Competition Warfare: The Intricacies of Advertising and Promotion

1.      Introduction

The establishment and protection of healthy competition among market players are among the primary objectives for a strengthening and growing economy. While the principle of integrity in commercial life is indispensable for the functioning and sustainability of a free-market economy, commercial practices contrary to this principle can undermine the trust relationship between market players and threaten the social welfare provided by free competition. Consequently, unfair competition law aims to protect every component of the economic system—from producers to consumers—rather than merely the competitors themselves.[1]

On the other hand, the role of well-designed and powerful advertisements is indisputable for free market players to enhance their reputation in the eyes of consumers and increase the sales of their products and services. However, the compliance of promotional and advertising materials—used by companies to establish a bond between their offerings and consumers—with unfair competition legislation is not always clear. In particular, advertisements and promotions involving comparative advertising, superiority claims, and discount campaigns are frequently subject to unfair competition allegations.

In this article, we examine how advertisements used by companies to promote, market, and increase the sales of their products and services are evaluated today under unfair competition legislation, in light of Court of Cassation precedents and Advertising Board decisions. Furthermore, we explore how companies can mitigate legal risks without falling behind in the competitive landscape.

2. Legal Framework for Advertising-Related Unfair Competition

The conditions under which unfair competition may arise during commercial activities are regulated under the Turkish Commercial Code (“TTK”). Pursuant to Article 54 of the TTK, unfair competition comprises any deceptive act or commercial practice that is contrary to the principle of good faith and affects the relationships between competitors, suppliers, and customers. Non-exhaustive examples listed under Article 55 of the TTK include disparaging competitors, misleading customers with deceptive statements, employing aggressive sales methods, and unfairly benefiting from another's work products.

a.     The Practice of the Court of Cassation

When examining advertisements and promotions subject to unfair competition allegations, the Court of Cassation does not rely solely on rigid criteria—such as the existence of a competitive relationship between the parties, the benefit gained by the perpetrator, the perpetrator's fault, or the damages suffered by the victim. Instead, it evaluates the circumstances of the specific case in a holistic and flexible manner. For instance, the 11th Civil Chamber of the Court of Cassation holds the view that the actual occurrence of damage is not a prerequisite for the existence of unfair competition; the mere occurrence of the act itself may suffice to constitute unfair competition.[2]

In terms of comparative advertisements and promotions, an advertisement will not constitute unfair competition provided that the comparison is made between products of the same type and nature, following an objective method based on concrete and verifiable data. It is essential that the goods, services, activities, or other characteristics of competitors are not disparaged or discredited in such advertisements and promotions; rather, the comparison must be made on a matter that provides a benefit to the consumer.

It is vital for advertisements to be based on concrete, verifiable, and objective data, and that it is not of a nature to mislead consumers or create confusion in the market. In another case, the 11th Civil Chamber of the Court of Cassation conducted a holistic assessment of an advertisement featuring the phrase “THE FASTEST”. By analysing the visuals, subtitles, and an independent technical report together, the Court ruled that the advertisement was misleading and likely to cause confusion.[3]

b.     Practices of the Advertising Board

The Advertising Board (“the Board”) is the primary administrative authority that monitors the compliance of commercial advertisements and promotions with the Law on Consumer Protection and the Regulation on Commercial Advertising and Unfair Commercial Practices, either ex officio or upon complaint.

The Board considers cases to be unfair competition if the expressions used in advertisements contain disparagement toward competing products or create a negative perception against competitors, even if the data utilized is accurate. Furthermore, in alignment with the Court of Cassation, the Board examines the overall nature and accuracy of each individual element in an advertisement to determine whether it is deceptive or misleading to consumers. Within this scope, in a 2021 decision, the Board ruled that an advertisement was deceptive because the survey cited as the basis for the phrase “a vast majority of children in Turkey” was limited to only three cities in Turkey and a small number of participants.[4]

Furthermore, it is essential that advertisements avoid using general and abstract expressions. In a 2022 decision, the Board evaluated phrases such as “No one can hold a candle to it” and “F1 products. All born environmentalists” as general and abstract. The Board ruled that the advertisement was misleading and constituted a breach of fair competition principles, as it exploited consumers' sensitivities in a particular field or their potential lack of information.[5]

Ultimately, both the Court of Cassation and the Advertising Board prioritize the impact of an advertisement on the perception of the “average consumer” over the subjective intent of the advertiser. The core test for compliance with fair competition remains the overall impression created by every textual, visual, and auditory element, and how that impression affects both consumer choices and competitors. However, while digitalization and easier access to information have significantly enhanced the awareness and critical thinking of the modern consumer, this shift has not yet been fully reflected in current judicial and administrative precedents.

