Constitutional Court's Evaluation of the Competition Board's Authority to Conduct On-Site Investigations
Introduction
In the decision of the Constitutional Court ("Constitutional Court" or "Court") dated 09.11.2022, numbered 2020/67 E. 2022/139 K. (the "Decision"), the annulment of certain articles of the Law Amending the Law on the Protection of Competition No. 4054 ("Law No. 7246") was requested.
These articles are Article 3 of the Law No. 4054 on the Protection of Competition ("Law No. 4054") regarding structural measures, Article 4 regarding the authority of the Competition Board ("Board") to conduct on-site examinations and Article 12 regarding the status of the personnel of the Competition Authority ("Authority"). In the Decision, only the part of Law No. 4054 regarding the appointment of the Authority's personnel as research assistants was annulled and the other provisions did not need to be annulled. In this article, the part of Article 15 of Law No. 4054 regarding the Board's authority to conduct on-site inspections is discussed together with the dissenting votes.
Background
One of the amendments made in Law No. 4054 by Law No. 7246, published in the Official Gazette numbered 31165 on 24.06.2020, is related to the on-site inspection authority of the Board. Under this amendment, it has been regulated that the Authority's experts can examine the records, physical and electronic data, and documents of the enterprise or associations of undertakings, and can take copies and physical samples of them, and the practical application of the Authority which existed before the regulation has been put on a legal basis.
As the Constitutional Court stated in the judgment, as a result of the recent non-stop developments in information technologies, personal data is processed much more and faster than traditional methods. Accordingly, many data that were previously considered unrelated to each other are brought together centrally and the capacity to generate new data increases by subjecting the data to analysis with advanced technological means such as data mining, and personal data becomes a valuable asset for commercial enterprises. On the other hand, the sensitivity regarding the protection of personal data has increased as the attempts of terrorism and criminal organizations to obtain this processed data have also increased with the more widespread processing of data. Therefore, the Personal Data Protection Authority ("KVKK") has become more active in parallel with this sensitivity and continues to do so.
Due to the sensitivities mentioned above, the board authority granted by Law No. 7246 to Authority experts for on-site inspections has been a subject of much debate in terms of the protection of personal data. In this respect, it has been stated that the rule regulated in Article 15/1(a) of Law No. 4054, which allows the copying and sampling of all kinds of documents of undertakings without any limitation, and does not include any guarantee regarding the acquisition and processing of personal data, which also grants access to commercial secrets and customer data of undertakings without any requirement of the representative of the relevant undertaking being present during this process, and the legal certainty of the relevant rule is problematic.
Assessment of the Constitutional Court
During its evaluation of the provision regarding on-site inspections regulated by the Law No. 4054, the Constitutional Court underlines the importance that it attributes to the protection of personal data. First, the court states that personal data is guaranteed under the confidentiality of private life scope in Article 20 of the Constitution. Then, the Constitutional Court examines the scope of the provision and therefore the protection of personal data for individuals. The court notes that the phrase "everyone" is mentioned in Article 20 of the Constitution and therefore the data related to legal entities should also be evaluated within the scope of the article. However, the decision states that as well as real persons with civil rights, legal entities also have legal standing to apply individually.
The Constitutional Court's approach is quite important and remarkable. In fact, the European Data Protection Directive No. 95/46/EC dated February 20, 1995, which is the main law for the Personal Data Protection Law No. 6698 ("KVKK") dated March 24, 2016, excludes data related to legal entities. The court shows that this different approach is justified by the technological developments in recent years and the fact that legal entities are considered personal data owners in the electronic communication sector under the European Parliament and Council Directive No. 2002/58/EC of July 12, 2002.
After determining that legal entities are also within the scope of personal data protection, the Constitutional Court accepts that the provision requested to be cancelled imposes a restriction, and evaluates the conformity of the provision with the Constitution.
Legality Assessment
After referring to Article 20 of the Constitution and stating that personal data can only be processed in cases where the explicit consent of the relevant person is given and it is provided by law, the Constitutional Court states that the competence granted to the Board in the challenged provision is clear and precise in terms of subject, scope, and limitations and therefore complies with the principle of legality since it meets the criteria of clarity, accessibility, and predictability.
Proportionality Assessment
During the proportionality assessment, the Court firstly emphasizes the obligation imposed on the state by the second paragraph of Article 48 and Article 167 of the Constitution to ensure the functioning of free markets and prevent collusion and states that the relevant provision is aimed at a legitimate purpose. In this context, the court notes that healthy and regular functioning of markets is a mandatory requirement and, in some cases, it is difficult to find evidence without the challenged provision, and therefore, the necessity element of the provision is satisfied.
