Facilitation of No-Poach Agreements by Third Parties: Coship/Nevzat Denizcilik Decision
Introduction
No-poach agreements, which have become one of the most prominent concepts in global competition law in recent years, are defined in the Glossary of Competition Terms[1] as “agreements, whether direct or indirect, whereby one undertaking agrees not to make job offers to, or hire, the employees of another undertaking.” No-poach agreements may differ from one another in terms of their scope and subject matter. For example, a no-poach agreement may directly prohibit undertakings from making job offers to each other’s employees, or it may require that decisions regarding a candidate in the recruitment process be submitted to the approval of the other undertaking. Similarly, these agreements may cover only current employees or may be structured more broadly to include former employees as well.
Pursuant to the Guidelines on Competition Violations in Labor Markets (“Guidelines”) published on 03.12.2024, no-poach agreements that restrict employee mobility constitute an infringement by object and are treated as a form of cartel conduct.
The Guidelines also acknowledge that no-poach agreements may be concluded directly between undertakings or facilitated through a third party. Accordingly, if a third party mediates the agreement or facilitates its conclusion, such third party may be considered a party to the violation depending on the specific circumstances of the case. However, the Guidelines do not provide detailed explanations or examples regarding the specific roles that may render third parties liable in the context of no-poach agreements.
In its Coship/Nevzat Denizcilik decision[2] , the Turkish Competition Board (“Board”) assessed whether Coship Denizcilik San. ve Tic. Ltd. Şti. (“Coship”) and Nevzat Aydın Denizcilik Ticaret Ltd. Şti. (“Nevzat Denizcilik”), both operating in the field of human resources services in the maritime sector, played a facilitating role in the no-poach agreement between Fatih Römorkörcülük ve Denizcilik Hizmetleri A.Ş. (“Fatih Römorkörcülük”) and Atlantik Gemi İşletmeciliği A.Ş. (“Atlantik”), and whether they could be held liable for the alleged infringement.
This article examines the Board’s Coship/Nevzat Denizcilik decision (“Decision”) with the aim of outlining how the Board may approach third-party liability in no-poach agreements.
Phases of the Case, Parties and Relevant Market
In its meeting dated 04.02.2021, the Board decided to initiate a preliminary investigation into Fatih Römorkörcülük and Atlantik based on complaints alleging that the undertakings had violated Law No. 4054 by agreeing not to employ each other’s employees. Within the scope of the preliminary investigation, on-site inspections were conducted at Fatih Römorkörcülük, Atlantik, and Coship.
Moreover, in its meeting dated 29.07.2021, the Board decided to open an investigation into Fatih Römorkörcülük, Atlantik, Coship, and Nevzat Denizcilik to determine whether undertakings operating in the PSV vessel management market had violated Article 4 of Law No. 4054 by agreeing not to employ each other’s employees.
The investigation was concluded through settlement with respect to Atlantik, following the Board’s decision dated 13.01.2022 and numbered 22-03/37-17, and with respect to Fatih Römorkörcülük, following the Board’s decision dated 19.01.2022 and numbered 22-04/56-25. However, the investigation continued for Coship and Nevzat Denizcilik.
As noted in the Decision, several independent undertakings operate in the maritime sector to supply crew members qualified to meet the needs of different types of vessels.
Coship, one of the parties to the investigation, provides crew recruitment services for domestic and foreign undertakings engaged in maritime activities and, in this context, carries out Atlantik’s human resources processes.
Similarly, Nevzat Denizcilik engages in activities such as preparing necessary documents on behalf of shipowners and ship operators, employment, dispatch and management of ship crew, resolution of disputes between existing crew and employers, and ensuring general harmony. Fatih Römorkörcülük’s human resources activities were carried out by Nevzat Denizcilik until 20.07.2020; after this date, Fatih Römorkörcülük established a human resources unit within its own structure.
Within this framework, in its market assessment and considering the fields of activity of the parties, the Board emphasized that the allegations concerned the restriction of mobility of personnel working on PSV vessels through an agreement preventing the transfer of such personnel between competing undertakings. The Board also underlined that PSV vessels differ from other types of vessels in terms of their purpose and operational characteristics. Accordingly, the Board observed that the relevant product market could be defined as the “market for the supply of crew to vessels providing support services for natural gas/oil exploration activities within the territorial waters and continental shelf of the Republic of Türkiye.” Nonetheless, the Board refrained from making a definitive market definition for the purposes of the case.
