THE LIMITS OF UNFAIR COMPETITION BY DENIGRATING UNDER THE LIGHT OF THE JUDGEMENT OF THE GENERAL ASSEMBLY OF CIVIL CHAMBERS OF SUPREME COURT 08 January 2021

Unfair competition refers to all behaviors and practices that violate the integrity rule of the parties of the economic order and distort competition against one party. For the existence of unfair competition, it is not obligatory for the parties to be competitors, or the perpetrator to benefit from unfair competition or the perpetrator has been at fault. What is essential for the existence of unfair competition; is the use of the economic competition right contrary to the good faith.

Rules of unfair competition are regulated under Article 54 to 63 of Turkish Commercial Code No 6102. The Article 54 of Turkish Commercial Code titled “purpose and principle” sets out the general principle of unfair competition. According to this: “behaviors or practices that are of deceptive nature or in violation with the principle of good faith between commercial rivals or suppliers and customers are qualified unjust and illegal”. In the continuation of this general principle, some unfair competition actions that are frequently encountered in practice and that are against the good faith are listed.

It is unfair competition “to denigrate others or their goods, business products, prices, activities or business affairs with false, misleading or unnecessarily offensive statements” according to Article 55/1-a of Turkish Commercial Code No 6102. The term "denigration" here, in general terms, refers to behaviors that will create a negative impression of a person's commercial life. As it can be understood from the text of the article, in order for unfair competition to occur within the scope of such article, it is necessary to disparage the activities of others with unnecessarily offensive statements. According to the justification of the Article, denigration includes defamation, obscuring, belittling and dropping its value according to the concrete event. Therefore defamation, obscuring or belittling others or their goods, business products, prices, activities or business affairs is considered within the scope of "denigration". In order for the declaration of denigration to constitute unfair competition; this declaration should be made with false, misleading or unnecessarily offensive explanations. First of all, the main issue sought is that the statement to be "delusive". In other words, if the statements are true, it shall not be taken into consideration within the scope of unfair competition. The current case law of the Supreme Court has been reached a consensus in such a way that there is no room for hesitation to unfair competition be mentioned if the statement is true.

As it stated at The Judgement of General Assembly of Civil Chambers of Supreme Court dated 10/06/2020, numbered 2017/39 E. and 2020/396 K.: in order for the "denigration" in the article to be qualified as "unfair competition", first there must be a statement, it must be about personality, property, work products, activities or commercial affairs of others; and finally, this statement must be false, misleading or unnecessarily offensive. False statement is a statement that content is incompatible with the truth, and that content is objectively incorrect about a particular fact or event or situation. Misleading statements are statements that, when evaluated together with their nature, style and content, may cause the addressee of the statement to fall into error and make a false impression on them. And an unnecessarily hurtful statement which exceeds its purpose by creating a negative impression about a person, his/her activities, work products etc. and create a negative impression about while being accurate in its content. (Suluk, Cahit / Karasu, Rauf / Nal, Temel: Fikri Mülkiyet Hukuku, Ankara, 2017, s.428)

The only criterion for determining whether the statement is "false" is whether it is compatible with reality. If the statement is accurate, then unfair competition cannot be mentioned. On the other hand, the criterion to be used for determining whether the statement is "misleading" or "unnecessarily hurtful" is the usual medium-skilled addressee of the statement.

In other words, whichever group the statement is made to, the mode of understanding of a person of medium ability belonging to that group will be taken as basis. Therefore, the way that the explanation is perceived by the average addressee is important not how the statement is perceived by a particular person or persons. (Ülgen, Hüseyin / Helvacı, Mehmet / Kendigelen, Abuzer / Kaya, Aslan / Nomer Ertan, Füsun: Ticari İşletme Hukuku, İstanbul, 2015, s. 540)

In the dispute subject to the decision of the General Assembly of Civil Chambers of Supreme Court dated 10/06/2020, numbered 2017/39 E. and 2020/396 K.; the plaintiff has claimed that the plaintiff has purchased a port crane from the defendant company and spare parts service from the other defendant to this crane, and that although any service has not been requested from the defendant it has been notified to plaintiff that the cylinder of the crane is ultrasound checked and needs to be replaced immediately and that the crane’s guarantee term has expired, and upon this the plaintiff got a report by a private company that there were no cracks on the cylinder, despite this the defendants has reported that the cylinder is cracked to the Port Authority, and that it is unfair competition that the defendants to report the crane is cracked to the Port Authority although there is not such a malfunction; and demanded the defendants’ actions to be determined as unfair competition, and to be prohibited, the district court has partially accepted the case on the grounds that the action damaged the commercial reputation of the plaintiff and caused unfair competition, the parties appealed the decision, all appeals of the parties has been rejected and the decision has been approved.

The defendant's attorney has requested a correction of the decision. The 11th Civil Chamber of the Supreme Court stated that in the expert report taken by the district court during the trial that it has been clearly determined that there has a crack in the hydraulic cylinder as a result of the measurements made by two separate ultrasound devices. Thereupon, it has been decided by the high court that it is not possible that the defendants' warnings of security to the company which the plaintiff is doing business to be considered as disparaging their commodity, work product, activity or commercial affairs with false, misleading or unnecessary statements. For this reason, contrary to the acceptance of the district court, the high court overturned the decision of the district court by finding it wrong that the decision of the acceptance of the case with a wrong evaluation in writing, while it has been necessary to dismiss the case, although there was no false, misleading or offensive statement about the plaintiff in terms of the content of the letter written by the defendant party to the port operator.

The district court resisted in its decision for previous reasons, and the dispute has been transferred to the Supreme Court Legal General Assembly.

The General Assembly of the Supreme Court, decided that the notification subject to the case did not constitute unfair competition on the grounds that "because of the fact that it is detected by the experts that there is a crack on the cylinder of the crane; giving a security warning to the Port Authority by the defendants cannot be determined as denigrating personality or goods, business products, activities or business affairs of the plaintiff with false, misleading or unnecessarily offensive statements, since it is established that the statements of the defendants are not false, it is understood that this statement is not misleading or unnecessarily offensive.

As can be clearly seen in the aforementioned decision, the accuracy of the statement subject to unfair competition has been taken as basis; it was emphasized that the notification made regarding the problem occurring during the execution of the contractual relationship between the parties cannot be described as defamation of the plaintiff's personality, commodity, work product, activity or commercial affairs with false, misleading or unnecessary statements. Therefore, reporting a defect, error or dysfunction related to a good or service to the relevant third parties with correct content cannot be considered within the scope of unfair competition.