Article 15 of Law No. 4054 on the Protection of Competition authorises the Competition Board to conduct on-site investigations at the premises of undertakings, if it deems it necessary. During the on-site inspection, Competition Authority officials assigned by the Board to conduct the inspection, are entitled to (i) examine the books, any paperwork and documents of undertakings and associations of undertakings, and take copies if needed; (ii) request written or oral statements on certain issues; and (iii) conduct on-site inspection of any assets of undertakings. The relevant undertakings or associations are obliged to provide copies of the requested information, documents, books and other instruments. In case an on-site inspection is hindered or likely to be hindered, the on-site inspection might be conducted with the support of a decision of a criminal magistrate.
In this respect, pursuant to Article 16(1)(d) of Law No. 4054, hindering or complicating the on-site inspection would lead to the imposition of a fixed fine of 0.5% of the turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision will be taken into account). This fine would in any event not be less than TL31,903 (approximately $4,468 or €4,135 at time of writing).
Additionally, further to Article 17(1) of Law No. 4054, this could also lead to the imposition of a fine of 0.05% of the turnover generated in the financial year preceding the date of the fining decision for each day of the violation.
Against this background, the Board has been recently developing its case law with respect to the hindering of on-site inspections. Below is the summary of the recent four most prominent decisions of the Board that shed light on the Board’s approach and what constitutes ‘hindering’.
Mosaş decision
The Board decided to impose an administrative fine on Mosaş Akıllı Ulaşım Sistemleri AŞ. Mosaş hindered the on-site inspection conducted pursuant to the preliminary investigation into the traffic signalling market (The Board’s decision of 21 June 2018, no. 18-20/356-176).
The Board took into consideration the following events during the on-site inspection at Mosaş’s premises, while rendering its decision:
- Internet access was disconnected twice while the on-site inspection was being carried out;
- E-mails under review were being deleted;
- A Mosaş employee was communicating about Mosaş through an online chat group over the phone. The relevant online conversations were examined through the relevant employee’s office computer and it was revealed and obtained that (i) photographs of Authority officials were shared through the chat group, and (ii) the conversations include statements such as, ‘disconnect the internet so they cannot access’, ‘break the modem device,’ and ‘erase emails.’
- A company official and in-house lawyer arrived on-site, informing the case handlers that they would hold a meeting to assess whether allowing the on-site inspection to continue would be in Mosaş’s best interests and that they may decide to halt or discontinue the on-site inspection.
- Subsequently, as the Authority officials were taking screenshots showing that the reviewed e-mail messages were being deleted, there was a power outage at the inspection site. After a while, despite electricity being restored, the internet connection could not be sustained.
- Although the Authority officials requested the company officials to discuss and solve the internet connection problem with their internet service provider, the connection could not be re-established –the company gave explanations such as the internet service provider did not answer their calls, and that they did not know the service numbers of the provider. Following the on-site inspection, the Authority requested information from the relevant provider on that front and it has been informed that there were no systematic outages in the area and there was no failure logging of Mosaş at the provider’s call centre.
- Despite being repeatedly informed of the penalties for obstructing on-site inspection, Mosaş representatives continued to prevent the Authority officials from conducting the inspection. In fact, the computer’s system units were taken away by a Mosaş representative and thus, the documents obtained during the on-site inspection until that stage, which were copied to a USB, could not be seized by the Authority.
- Following negotiations between the Authority officials and Mosaş representatives, the Authority officials were allowed to copy the relevant documents, during which Mosaş personnel recorded the process on video.
- Lastly, Mosaş representatives also refrained from signing the affidavit documenting the hindrance and obstruction of the on-site inspection.
In this respect, the Board concluded that Mosaş had hindered the on-site inspection, and thus, decided to impose an administrative monetary fine on Mosaş in the amount of TL81,500.87. The Board further imposed a total fine of TL138,551.53 for every day that Mosaş refrained from inviting the Authority to conduct the on-site inspection starting from the day of hindering the on-site inspection (ie for 17 days) (The Board’s decision of 5 July 2018, no. 18-22/378-185).
Subsequently, Mosaş requested the Board to reassess the relevant decisions based on the grounds that (i) the on-site inspection was not carried out with a decision from a criminal magistrate; (ii) the affidavits prepared after the on-site inspection lacked the undertaking’s signature and Mosaş was not informed about the Authority’s and Board’s powers to request for information and on-site inspection and the consequences of these powers; and (iii) Law No. 4054 does not envisage for submission of a written invitation by the hindering undertaking to the Authority and this has not been provided within the affidavit for hindering/complicating the on-site inspection. However, the Board found that there is no need to remove, revoke, amend or issue a new action on the relevant decision based on the events that took place during the inspection provided above (The Board’s decision of 8 August 2018, no. 18-27/439-209).
Ege Gübre decision
The Board concluded that Ege Gübre hindered the on-site inspection in the scope of the pre-investigation initiated in order to evaluate the price increases in the fertiliser sector by preventing the case handlers’ inspection of a personal email correspondence which was directly related to the competitive behaviour subject to the pre-investigation (The Board’s decision of 7 February 2019, no. 19-06/51-18).
The Board’s decision was based on the following factors:
- Ege Gübre’s general manager had been using a personal email account with a superonline.com extension that was directed to a business email account.
- The case handlers reviewed the relevant account by limiting their inspection to the subject matter of the pre-investigation and identified an email message of November 2018 including a statement that ‘İgsaş [another fertiliser producer] stated that it will change its prices.’
- Once the case handlers printed out the relevant correspondence, the company officials refrained from handing over the relevant document by indicating that it was a personal correspondence, and prevented the case handler’s accessing the document.
- Although the company officials allowed the case handlers to continue their review after separating the personal and the business email accounts, the case handlers informed the company officials that this conduct would be deemed as hindering the on-site inspection.
