The Turkish Competition Authority's ("TCA") much-debated decision on its banking investigation concerning information exchange between competitors on syndicated loans ("Syndicated Loan Decision") still resonates with further discussions on procedural aspects of antitrust proceedings in Turkey. Lastly, the Administrative Court rendered its decision on the admissibility of telephone conversations recorded without explicit consent and declared that using the recordings of instant conversations as a source of evidence in antitrust proceedings should be deemed lawfully collected so long as the content of the conversations infringes competition law rules and the lack of alternative proof can be ascertained. Before delving into the details of the decision, it would be useful to recall the background story in Syndicated Loan Decision of the TCA.
Background of the Case
On April 20th, 2016, the TCA decided to launch a fully-fledged investigation against 13 banks in order to examine whether these banks providing their corporate customers with loans exchanged commercially sensitive information (e.g. loan conditions, content of financial transactions) and signalled their future market behaviours to each other. At the end of the investigation, the TCA found two international banks as the parties to an anti-competitive agreement/concerted practice with the leniency applicant and decided to impose administrative monetary fines to these two banks. The leniency applicant benefitted from the full-immunity for administrative fines as the whole investigation was constructed on the ground of its leniency application.
The leniency application giving path to the TCA's syndicated loan investigation included phone conversations (documented in written format) between employees of the leniency applicant and the employees of its competitors. The relevant conversations were mainly made over the desk phones of certain employees and recorded by the leniency applicant without any investigation or prosecution conducted by competent authorities (i.e. judge, prosecutor) against the parties to the conversation. The TCA evaluated these recordings and treated them as lawfully collected evidence for the purposes of its investigation. That said, admissibility criteria for such evidence was not comprehensively scrutinized under constitutional and criminal principles.
One of the banks on which the TCA imposed administrative monetary fine at the end of its investigation appealed the TCA's decision and discussed the admissibility of phone conversations recorded without any investigation or prosecution by competent authorities in antitrust proceedings.
What Does the Administrative Court's Decision Set Forth?
As per the Administrative Court's decision, we understand that the appellant bank primarily argued that the recordings of phone conversations used as a source of evidence in TCA's investigation were collected without explicit consent of the relevant employees and, thus, these recordings should be deemed illegally collected findings in lack of any judge or prosecutor ruling and disregarded within the scope of the TCA's syndicated loan investigation. By referring to Article 38 of the Turkish Constitution (Principles on Crimes and Punishments), the appellant bank stated that illegally collected findings cannot be admitted as evidence and such constitutional principle cannot be ignored in antitrust proceedings.
In this respect, the Administrative Court agreed with the appellant bank on the fact that there is no sufficient proof demonstrating that the relevant phone conversations were recorded upon the consent of the parties to such conversation. Therefore, they should be deemed as unauthorized, instant recordings. Having said that, although the Administrative Court assumed that the TCA used phone conversations recorded without consent of the parties to the conversation as source of evidence, it separately evaluated whether such recordings could be deemed as lawfully collected evidence in antitrust proceedings. The Administrative Court rendered its final decision by referring to several decisions of the Court of Cassation.
In this regard, one of the decisions of the Court of Cassation explicitly states that in lack of a judge ruling, findings brought forward by recording conversation between two individuals without their consent cannot be regarded as a lawfully collected evidence in criminal proceedings.
Another decision of the Court of Cassation argues that any conversation between individuals can only be recorded by an authorized third party upon the decision of a competent authority within the scope of an investigation or prosecution. That said, the same decision provides an exception for this general principle: In terms of a crime committed against an individual, that individual could record relevant conversations only if there is no alternative way to collect evidence on the alleged crime and no opportunity to inform competent authorities in instant cases.
As a result, the Administrative Court evaluated that interests
in protecting competition by proving an infringement outweigh the
interests in protecting freedom of communication only where an
infringement cannot be proven in an alternative way. In this
respect, the Administrative Court concluded that recordings of
phone conversations could be deemed as lawful evidence in antitrust
proceedings if these recordings include instant liaisons that
infringe competition law rules.
Potential Consequences of the Administrative Court's Decision
Under Turkish competition law regime, infringements results with an administrative sanction rather than a criminal one, thus, violations under Law No. 4054 on Protection of Competition ("Turkish Competition Act") are characterized as misdemeanours. Therefore, where the Turkish Competition Act remains silent, the general principles under Law No. 5326 on Misdemeanours ("Turkish Misdemeanours Act") are applied. Furthermore, neither the Turkish Competition Act nor the Turkish Misdemeanours Act can be separated from fundamental principles of constitutional and criminal law essentials. In this respect, given that both the Turkish Competition Act and the Turkish Misdemeanours Act stay silent regarding the admissibility criteria of evidence in antitrust proceedings, the fundamental principles under the Turkish Constitution and the Turkish criminal procedural rules should be carefully applied. Accordingly, it is evident that illegally collected findings should not be used as evidence based on the principle that fruit of the poisonous tree is poisonous.
At this point, although the Administrative Court's decision took into consideration the fundamental principles of constitutional and criminal law, it provided an exemption for admissibility of evidence in antitrust proceedings. However, arguing that public interests in protection of competition may outweigh fundamental freedoms under certain circumstances could lead to hazardously wide interpretations. Furthermore, the opportunity to use recordings of phone conversations in antitrust proceedings might provide additional incentives to the undertakings to record all conversations of their employees without obtaining their consent and this might create an harmful oppression on employees' freedom of communication.
At this stage, the Administrative Court's decision has the potential to create further controversies for admissibility of evidence in antitrust proceedings in Turkey. That said, the decision is open to another appeal, and thus, the next steps should be closely watched.
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