Economic Unity Concept in Turkish Competition Law

The principle of economic unity is adopted in the definition of undertakings under Law No 4054 on the Protection of Competition (Law No. 4054). Although it may be characterized as independent in terms of other branches of law, the economic unit, which is not independent in its decisions in terms of competition law, is accepted as a single economic integrity together with the persons or companies that have control over its decisions. The Turkish Competition Board (Board) makes it clear that an undertaking, as the subject of the competition law, does not necessarily have to be a legal entity, but there should, instead, be an “economic entity”. Based on the notion of “economic entity”, a company will be considered as belonging to the same economic integrity/whole as the other companies that are within the same group.

The Board remarks that in assessing whether different natural and/or legal persons belong to a single economic integrity/whole, the following are taken into account: (i) whether there are economic and familial ties between persons and/or groups; (ii) the foundations, nature, scale of such economic ties and the comparison of dependent activities with independent activities, if any; and (iii) whether there is a unity of interest between persons and/or groups. The concept of control is not applicable in terms of the relationships between natural persons, so the concept of “unity of interest” is employed as the main criterion for determining whether two legal entities controlled by two natural persons belong to a single economic entity.  If the Board determines that there exists a “unity of interest” between two natural persons and/or groups, it is assumed that there is no motive for competition between such persons and/or groups and the legal entities controlled by them.

Where separate undertakings are considered to be part of a single economic entity/whole: (i) the agreements concluded between these undertakings are not caught by Article 4 of Law No. 4054 prohibitions and (ii) there is no need to make a notification as per Article 7 of Law No. 4054 for a transaction which merely involves the entities belonging to such single economic entity.  Overall, Law No. 4054 does not apply to the interplay between undertakings stemming from a single economic entity.

For more information on single economic unit concept in Turkish competition law, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.