Do Boycott Calls Constitute Unfair Competition? An Assessment Within the Framework of Commercial Law

The power of individuals to influence public opinion has been increasing day by day, parallel to the widespread use of social media. It should be considered a significant development that individuals have the ability to directly create and determine agendas regarding issues where they have been subjected to unfairness or injustice, experienced dissatisfaction, and discontent. At the same time, these individuals, in their capacity as consumers or users, can make numerous positive or negative comments about businesses from which they have acquired goods or services. These comments can turn into boycott calls, citing various political, social, and cultural reasons, not related solely to the goods or services provided by the businesses. In addition to consumers, rival commercial enterprises can also engage in boycott and boycott-like behaviors and practices as a method to gain a competitive advantage. This article will examine boycott calls within the framework of the unfair competition provisions in Article 54 of the Turkish Commercial Code.

1.Boycott

Boycott can be defined as behaviors in commercial life aimed at not doing business with certain individuals or commercial enterprises or avoiding organized economic relations with them.[1] Boycott calls can be made by rival commercial enterprises or organizations as well as by consumers/customers.

The fundamental motivation of individuals or groups deciding to boycott is the belief that the individuals or entities they target deserve to be punished due to reprehensible or harmful behavior or for failing to perform expected actions.[2] There can be various reasons behind boycott calls. Apart from boycotts stemming from criticisms of the goods or services provided by the relevant commercial enterprise, boycott calls can also result from the relationships that commercial enterprises have with political authorities, social reasons, or wartime conditions.

The justifications provided by those making boycott calls can be genuinely valid and accurate, but they can also be malicious. Boycott calls made with unreasonable reasons or malicious intent can lead to irreversible harm to the relevant commercial enterprise, causing much more severe consequences than sanctions imposed by a judicial or administrative authority.[3] For example, the boycotted business may experience a decrease in revenue or may be forced to withdraw its products from the market or may not be able to introduce new products to the market.[4] For all these reasons, the question of whether boycott calls constitute unfair competition becomes significant.

2.Unfair Competition

According to Article 54 of the Turkish Commercial Code (TCC), actions and commercial practices that affect the relationships between competitors or between suppliers and customers in a manner contrary to honesty and which are deceptive or in other forms contrary to the rules of fairness are unfair and illegal. Article 55 provides examples of actions and commercial practices contrary to honesty.

Some of the main examples include advertisements and sales methods that are contrary to the rules of fairness, defamation with false, misleading, or unnecessarily offensive statements about others, and making false or misleading statements about one’s own commercial activities. It should be noted that for these behaviors to be considered unfair competition, it is not necessary for the parties to be competitors.

Personal statements and actions do not constitute unfair competition unless they have an impact on the commercial field. For example, if a consumer criticizes a business’s products within their personal circle of friends and advises against purchasing them, this would not fall under the scope of unfair competition provisions. However, if these actions and statements encourage an organized boycott movement, the incident may need to be examined in terms of unfair competition.

3.Boycott from the Perspective of Unfair Competition

Boycott calls made against a commercial enterprise or its products should be examined under the category of “defamation,” one of the behaviors and practices constituting unfair competition, as defined in Article 54 of the Turkish Commercial Code (TCC). The reason for this is that boycott calls often involve statements that the relevant commercial enterprise or its products have done something “bad, wrong, or incomplete.” To determine whether these statements constitute unfair competition, certain criteria need to be considered. Accordingly, if the grounds for a boycott aim to defame without proper cause, if the consequences resulting from the boycott grounds are disproportionate, and if the methods employed by those making the boycott calls are contrary to the law and objective good faith rules, then unfair competition may be in question. [6]

Therefore, regardless of how or by whom it is done, discouraging people from purchasing specific branded products or products produced by a particular commercial enterprise for reasons that fit the criteria mentioned above will be considered unfair competition.