Moreover, it is accepted that the evidence to be obtained by the experts of the Authority will prevent market malfunctions, monopoly, and collusion. In addition to this point, the Constitutional Court states that due to technological developments and data storage methods, it is not possible to examine violations of competition on data such as corporate structures and market power, and therefore, the provision is suitable for this purpose.
Finally, the Court reviews the relevant provision in terms of proportionality and concludes that it is proportionate, taking into account (I) the fact that the review is carried out by submitting documents, (II) the fact that the Board does not have the power to use force, (III) the fact that issues for which the parties were not given the right to defend themselves cannot be relied upon, (III) the fact that the Board is subject to the obligations provided for in the KVKK, and (IV) the fact that special categories of personal data are subject to stricter conditions
Grounds for Dissenting Votes
The reasons for dissent can be grouped under two headings. The first is that the provision whose annulment is requested does not comply with the legality principle, and the second is that the relevant provision is contrary to Article 21 of the Constitution, which regulates the inviolability of the home.
Legality
In the dissenting opinions, it is argued that although the authority to obtain copies and physical samples of all kinds of data and documents has been regulated in the provision whose annulment is requested, the conditions required by Article 20 (3) of the Constitution for how these copies and physical samples obtained will be used, where they will be processed and stored, are not provided with the necessary guarantees, and it is not specified how this information and documents will be used, whether there is an opportunity to object to such information, and the period and procedure for their erasure are not provided, which undermines the certainty requirement of the legality principle and therefore contradicts the legality principle.
Immunity of Domicile
Another reason for dissent is the inviolability of the home. According to this view, places that are not entirely dedicated to work should be considered as part of the home, and decisions of the European Court of Human Rights and the Constitutional Court supporting this view are cited.[1] Therefore, according to the relevant dissenting opinion, if workplaces are considered as part of the home, the express consent of the workplace owner is required for an inspection to be carried out. In cases where the workplace owner does not give express consent, a court order is required. According to the last paragraph of Article 15 of Law No. 4054, if the workplace owner does not allow an inspection, this is considered as obstruction of inspection and the relevant undertaking will face an administrative fine, so even if the undertaking owner consents to an inspection on site, this consent cannot be considered as express consent.
Conclusion
In conclusion, the Constitutional Court accepts the Board's power to conduct on-site inspections as a proportional and lawful means of protecting competition. On the other hand, it is important to note that the Constitutional Court has stated that legal entities can also benefit from the protection provided in the KVKK and that the Board is subject to the obligations set forth in the KVKK. Although the Constitutional Court has taken a clear stance on this issue, the increasing sensitivity regarding personal data suggests that this debate on personal data and the Board's powers will continue.
- Niemietz v. Germany, B. No. 13710/88, 16/12/1992, § 30; Société Colas Est c./France, B. No. 37971/97, 16 April 2002, §§ 40-42; Petri Sallinen and Others v. Finland, B. No. 50882/99, 27/12/2005, § 70, Mehmet Taşdemir, B. No. 2013/3436, 18/5/2016, § 55.
All rights of this article are reserved. This article may not be used, reproduced, copied, published, distributed, or otherwise disseminated without quotation or Erdem & Erdem Law Firm's written consent. Any content created without citing the resource or Erdem & Erdem Law Firm’s written consent is regularly tracked, and legal action will be taken in case of violation.
Other Contents
At the meeting of the Fédération Internationale de Football Association (“FIFA”) held on 16 December 2022, the FIFA Council approved the FIFA Football Agents Regulations (“FFAR”). In the FFAR, various amendments have been made, such as the introduction of a maximum service fee limit that football agents are...
Resale Price Maintenance (RPM) is still considered a hardcore restriction under the recently revised Vertical Block Exemption Regulation (VBER), which means that it cannot benefit from a statutory exemption under Article 101(1) TFEU, unlike certain other types of vertical agreements. However, it has been debated...
In competition law, it is important to accurately determine the concept of undertaking, especially in terms of mergers and acquisitions. Therefore, the concept of economic entity aims to reveal the economic units covered by the undertakings. The relationship between the concept of economic entity and family ties comes...
In these days when the Competition Board (“Board”) frequently imposes administrative fines for preventing on-site inspections and both the Competition Authority (“Authority”) and undertakings take legal and technical measures regarding on-site inspections, a striking development has occurred. In its decision...
Online advertising has become an important source for businesses for promoting products and services and meeting consumers, as a result of the rapid development of information technologies and increase in the use of internet. Delivering targeted messages to consumers at the right time through the digital...
