• Ignores a properly raised competition defence;
• Purports to impose an administrative fine;
• Replaces the Competition Board’s merger authority;
• Violates the right to be heard when raising competition law.

Not every error in competition analysis should automatically become a public-policy violation.

Annulment is not intended to be a complete merits appeal. The court’s concern is more likely to focus on fundamental conflict with mandatory competition principles rather than ordinary disagreement over market definition or economic evidence.

Comparative Importance of the Eco Swiss Decision

The Court of Justice of the European Union’s Eco Swiss v Benetton judgment is frequently cited internationally in discussions of competition law and arbitration.

The Court treated core EU competition rules as sufficiently important to be considered within national public-policy review where domestic law permits annulment for public-policy violations.

Eco Swiss is not a Turkish court judgment and should not be presented as binding Turkish precedent.

Its comparative importance lies in demonstrating why arbitral tribunals should address mandatory competition rules carefully rather than assume that confidentiality or party autonomy places the dispute outside competition law.

Enforcement of Foreign Awards

Foreign and non-domestic awards are generally considered under the New York Convention and Turkish private international law.

The New York Convention establishes common standards for the recognition of arbitration agreements and enforcement of foreign and non-domestic awards. It also permits refusal on limited grounds, including non-arbitrability and conflict with public policy.

A foreign award requiring payment under a normal distribution agreement presents a different enforcement profile from an award enforcing a cartel arrangement affecting Turkish markets.

The enforcing court may examine the competition issue through the public-policy framework without conducting a complete rehearing of every economic question.

Drafting Competition-Sensitive Agreements

Competition risk should be addressed before the dispute begins.

A commercial agreement should identify:

• Permitted exclusivity;
• Territory and customer rules;
• Active and passive sales;
• Online sales;
• Resale-pricing independence;
• Duration of non-compete obligations;
• Information-exchange safeguards;
• Compliance responsibilities;
• Merger-clearance obligations;
• Regulator cooperation;
• Severability;
• Consequences of invalidity.

A general statement that “the parties shall comply with competition law” is useful but insufficient.

Operational clauses should be drafted so that employees and commercial teams understand what they may and may not do.

Sample Competition Law Compliance Clause

“Each Party shall conduct its activities under this Agreement in compliance with applicable competition laws, including Law No. 4054 on the Protection of Competition.

Nothing in this Agreement shall be interpreted as requiring either Party to fix resale prices, allocate markets or customers unlawfully, restrict output, exchange competitively sensitive future information without legitimate necessity, or engage in an abuse of dominant position.

Each Party shall determine its resale prices independently. Any recommended or maximum price communicated by the Supplier shall be non-binding and shall not be enforced through threats, penalties, withdrawal of benefits or commercial pressure.

Where a provision is found to violate mandatory competition law, that provision shall be ineffective to the extent of the violation. The remaining provisions shall continue where they can operate lawfully and consistently with the commercial purpose of the Agreement.

Nothing in this Agreement prevents a Party from providing information to the Turkish Competition Authority or another competent authority where disclosure is required or legally protected.”

Sample Arbitration Clause for Competition-Related Disputes

“Any dispute arising out of or relating to this Agreement, including disputes concerning its formation, validity, interpretation, performance, termination, competition-law compliance, exemption, severability, restitution or damages, shall be finally resolved by arbitration administered by the Istanbul Arbitration Centre under the ISTAC Arbitration Rules.

The seat of arbitration shall be Istanbul, Türkiye. The tribunal shall consist of three arbitrators. The language of arbitration shall be English. Turkish law shall apply to the merits.

The tribunal may determine the private-law consequences of alleged competition-law infringements between the Parties, including contractual invalidity, severability, restitution and damages.

The tribunal shall have no authority to impose administrative fines, grant merger clearance, annul decisions of the Turkish Competition Board or exercise another public enforcement power reserved for the competent authority.

The tribunal may establish confidentiality rings, external-counsel-only access and expert-only procedures for competitively sensitive information. Nothing in this clause prevents a Party from applying to the Turkish Competition Authority or a competent court.”

ISTAC’s official model clause allows parties to select the seat, language, number of arbitrators and law applicable to the merits.

Practical Checklist for Claimants

Before bringing a competition claim in arbitration, a claimant should determine:

• Whether a valid arbitration agreement covers the claim;
• Whether Turkish markets are affected;
• Which provision of Law No. 4054 applies;
• Whether an exemption may apply;
• Whether the claim is contractual or statutory;
• Whether a Competition Board investigation exists;
• What evidence proves the infringement;
• What counterfactual proves damage;
• Whether overcharge was passed on;
• Whether interim relief is necessary;
• Whether the requested remedy belongs to an arbitrator or public authority;
• Where the award will be enforced.

Practical Checklist for Respondents

A respondent should examine:

• Whether the claimant is attempting to enforce an unlawful provision;
• Whether the alleged restriction has an anticompetitive object or effect;
• Whether the market has been defined correctly;
• Whether the parties are competitors;
• Whether block or individual exemption applies;
• Whether dominance exists;
• Whether an objective justification exists;
• Whether the claimant suffered actual loss;
• Whether causation is established;
• Whether damages are duplicated;
• Whether confidential regulatory documents are protected;
• Whether the tribunal has authority over every requested remedy.