When examining the findings in the Decision, it is observed that in the correspondences where Coship was also a party, there are statements indicating that there was an agreement between Fatih Römorkörcülük and Atlantik regarding the transfer of employees and that Coship conducted its activities knowingly, taking this situation into account. In contrast, it is noted that no other evidence was found regarding Nevzat Denizcilik apart from a single correspondence. The Board also observed that the service agreement between Nevzat Denizcilik and Fatih Römorkörcülük did not overlap with the infringement period established in the settlement decisions. Taking these factors together, the Board concluded that the evidence was insufficient to establish that Nevzat Denizcilik was a party to, or facilitated, the no-poach agreement between the competing undertakings.
Assessment of the Board
Firstly, the Board noted that undertakings that are not direct parties to a violation, and even those that do not operate in the same market, may still be held liable and sanctioned for their participation in the violation of Law No. 4054 pursuant to the joint liability provisions of the Misdemeanors Law No. 5326.
In this context, the Board referred to its Çorum Building Inspection decision[3] , in which it examined allegations that building inspection firms in Çorum had restricted competition in the market through a system enabling price-fixing and customer allocation. In the said decision, the Board emphasized that the support provided by Duru Bilişim constituted an essential component for the functioning of the system established among the inspection firms. Accordingly, the Board concluded that Duru Bilişim played an effective role in the commission of the violation of Article 4 of Law No. 4054, acted with knowledge of its conduct, and intended the resulting outcome.
Taking into account its assessments in the Çorum Building Inspection decision, the Board stated that for an undertaking to be penalized as a facilitator of conduct constituting a violation of Article 4 of Law No. 4054 pursuant to Article 14 of the Misdemeanors Law No. 5326, (i) the undertaking in question must be intentionally involved in the violation and (ii) must make a substantial contribution to the implementation and/or continuation of the violation.
On the other hand, the Board stated that in the present case, it found no indication that Coship and Nevzat Denizcilik engaged in any conduct aimed at committing the violation, other than evaluating personnel applications in accordance with the criteria determined by Atlantik and Fatih Römorkörcülük and sharing the personnel lists they created for this purpose with each other. For this reason, the Board concluded that the violation occurred solely and entirely between Atlantik and Fatih Römorkörcülük.
In any event, taking into account the sensitivity of labor markets and the nature of the sector in which the undertakings operate, the Board decided to issue an opinion to Coship and Nevzat Denizcilik, reminding them to exercise due care in their human resources activities so as to avoid participating in or facilitating any agreement or concerted practice that may constitute a violation under Law No. 4054.
Conclusion
No-poach agreements can be concluded directly between undertakings or through a third party. However, the Guidelines do not provide detailed explanations or examples regarding which roles third parties may assume that would render them liable as parties to no-poach agreements. Therefore, it is expected that the conditions under which third-party undertakings providing services in the field of human resources can be held responsible for competition violations that may arise in labor markets will be shaped by Board decisions.
In the Coship and Nevzat Denizcilik decision, the Board examined whether Coship and Nevzat Denizcilik had played a facilitating role in the no-poach agreement between Fatih Römorkörcülük and Atlantik. Based on the findings obtained within the scope of the file, the Board concluded that Coship and Nevzat Denizcilik did not engage in any conduct contributing to the implementation of the violation, other than assessing personnel applications in line with the criteria set by Atlantik and Fatih Römorkörcülük and sharing the personnel lists they prepared for that purpose. Accordingly, the Board decided not to impose any sanctions on the said undertakings and instead issued a cautionary opinion to them.
On the other hand, considering the Board’s rigorous approach towards competition infringements in labor markets, it is foreseen that the standard of diligence expected from third parties will increase in the future, and that undertakings providing human resources services will be expected and required to act more carefully so as not to participate in or facilitate any agreement or concerted practice that may constitute a violation under competition law.
- Glossary of Competition Terms, Revised Sixth Edition, 2019, p. 51.
- Board’s decision dated 12.05.2022 and numbered 22-21/353-151.
- Board’s decision dated 02.12.2013 and numbered 13-67/929-391.
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