For example, the Ultraslan fan group decided to boycott 28 brands owned by the Koç Group after tensions between Galatasaray coach Fatih Terim and Fenerbahçe president Ali Koç. The grounds for the boycott were emphasized as Ali Koç’s attacks on the Galatasaray community and its values.[7] Ultraslan wanted to express its disapproval by targeting unrelated businesses owned by the rival’s president. Due to the unreasonable grounds and the clear intent to defame, we believe that these boycott calls constitute unfair competition. For example, boycotting a company because its chairman had an extramarital affair, a matter unrelated to the business, would also be considered unfair competition.

If the grounds for boycott calls are objectively accurate, careful consideration should be given to whether unfair competition exists. Boycott calls that serve societal purposes, such as protecting consumers from defective or poor-quality products or preventing child labor, should be considered legal. For instance, Nestlé, one of the world’s leading companies, is frequently the target of boycott calls due to allegations of child labor use. [8]After some time, Nestlé acknowledged that it could not guarantee that no child labor was used on the cocoa farms in its supply chains.[9] Therefore, considering that the grounds for the relevant boycott calls were accurate, it is not feasible to label them as unfair competition.

Boycott calls against various cosmetic companies are widespread due to their continued animal testing. L’Oréal Paris, cited in boycott calls, claims in its statements that it does not test on animals and asserts that it undertakes every effort to prevent such testing. However, the company continues to be listed by PETA (People for the Ethical Treatment of Animals). [10]

Therefore, as long as the relevant boycott calls remain proportionate, they will not constitute unfair competition.

Furthermore, boycott calls made without valid reasons and solely for the purpose of defamation will continue to constitute unfair competition. For example, the act of placing a sign on cars that reads “Boycott Siemens in Turkey” without any valid cause and solely for defamation purposes was deemed unfair competition by the Turkish Court of Cassation. [11]

Commercial enterprises that have suffered or may suffer damages to their customers, credit, professional reputation, business activities, or other economic interests due to boycott calls that constitute unfair competition may demand a determination of whether the act is unfair, the cessation of unfair competition, the elimination of the consequences of unfair competition, the correction of any false or misleading statements if made, and the prevention of infringement. If the boycott calls were made negligently, the affected business may also seek compensation for damages.

4.Conclusion

If boycott calls are made with the intention of unjustifiably defaming, if the methods employed are contrary to the law and good faith rules, or if the consequences resulting from the boycott grounds are disproportionate, then unfair competition may arise.

It is not necessary for boycott calls to be made by rival commercial enterprises for unfair competition to be present; consumer boycotts can also constitute unfair competition.

Boycott calls that serve societal purposes and are made using methods that comply with good faith rules are legally permissible.

[1] Piyasa Ekonomisi Açısından Rekabet ve Haksız Rekabet Hukuku İlişkisi – Dr. Hasan Karakılıç
[2] Tüzel Kişilerde Kişilik Hakkı ve Korunması – Dr. Doruk Gönen
[3] Tüzel Kişilerde Kişilik Hakkı ve Korunması – Dr. Doruk Gönen
[4] Haksız Rekabet Açısından Boykot – Dr. Kemal Şenocak
[5] Haksız Rekabet Hukuku – Prof. Dr. Füsun Nomer
[6] Tüzel Kişilerde Kişilik Hakkı ve Korunması – Dr. Doruk Gönen
[7] https://www.internethaber.com/galatasaraylilar-kocu-neden-boykot-ediyor-iste-boykotun-sebebi-2039950h.htm
[8] https://www.theguardian.com/global-development-professionals-network/2015/sep/02/child-labour-on-nestle-farms-chocolate-giants-problems-continue
[9] https://www.nestle.com.tr/sss/insan-haklari/nestle-kakao-tedarik-zincirlerinde-cocuk-isci-var-mi
[10] https://www.mediapeta.com/peta/PDF/companiesdotest.pdf
[11] Haksız Rekabet Hukuku – Prof.Dr. Füsun Nomer