Selective distribution systems refer to a type of distribution system in which suppliers commit to selling the contracted goods or services directly or indirectly to distributors selected based on specified criteria, while the distributors commit not to sell the said goods or services to unauthorized...
Fast-moving consumer goods is undoubtedly one of the sectors that the Competition Authority has been working most intensively since the COVID 19 pandemic. Among the most important developments of this period was the Sector Inquiry initiated on Fast Moving Consumer Goods (“FMCG”) Retailing...
In Turkish competition law, certain types of mergers and acquisitions are subject to Turkish Competition Board’s (“Board”) approval in order to gain legal validity. Pursuant to Article 7 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”), the Board is competent to define mergers and acquisitions...
Recently, the Competition Board (the Board) had imposed administrative fines on banks and financial institutions for failing to respond to the request for information within the scope of a preliminary investigation.[i] The request for information that lays the groundwork for the administrative fine imposed by...
Amazon, a world-famous company, is an e-commerce company that operates the world’s largest online shopping platform. In the backstage, Amazon is a data-driven company whose retail decisions are mostly driven by automated systems, fueled by the relevant market data. That being said, Amazon has a dual...
The right to make on-site inspections is one of the Competition Board’s (“Board”) most important tools for revealing whether Law No. 4054 on the Protection of Competition (“Law No. 4054”) has been violated. The effective use of this authority is quite important in terms of obtaining fruitful results from...
“Harese” is an interesting Arabic word. There is a thorn that camels love very much in the desert. The camel eats the thorn with great greed. So much so that, its mouth bleeds as it eats, but it doesn't stop eating. The taste of the thorn is mixed with the salty taste of its own blood. This mixed taste drives the camel...
Turkey’s leading pay television service provider, Krea İçerik Hizmetleri ve Prodüksiyon A.Ş. (“Digiturk”), is frequently the subject of complaints made to the Competition Authority (“Authority”). In fact, the Competition Board (“Board”) issues a new decision about Digiturk almost every year. In these decisions...
The French Competition Authority (Autorité de la Concurrence), within the scope of the competition law proceeding initiated upon the complaint of Criteo SA (“Criteo”), accepted the commitments proposed by Meta Platforms Inc., Meta Platforms Ireland Ltd., and Facebook France...
While the scope of Competition Board’s (“Board”) power to conduct on-site inspections has increased with the introduction of Guidelines on Examination of Digital Data during On-site Inspections (“Guidelines”), nowadays the amount of monetary fines imposed on undertakings continue to...
The hub and spoke cartel, which is a relatively new type of violation in terms of Turkish competition law, is defined as the indirect exchange of information between two independent undertakings which are horizontal competitors on the supplier or retailer level, through another undertaking...
The settlement mechanism has only recently been introduced to Turkish competition law practice. It entered into force with the amendment made to the Law on the Protection of Competition (“Law”) numbered 4054 on 16.06.2020, and has been in effect for less than two years. In this relatively...
Due to their increasing share in the economy and rapid growth rate, e-marketplace platforms have come under the increasing scrutiny of the Turkish Competition Authority (“Authority”) as well as many competition authorities around the world...
Pursuant to the Amendment Communiqué Concerning the Mergers and Acquisitions Requiring the Competition Board’s Approval (“Amending Communiqué”) published in the Official Gazette dated March 4th, 2022 and numbered 31768, certain amendments have been introduced...
The Competition Board (“Board”) has recently published a reasoned decision in which it evaluated BSH Ev Aletleri Sanayi ve Ticaret A.Ş.’s (“BSH”) request for negative clearance or exemption with regard to its practice of prohibiting authorized dealers from making sales through online marketplaces...
Shahmaran, a Mesopotamian myth, is believed to take place in Tarsus. According to the myth, the shah of snakes is the immortal and omniscient "Shahmaran." Shahmaran is described as a beautiful woman living in her cave with her snakes...
During the COVID-19 pandemic, competitive concerns about the pricing behavior of chain markets, manufacturers, and wholesalers engaged in the retail trade of food and cleaning supplies led to an investigation by...
When the past decisions and the recent decisions of the Competition Board (“Board”) are examined, a significant increase can be observed in the number of decisions where the Board found hindrance or obstruction of on-site inspections. This situation shows that...
The European Commission began investigating the collusive behavior of Credit Suisse, UBS, Barclays, RBS, and HSBC in the Foreign Exchange (forex) spot trading market in 2019. With the recent press release dated 02.12.2021, the Commission announced that the case is now closed...
Digitalization, in particular, necessitates the rewriting of competition law rules. Competition law is at the center all questions regarding e-commerce and digital platforms. The aforementioned platforms, which have become prominent due to innovations in...