Freestanding bulk C-doped GaN wafers grown by halide vapor phase epitaxy are studied by optical spectroscopy and electron microscopy. Significant changes of the near band gap (NBG) emission as well as an enhancement of yellow luminescence have been found with increasing C doping from 5 × 1016 cm−3 to 6 × 1017 cm−3. Cathodoluminescence mapping reveals hexagonal domain structures (pits) with high oxygen concentrations formed during the growth. NBG emission within the pits even at high C concentration is dominated by a rather broad line at ∼3.47 eV typical for n-type GaN. In the area without pits, quenching of the donor bound exciton (DBE) spectrum at moderate C doping levels of 1–2 × 1017 cm−3 is observed along with the appearance of two acceptor bound exciton lines typical for Mg-doped GaN. The DBE ionization due to local electric fields in compensated GaN may explain the transformation of the NBG emission.