International Competition Law and Extraterritoriality in Turkey

A common question for foreign investors is: “My company is based in Germany or the US, and we signed an agreement there. Does Turkish Competition Law apply to us?”

The answer is a resounding YES, if it affects the Turkish market.

The “Effects Doctrine” (Article 2)

Article 2 of Law No. 4054 states that the law covers behavior that “prevents, distorts or restricts competition within the markets for goods and services in the Republic of Turkey,” regardless of where the conduct took place. This involves the Effects Doctrine. Even if:

• The companies have no office in Turkey.
• The agreement was signed abroad.
• The products were sold to Turkey via intermediaries.

If the effect is felt in Turkey (e.g., higher prices for Turkish consumers), the Turkish Competition Authority (RK) asserts jurisdiction.

Enforcement Against Foreign Entities

The RK regularly fines foreign entities.

• Notification: Official notifications are sent through diplomatic channels or to local representatives/subsidiaries.
• Collection: Collecting the fine can be challenging if the company has no assets in Turkey. However, if the company wants to do business in Turkey in the future, unpaid fines remain a serious liability.
• Subsidiary Liability: Often, the RK fines the local Turkish subsidiary for the conduct of the parent company, treating them as a “single economic unit”.

Examples

• International Car Shipping Cartels: The RK fined global shipping companies for price-fixing on routes that included Turkish ports.
• Forex Banks: The RK investigated global banks for manipulating forex benchmarks affecting the Turkish Lira.

Conclusion

Global compliance requires considering Turkish Competition Law. Ignoring the RK because “we possess no Turkish entity” is a risky strategy that can lead to permanent exclusion from the Turkish market.

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