3.     Consequences of Unfair Competition

a.     Legal Actions for Unfair Competition

Pursuant to Article 56 of the TTK, a person whose interests are harmed by unfair competition may request: (i) the determination of whether the act is unfair, (ii) the prevention of unfair competition, (iii) the elimination of the material situation resulting from the unfair competition, including the correction of misleading statements and the destruction of the tools and goods effective in committing the unfair competition, and (iv) the compensation of damages if fault is present.

In claims regarding the determination of an act of unfair competition, the prevention of unfair competition, and the rectification of the resulting material situation, the mere existence of a violation is sufficient; the fault of the advertiser is not examined. Indeed, this practice aligns with the principle that a prudent merchant must compete in accordance with the rule of honesty.

It is essential for companies to take the most accurate legal action within the prescribed time limits regarding unfair competition. To prevent irreparable damages, an interim injunction should be requested without waiting for the trial process to immediately halt the competitor's unfair activities. Furthermore, it is critical to comply with the 1-year and 3-year statutes of limitations for claiming material and moral damages.

b.     Sanctions of the Board

The Board may issue decisions for the suspension of advertisements, the publication of corrections, or interim suspension for up to three months, either jointly or separately, against market players who act in violation of the legislation. Depending on the nature of the violation, the medium in which it occurred, the extent of the damages, the benefit gained, and the economic status of the perpetrator, the Board is also authorized to impose administrative fines ranging from 100,000 to 40,000,000 TL.[6]

Specifically, regarding online violations, if the relevant content is not corrected or removed within 24 hours, the Board may block access to the content or, in case of technical necessity, to the entire website. With these powers, the Board aims to establish a deterrent oversight mechanism for both the protection of consumers and the prevention of unfair competition in digital and traditional media.

4.     Risk Management and Recommendations

In recent years, advertising violations have evolved beyond being mere legal disputes into significant risks that can lead to administrative fines, access blocks, and irreparable reputational damage. Therefore, it is essential for businesses to systematically implement certain fundamental rules in their advertising and promotional activities to minimize legal and financial risks without losing their competitive edge:

• Seeking Legal Opinions: To ensure compliance with the legislation, support should be obtained from specialized legal experts to review every expression used in the text and visuals of advertisements and promotions prior to publication.
• Substantiating Claims: For any claim such as "the best," "the first," "the only," or "number one," businesses must have reports and surveys based on up-to-date, independent, and scientific data ready before the advertisement is launched. Furthermore, consumers should be informed within the advertisement that these claims are based on such data.
• Avoiding Disparagement: Competitors' trademarks or distinguishing marks should not be disparaged, even indirectly; in any comparisons made, the potential impression on the "average consumer" must first be evaluated.
• Transparent Discount Management: In discounted sales, the "previous price" must be clearly determined; consumers should not be misled, and the lowest price applied within the last 30 days must be taken as the basis.
• Digital Evidence Security: Evidence for social media posts or website content should be secured with timestamps using Notary Determinations or technical reporting methods.

5.     Conclusion

While advertising and promotional activities are an essential part of competitive strategies, practices in violation of the legislation can lead to undesirable legal, financial, and operational consequences. Therefore, when planning advertising activities, current applications of unfair competition legislation must be taken into account; the cost-benefit balance should be meticulously examined within the legal framework, and a proactive compliance approach should be adopted accordingly.

In this context, conducting a legal pre-assessment of advertising and promotional campaigns before they are launched—and performing compliance audits with respect to legislation and current precedents where necessary—will provide a significant protection mechanism in terms of mitigating the legal risks companies may face. Otherwise, advertising activities may cease to be merely a commercial tool and transform into a significant source of legal risk.

Efe Kınıkoğlu, Senior Partner

Nejan Yılmaz, Associate

Tan Tümay, Trainee Lawyer