Practical Checklist for Arbitrators

The tribunal should consider:

• Mandatory Turkish competition rules;
• Territorial effect on Turkish markets;
• Parties’ right to be heard;
• Need for an economic expert;
• Confidentiality of sensitive information;
• Parallel Competition Board proceedings;
• Public and private enforcement boundaries;
• Severability of restrictive clauses;
• Appropriate form of relief;
• Public-policy risks at the seat and place of enforcement.

The award should explain the competition analysis sufficiently to demonstrate that the issue was considered seriously and procedurally fairly.

Frequently Asked Questions

Can Turkish competition disputes be arbitrated?

Yes. Private contractual consequences such as invalidity, restitution and damages may generally be arbitrated where a valid arbitration agreement exists. Administrative enforcement powers remain with the Competition Board and competent courts.

Can an arbitrator impose a Turkish competition fine?

No. Administrative fines under Law No. 4054 are imposed through the public competition-enforcement system, not private arbitration.

Can an arbitrator grant merger clearance?

No. A tribunal may decide contractual responsibility for obtaining clearance but cannot replace the Competition Board’s authorisation.

Is every anticompetitive agreement entirely invalid?

Article 56 renders agreements contrary to Article 4 invalid. The tribunal should determine whether the unlawful provision can be separated from the lawful remainder and whether an exemption applies.

Can the tribunal apply competition law when the contract is governed by foreign law?

Potentially. Turkish competition law has an effects-based scope covering conduct operating in or affecting Turkish markets. Mandatory competition and public-policy considerations may therefore remain relevant.

Is exclusivity prohibited?

No. Exclusivity may be lawful depending on market shares, duration, foreclosure, efficiencies and the applicable exemption framework.

Is resale price maintenance prohibited?

Fixed or minimum resale-price control presents serious Article 4 risk. A genuinely non-binding recommended or maximum price requires a different assessment.

Are five-year non-competes always valid?

No. Five years is not an automatic approval. Market shares, scope, necessity, cumulative foreclosure and other exemption conditions must also be assessed.

Can a licensee claim competition damages in arbitration?

Potentially, where the arbitration clause covers the claim and the claimant proves infringement, causation and loss.

Can an arbitral tribunal award threefold damages?

Article 58 refers to enhanced damages under specified conditions but uses the term “judge.” Whether an arbitral tribunal may grant that remedy requires case-specific analysis and should not be assumed automatically.

Must arbitration stop during a Competition Board investigation?

Not necessarily. The tribunal may continue, stay or sequence issues depending on overlap, urgency, evidence and procedural fairness.

Is a Competition Board decision automatically enough to prove damages?

No. The claimant must still establish causation and the amount of its own loss.

Can leniency materials be disclosed in arbitration?

Not automatically. Confidentiality, public-enforcement interests, privilege, relevance and proportionality must be considered.

Can competition law cause annulment of an award?

Potentially. A Turkish-seated international award may be annulled where the subject matter is non-arbitrable or the award conflicts with public policy.

Can a foreign award enforcing an anticompetitive agreement be refused in Turkey?

Potentially, where enforcement would conflict with Turkish public policy or concern a non-arbitrable matter under the applicable enforcement framework.

Conclusion

Competition law issues in Turkish arbitration proceedings require a careful balance between party autonomy and mandatory market regulation.

Arbitration remains available for many private-law disputes arising from competition infringements.

A tribunal may determine whether a distribution, franchise, licensing, joint venture or supply provision is invalid. It may order restitution, dismiss a claim seeking enforcement of an unlawful clause and award compensatory relief where jurisdiction and the applicable substantive law permit.

The tribunal cannot exercise the Competition Board’s public powers.

It cannot impose administrative fines, grant merger clearance, conduct an official investigation, approve commitments or annul a regulatory decision.

This distinction should appear expressly in the arbitration clause, procedural order and final award.

Article 4 of Law No. 4054 is relevant to both horizontal and vertical arrangements. Cartels, market allocation, resale price maintenance and serious customer restrictions present particularly high risk.

Other clauses require a more detailed analysis.

Exclusivity, non-competes, most-favoured-customer clauses, tying and online-sales restrictions may produce efficiencies or anticompetitive foreclosure depending on their scope, market context and duration.

Article 5 exemption analysis may therefore become central to the award.

The tribunal should also protect competitively sensitive information.

A multiparty arbitration involving competitors must not become a channel for exchanging future prices, customer strategies or output plans. Confidentiality rings, redaction and expert-only access may be necessary.

Private damages require rigorous evidence.

The claimant must establish the infringement, causal connection and counterfactual financial position. The tribunal should examine passing on, mitigation and double-recovery risks rather than relying on the infringement finding alone.

Public policy remains the principal link between competition law and post-award judicial review.

A tribunal that carefully addresses competition arguments, hears both parties and limits its relief to private-law consequences substantially reduces annulment and enforcement risk.

A tribunal that orders performance of an obvious cartel or ignores a properly raised mandatory competition defence may place the award in danger.

The commercial objective is not to transform every arbitration into a regulatory investigation.

It is to ensure that private dispute resolution does not enforce obligations that Turkish competition law prohibits.

When the arbitration clause, evidence procedure and requested remedies are designed with these boundaries in mind, arbitration can provide an effective, confidential and specialised forum for complex competition-related commercial disputes.

Legal Disclaimer: This article is provided for general informational purposes only and does not constitute legal advice. Competition-law issues depend on the parties, relevant markets, market shares, contractual restrictions, regulatory proceedings, arbitral seat, applicable law and intended enforcement jurisdiction. Case-specific Turkish competition and arbitration advice should be obtained before commencing proceedings or enforcing a competition-sensitive contractual provision.