The basic principle of market economy, which prescribes an environment where actions performed by individuals to gain benefits and by undertakings to maximize profits are converted into social welfare, is the assumption that economic relationships are focused on free competition. In the economic sense, competition may be defined as the race sellers in a market enter in order to acquire more customers, thereby increasing their sales of goods and services, and consequently, their profits. The concept of competition forms the basis of an efficiently operating market system; it protects the independence of the decisions of market actors as well as their actions in the pursuit of their own interests, while also ensuring social justice and economic efficiency.
In addition, competitive market structure also serves dynamic functions. Competition encourages technological development. This is because technological development plays a key role in achieving the status desired by undertakings. As well, a competitive market structure encourages firms to continually adapt their competitive power in line with the prevailing market conditions.
On the other hand, if markets are left to their own devices, there is a risk that undertakings within those markets may start a predatory race in which, instead of competing, they may choose to enter into collaborations with negative effects on social welfare and economic development, or to utilize their economic power through abusive or exclusionary practices. These would make state intervention unavoidable. Such actions would also restrict the freedom of enterprise, causing harm to fundamental democratic rights and freedoms. Eliminating the aforementioned problems would only be possible by upholding the economic system with a competition act and by establishing an efficient competition authority to enforce that act.
The first legal arrangement in the area of competition law was made in the United States of America. Sherman Act, adopted in 1890, includes regulations on the restriction of competition through horizontal or vertical agreements as well as on prohibiting monopolies. The first legal arrangement on competition law in Europe was made through the Treaty of Rome, which was put into effect in 1958.
In Turkey, the Act no 4054 on the Protection of Competition was adopted and put into effect in 1994. The purpose of the Act no 4054 on the Protection of Competition is to prevent agreements, decisions and practices preventing, distorting or restricting competition in markets for goods and services, and the abuse of dominance by the undertakings dominant in the market, and to ensure the protection of competition by performing the necessary regulations and supervisions to this end.
History of the Act no 4054
Article 167 of the Turkish Constitution places a duty and responsibility on the state to take "measures to ensure and promote the sound, orderly functioning of the money, credit, capital, goods and services markets" and to prevent "the formation, in practice or by agreement, of monopolies and cartels in the markets". The principle factor in drafting the Act no 4054 on the Protection of Competition was the need to fulfill this obligation in the provision.
Another factor affected the drafting of the law are the obligations placed on Turkey by international agreements. At this point, particular note must be made of the obligations within the framework of the Association Agreement (Ankara Agreement) signed between Turkey and EEC on October 12, 1963. Article 16 of the Association Agreement specifies that principles mentioned in the provisions of the Treaty of Rome concerning competition, taxation and the approximation of laws must be made applicable in the association relationship. As a matter of fact, Turkish Competition Act is based mostly on articles 81 and 82 of the Treaty of Rome. It must also be noted that the positive atmosphere created by the Customs Union between the European Union and Turkey, which was put into effect on January 1, 1996 based on the Association Council Decision of March 6, 1995, played a decidedly important role in the adoption process of the Act no 4054 on the Protection of Competition.
Even though the Act was adopted and put into force at the end of 1994, the studies for the introduction of a legal regulation on the subject may be said to have a long history.
The first act aimed at protecting competition in Turkey was a symposium in 1971, spearheaded by the Ministry of Commerce, which mainly addressed consumer protection. Following this symposium, a study by the aforementioned Ministry resulted in the "Draft Law on the Regulation of Activities Related to Commercial Goods and Services for the protection of Consumers." This draft law mainly included provisions on consumer protection and regulation of the internal market.
The second draft prepared by the Ministry of Commerce on the subject was the "Draft Law on the Regulation of Trade and Protection of Consumers," dated 1975. This draft law included the first provisions introducing regulation on competition law in Turkey.
Another draft law prepared by the Ministry in 1980 was titled "Draft Law on the Protection of Honesty in Commerce." The draft cited the purpose of the act as "protecting the free market regime, eliminating any elements distorting competition…"
"Draft Law on the Regulation of Commercial Activities and Protection of Consumers," which was prepared in 1981 by the Ministry of Commerce, essentially includes provisions in parallel to those in the previous draft, despite the different title.
To versions of the "Draft Law on Consumer Protection," dated October 1983 and March 1984 addresses regulations related to cartels and monopolies in separate sections for the first time.
The environment created by the new economic model adopted in Turkey in the 1980s in addition to the explicit duty placed on the State by article 167 of the 1982 Constitution to prevent monopolization and cartel formation in the markets, the Ministry of Industry and Commerce separated problems related to the restriction of competition from provisions concerning the protection of the consumers and regulation of trade, and prepared the "Draft Law on Agreements and Practices Restricting Competition" in November 1984.
In addition to being the first independent text on competition, unlike the previous ones, this draft is also the first text to be submitted to the Turkish Grand National Assembly (TGNA) for adoption. The draft law was submitted to the TGNA in December 1985, but could not be discussed in within the 17th Legislative Year and lapsed after the 1987 elections.
Following the 1991 general elections, a commission created under the Ministry of Industry and Commerce worked in two sub-committees to prepare the "Draft Law on Consumer Protection" and the "Draft Law on the Protection of Competition". In the preparation of the Draft Law on the Protection of Competition, US, British and EU competition rules were taken into consideration to arrive at a text that was very different from the previous drafts. This draft, which was completed in 1992, was forwarded to all relevant institutions for their opinions, and was later submitted to the TGNA after it was given its final form in light of the opinions and criticisms received. As mentioned in the introduction, the draft law was discussed in the General Assembly and adopted on December 7, 1994. It was put into force with its publication in the Official Gazette dated 13.12.1994 and numbered 22140.