Ege Gübre contended that the case handlers requested access to a personal email correspondence, which was mistakenly located within the general manager’s business account without any legal basis or court decision. They argued that this would constitute an infringement of the constitutional right to privacy and freedom of communication and rejected the related content of the on-site inspection affidavit. The Authority conducted another on-site inspection at Ege Gübre’s premises by obtaining an injunction decision from the Criminal Judgeship of Peace. During the second on-site inspection, the case handlers reobtained the relevant email message and detected another email including Igsaş’s current and future prices.
Accordingly, Ege Gübre submitted a further statement to the Authority mainly arguing that (i) the relevant personal email is included in a corporate email correspondence due to a technical error and thus was not provided, (ii) since the printouts were obtained from a personal account, they do not have the nature of evidence and (iii) they have allowed easy access to the Authority officials during the inspection.
The Board concluded that Ege Gübre’s representatives’ relevant conduct constituted hindering on-site inspection and imposed an administrative monetary fine.
Siemens decision
During the on-site inspection at Siemens’ premises conducted in the scope of a pre-investigation, the case handlers requested to conduct an electronic review based on a keyword-based search and a specific time period covering all Siemens Healthcare employees. The company officials, the information technology supervisors, informed the inspectors that they were using Microsoft Office 365 (O365) and they need to consult the global headquarters on how to conduct the requested review through this application. The headquarters indicated that the review could be conducted via the ‘eDiscovery’ feature of the O365 application, which requires necessary permissions at a global level.
Subsequently, the case handlers requested access to the respective feature for the purpose of their review covering employees in Turkey. Although the case handlers clarified that (i) the review would be limited to Siemens Healthcare users, and (ii) the undertaking’s representatives can be present during the review in order to eliminate any potential legal concerns, such request could be fulfilled during the on-site inspection on the grounds that such review would mean access to all employees’ information within the EU which may, in turn, give rise to risks in other jurisdictions.
To avoid the risk of any unlawful conduct in another jurisdiction, the company representatives also indicated that if individual date and search parameters are shared with Siemens, the requested information set could be prepared and submitted before the Authority. However, the Authority officials, by referring to their authorities, informed Siemens that the on-site inspection cannot be conducted under these circumstances and all of the above will be recorded on the on-site inspection affidavit.
Successively, Siemens has submitted a petition before the Authority indicating that the ‘immediate’ access to the requested database could not be granted during the on-site inspection, as it is impossible to limit the scope of the review solely to Turkey due to global informatics infrastructure and therefore, access would have resulted in a breach of safety protocols, contractual obligations, intellectual property matters and the data protection laws in force within the EU, the US and rest of the world. Siemens added that it has been exploring further methods to comply with the Authority’s request and submitted certain proposals to grant access limited to Turkey. Thereon, based on the respective set of solutions, the case handlers conducted another on-site inspection at Siemens’ premises.
In its decision (The Board’s decision of 7 November 2019, no. 19-38/581-247), the Board indicated that the fact that the system has not been altered between the first and second on-site inspections can be assured. However, since the eDiscovery feature allows the review of the e-mails categorised under ‘hard delete’ up to 30 days before 2 October 2019, the case handlers have found that the review conducted during the second on-site inspection –during which they were granted access to the system –covers a shorter period compared to the first on-site inspection. Therefore, the Board concluded that it is not possible to consider the data gathered during the two on-site inspections as one and the same. The Board also indicated that during the initial on-site inspection, Siemens representatives also gained access to the keywords used by the case handlers, and therefore, the undertaking has had a chance to conduct its own keyword search via the eDiscovery feature.
The Board recalled that refraining from hindering and/or obstructing the on-site inspection does not only mean that the investigated undertaking should submit solely the information and documents which it grants access to, within the time frame and manner it sees suitable; but also encompasses the inspection to be conducted at the undertaking’s premises on the date, scope and within the units that the Authority considers as necessary.
In this regard, the Board decided to impose an administrative monetary fine on Siemens at the rate of 0.5% of Siemens Healthcare’s 2018 Turkish turnover for hindering the on-site inspection, and also, a proportional fine at the rate of 0.05% for each day of violation starting from the next day of the on-site inspection until the second on-site inspection.
Unilever decision
Similar to the facts surrounding the Siemens decision above, during the on-site inspection at Unilever’s premises in the scope of a pre-investigation based upon the allegation that Unilever has prevented competing products’ sales at the final sales points, the case team requested access to Unilever’s email system for a keyword based review for specific time periods by way of using the eDiscovery program. The relevant permission for such access could only be granted after approximately eight hours from the start of the on-site inspection. The decision sets forth various explanations provided by Unilever for the delay on this front, including but not limited to the global nature of the authorisation to be granted for such access, the jurisdiction of the case team to review global data, the burdensome process of separating Turkey-specific data from global data.
The Board referred to the 13th Chamber of the Council of State’s decision of 22 March 2016 (no. E. 2011/2660, K.:2016/775), which concluded that even delaying the on-site inspection for 40 minutes is sufficient for the risk of spoliation of evidence that could be useful in the pre-investigation. Unilever hindered the on-site inspection for approximately 7.5 hours by way of not granting access to the information system. To that end, the Board decided to impose a turnover-based administrative monetary fine on Unilever (The decision of 7 November 2019, no. 19-38/584-250).
Conclusion
The Board’s recent decisions summarised above demonstrate the different preventative measures faced by the Authority during the on-site inspections. Also, specifically, Siemens and Unilever cases reveal that global companies face difficulties granting access to a larger global digital infrastructure due to their internal procedures and their legal duties in other jurisdictions. All in all, these cases ultimately provide guidance for the undertakings for do’s and don’ts during the on-site inspections.