Turkey: Obstruction Of A Competition Law Investigation: Don't Keep The TCA Waiting

It is a rare occasion, though in an increasing frequency, where competition law becomes a hot topic in Turkey's mainstream press. Last weeks of 2019 was one of those rare occasions. On November 7, 2019, Turkish Competition Board imposed a daily 0.5% fine on Google's Turkish turnover for not complying with the obligations set forth in the Turkish Android case which was decided on September 19, 2018 and later there was news about Google's ceasing to issue licenses for new Android phone models sold in Turkey¹. And lastly on December 16, 2019, the Competition Authority issued a press release which in short states that Google must comply with the decision and take necessary steps as it did in the EU and in Russia.

As the clash between the Turkish Competition Authority and Google intensifies, we could not let two interesting decisions of the Board regarding slip into the abyss. The Board fined Unilever Sanayi ve Ticaret Türk Anonim Şirketi ("Unilever Turkey") for hindering on-site inspection and fined Turkish Pharmacists' Association ("TPA") for hindering on-site inspection and also imposed a daily monetary fine for not providing the necessary documents. Here is what happened:

What Happened at Unilever?

The Competition Board has initiated a preliminary investigation in respect of Unilever Turkey on December 17, 2018. As part of the preliminary investigation, the Competition Board officers conducted an inspection at Unilever premises on June 18, 2019. During the on-site inspection, they have concluded that the Unilever acted in a way that hinders and/or complicates the preliminary investigation. As a result, the Board imposed an administrative monetary fine of 0.5% on Unilever's Turkish turnover².

In the decision it was stated that the case handlers entered the Unilever building at 10:10 am and initiated the inspection. During the procedure they requested to examine e-mail correspondence belonging to Unilever employees, which is a very normal procedure. Unilever employees stated that this examination should be done through an e-Discovery programme and required permission from global level. The relevant permission was given at 17:45 p.m. and e-mail records of Unilever employees could only be examined nearly seven and a half hours later.

Based on the report of the case handlers, the Turkish Competition Board concluded that, since this constitutes an obstruction to the inspection pursuant to Article 16/1 (d) of the Law numbered 4054 on the Protection of Competition (the "Law No. 4054"), an administrative monetary fine shall be imposed on Unilever. The amount of the fine, which is 0.5% of the turnover in Turkey, is automatic and the Board does not have any discretion on setting the amount. The 0.5% amount can be disproportionate, especially if at the end of the day it is found out by the Board that there was no restriction of competition at all as a result of its investigation, which true for many cases.

What Happened at TPA?

The preliminary investigation was initiated on October 17, 2018 in respect of TPA and Istanbul Chamber of Pharmacists in order to find out whether these association of undertakings violated the Law No. 4054.

The case handlers entered the TPA building on June 18, 2019 at 10:00 a.m. in order to conduct an on-site inspection. It is understood from the decision that the TPA officials consulted their lawyers and the TPA lawyer indicated that the on-site inspection can only start with the presence of the TPA General Secretary and the General Secretary arrived at 10:50 a.m. and the on-site inspection could only be started at 11:20 a.m.. In its decision the Turkish Competition Board concluded that an hour and twenty minutes of delay of the on-site inspection constituted an obstruction of the inspection and the explanations set forth by TPA does not justify this delay. Therefore, the Board imposed an administrative monetary fine of 0.5% of the TPA's annual turnover.

Moreover, during the on-site inspection the case handlers took copies of the minutes of advisory committee meetings which were in a form of transcripts of voices recorded during these meetings and a draft contract. TPA did not allow the case handlers to take copies of the participant lists arguing that the meeting minutes are word-by-word transcripts and of private nature which include personal opinions of the participants on several different subjects. TPA also argued that the draft contract included commercially sensitive information of a third party. The Board stated that not providing the relevant information and the documents also constituted hindering the on-site inspection and imposed a daily administrative monetary fine of 0.05% of the TPA's turnover, starting from the day following the on-site inspection (19.06.2019) until the date TPA submit the relevant information and the document to the Turkish Competition Authority.

TCA's Investigative Powers

Article 15 of the Law No. 4054 grants the Turkish Competition Authority a broad set of powers of scrutiny. The Authority is entitled to request the copies of information, documents, books and other instruments requested without any delay. In addition, the Authority is entitled to request written or oral statement on particular issues from the undertakings and perform on-site examination of any assets of undertakings.

As we see from Unilever and TPA cases, it is important not only to provide access to documents during an on-site inspection but also to provide them in a timely manner. The Board does not hesitate to trigger the proceedings which will result in a fine. For example, even a 40 minutes delay has been found to be obstructing the inspection and as the case³ brought before the Council of State it was concluded that a delay of 40 minutes could seem to be a short time but it is enough for removing of such materials subjected to an inquiry from the building in which the examination is conducted. Similarly, in the recent MOSAS case⁴, the Board issued a fine for causing 2 hours delay of the inspection by cutting of the internet access and power and deleting certain files from the computers. The MOSAS case was also interesting as the case handlers also inspected Whatsapp communications of one employee with other employees by accessing them through desktop application, which is a rare occasion. Whatsapp communications included messages such as "cut the internet", "disconnect the modem", "delete the e-mails."

As it was in the case for TPA and also in the Turkish Google Android case, Article 17 of the Law No. 4054 entitles the Board to impose daily monetary fine of 0.05% of the previous year's turnover in cases where the undertakings;

- Fail to comply with an injunction decision of the Board or with commitments given,

- Hinder or complicate the on-site inspection,

- Fail to submit the information or documents requested by the Authority.

Daily fines are fairly rare in the Turkish Competition Board's more than 20 years of history. But as we see from the Turkish Google Android and TPA decisions which are very recent, the Board will not act reluctant use this weapon against the undertakings that do not comply.

So, there is one simple rule of thumb: "Provide the requested information and do it ASAP!"

Footnotes

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