Setting Legal Grounds for On-site Inspections
Introduction
Several changes have been introduced to Law No. 4054 on the Protection of Competition (“Law No. 4054”) with Law Amending the Law on the Protection of Competition numbered 7246 (“Law No. 7246”) which was published in the Official Gazette dated 24.06.2020 and numbered 31165.
One of these changes, regarding on-site inspections, set legal footing for the broad range of powers the Authority experts exercise during on-site inspections. As mentioned in previous newsletters, prior to the amendment, it could have been argued that the procedures adopted during on-site inspections were not entirely the same with the procedure set out in the legislation and to an extent were modelled during the on-site inspection depending on the attitudes of employees’ and the extent of use of technological and cloud systems within the inspected undertaking. Pursuant to Article 15 of Law No. 4054, the Board was entitled “To examine the books, any paperwork and documents of undertakings and associations of undertakings, and take copies thereof if needed.” Having said that and although it was not explicitly set out in the relevant Article, in practice and depending on the facts of the case, it was observed that the Authority experts examined personal phones, e-mail accounts, even WhatsApp messages of employees, and did not consider concerns regarding GDPR as legitimate, during on-site inspections. Therefore, as mentioned in previous newsletters, considering the rapid technological changes all around the world, the Authority experts were not able to adopt a literal reading of Law No. 4054 with regards to on-site inspections, which gave them a right to inspect books, any paperwork and documents. With the introduced change, it is specifically stated that the Board may “review undertakings’ books, data and documents kept in physical and electronic form and in information systems, and make copies and printouts of them during on-site inspections,” which was the practice adopted by the Authority experts in any event. Therefore, it can be argued that the relevant change establishes legal grounds for the already applied procedure during on-site inspections which was, to a certain extent, a much debated issue as observed in previous Board decisions.
Prior Board Decisions Regarding On-Site Inspections
Previous case law regarding on-site inspections and administrative fines given to undertakings also showed that such practice was already adopted. In the Groupe SEB decision,[1] an on-site inspection was conducted at Groupe SEB Istanbul Ev Aletleri Ticaret A.Ş., where the Authority experts specifically requested employees that were to be examined to remain at the premises during the on-site inspection. When the computers of such employees were demanded, it was discovered that such employees had left the building and did not return, even though they were asked to. To that end, their e-mail accounts were examined by remote access, but their computers could not be examined. In addition, the Authority experts requested to review the ex-General Manager’s e-mail account who, at the time, was acting as the Groupe SEB Senior Vice President Eurasia, in France. The undertaking claimed that she/he did not work at Groupe SEB Istanbul any longer and, therefore, there was no way to access his/her e-mails legally or technically, and such correspondences were within the scope of the General Data Protection Regulations, as well. In return, the Authority experts continued to demand access to his/her e-mail accounts, stating that his/her job as Senior Vice President Eurasia was closely related to Groupe SEB Istanbul, and his/her work-related correspondences during his/her term of office could not be considered as personal data. Since the Authority experts could not examine the VP’s e-mail correspondences, Groupe SEB İstanbul Ev Aletleri Ticaret A.Ş. was assessed an administrative fine of five per thousand of its 2018 annual gross revenue.
In its Askaynak decision[2], Kaynak Tekniği San. ve Tic. A.Ş. was assessed an administrative fine for hindering the on-site inspection. In this case, during the on-site inspection, Askaynak’s General Manager (“GM”) sent an e-mail from his/her personal mail account to another undertaking’s employee, which was also a party to the preliminary investigation. The said e-mail contained phrases that suggested Askaynak’s General Manager used his/her personal Yahoo e-mail account for work-related purposes and, therefore, was asked to provide access to his/her Yahoo account. The Authority experts also stated that refusal to grant such access could amount to hindering on-site inspection, which could result in an administrative fine. The GM refused to provide such access for a while and, when he/she finally gave permission, the Authority experts noticed that some e-mails had been deleted and could not be recovered. As a result, Kaynak Tekniği San. ve Tic. A.Ş. was assessed an administrative fine of five per thousand of its 2018 annual gross revenue for hindering on the site-inspection.
In Siemens Healthcare[3], after examining certain employees’ computers during an on-site inspection on 02.10.2019, the Authority experts requested to review certain dates and keywords that would include all of the Siemens Healthcare employees. After consulting with the global headquarters of Siemens Healthineers AG, it was stated that such a review could only be done through eDiscovery, which would mean accessing all employees’ information within the European Union, and could not be limited to Siemens Healthcare users only. Accordingly, it was stated that such a review could create different types of risks in different jurisdictions and, therefore, could not be accepted by the company.
Through a later dated letter, Siemens Healthcare offered a procedure to facilitate the requested review which was accepted and, thus, the review was performed on 15.10.2019 in accordance with the offered procedure. The Board explicitly stated that not hindering an on-site inspection did not constitute providing solely the documents and information an undertaking deems fit, when they deem fit. To the contrary, documents, which are deemed to be relevant by the Authority, are to be provided within the timeframe provided by the Authority. To that end, the Board applied an administrative fine of five per thousand of Siemens Healthcare’s 2018 annual gross revenue for hindering the on-site-inspection, along with another fine amounting to five per thousand of its 2018 annual gross revenue for each day Siemens Healthcare did not allow such inspection.
Conclusion
The changes introduced with Law No. 7246 regarding documents and information that may be obtained during an on-site inspection broadened the scope of documents and information to be obtained by the Authority experts. Having said that, it can be suggested that the said change only redacted the practice into Law No 4054, which was being explicitly followed or had to be followed by the Authority experts due to the fact that technology has evolved and according to employees’ manners during on-site inspections. As observed from previous Board decisions, the Authority experts have been requesting access to personal e-mail accounts of employees and accounts stored in cloud systems, while they did not give any credence to undertakings’ concerns regarding GDPR, although Law No. 4054 did not specifically give them such powers in writing to do so. Thus, the question of which documents or information the Authority experts could obtain during an on-site inspection has always been a debated issue. However, with Law No. 7246, the Authority experts are now given explicit and written power to “review undertakings’ books, data and documents, kept in physical and electronic form and in information systems, and make copies and printouts of them during on-site inspections,” which establishes legal grounds for the procedure adopted by the Authority experts during on-site inspections.
[1] The Board’s decision, No. 20-03/31-14, 09.01.2020.
[2] The Board’s decision, No. 19-46/793-346, 26.12.2019.
[3] The Board’s decision, No. 19-38/581-247, 07.11.2019.
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 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...
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...