Turkey: It Is Not Always "Better Late Than Never" When It Comes To Procedural Violations: The Board Imposes Administrative Monetary Fines For Procedural Violations In Two Separate Preliminary Investigations

The Turkish Competition Board ("Board") recently published two reasoned decisions in which it imposed administrative monetary fines on the Turkish Pharmacists' Association ("Türk Eczacıları Birliği" - "TEB"), and Unilever Sanayi ve Ticaret Türk A.Ş. ("Unilever") in two separate preliminary investigations, due to their actions amounting to violation of Articles 14 and 15 of the Law No. 4054 on the Protection of Competition ("Law No. 4054"), respectively.

Article 14 of the Law No. 4054 enables and authorizes the Turkish Competition Authority ("Authority") to seek information and documents from the parties to the case at hand as well as from third parties, including state- owned undertakings, by way of explicitly setting forth deadlines. In a similar vein, Article 15 of the Law No. 4054 stipulates that the Board may conduct on-site inspections at the premises of undertakings and association of undertakings, and may examine documents at such premises and take copies if needed.

In the case of TEB,¹ under the preliminary investigation² conducted against TEB and Istanbul Chamber of Pharmacists to determine whether they had violated the Law No. 4054, the Authority asked for certain information and documents to be submitted to the Authority with its information request of June 28, 2019, and granted time until the close of business on July 5, 2019, for the parties to comply with its request.

Instead of providing the requested information and documents to the Authority within the specified deadline, TEB submitted a petition on July 5, 2019, stating that the Board's request had been added to the agenda of the next meeting of TEB's Central Committee on July 11, 2019, and that the request would be addressed after its evaluation by the Central Committee of TEB. On July 26, 2019, exactly 20 days after the deadline set by the Authority had expired; TEB provided the requested information and documents to the Authority.

In its reasoned decision, the Board emphasized that TEB had delayed submitting the requested information and documents, which were only provided after the Authority's case team had already submitted its preliminary investigation report to the Board (which must be submitted by the case team within 30 days after the team is assigned to the case, as per Article 40 of the Law No. 4054). Therefore, the Board noted that the relevant information and documents could not be used for assessing the allegations within the scope of the preliminary investigation. The Board also referred to a previous TEB case,³ in which TEB had been fined for not providing the requested information in due time. TEB had appealed this previous Board decision; however, its request was denied, and the appellate courts approved the Board's decision on the administrative monetary fine.⁴

As a result, the Board unanimously decided to impose (i) a turnover-based administrative monetary fine at the rate of 0.1% of the turnover generated by TEB in 2018,⁵ pursuant to Article 16/l(c) of the Law No. 4054, and (ii) a separate turnover-based administrative monetary fine at the rate of 0.05% of the turnover generated by TEB in 2018, as per Article 17 of the Law No. 4054, for each day that passed after the deadline given by the Board for the submission of the requested information and documents until the actual date of submission by TEB (which, in this particular case, amounted to 20 days in total). In the case of Unilever, ⁶ a preliminary investigation had been conducted against the company to determine whether it had violated Articles 4 and 6 of the Law No. 4054 by preventing the sale of competing products at sales points to the end-consumers, whereby the Authority had conducted an on-site inspection at Unilever's premises.

During the on-site inspection, the case team had requested access to Unilever's e-mail system, in order to conduct a keyword-based review for specific time periods by way of using the "eDiscovery" software. The relevant permission for such access was only granted by Unilever after approximately eight hours from the start of the on-site inspection. The reasoned decision sets forth various explanations that were provided by Unilever for the delay at this front, including (but not limited to) the global nature of the authorization to be granted for such access, the jurisdiction of the case team to review global data, and the burdensome process of separating Turkey-specific data from global data.

The Board, referring to the decision of the 13th Chamber of the Council of State,⁷ which had found that delaying an on-site inspection for even 40 minutes could be deemed sufficient for the risk of spoliation with respect to evidence that could be useful in a preliminary investigation, concluded that Unilever had hindered the on-site inspection from 10:10 to 17:45 by way of not granting access to the information system, and unanimously decided to impose a turnover- based administrative monetary fine at the rate of 0.5% of the turnover generated by Unilever in 2018, as per Article 16/l(d) of the Law No. 4054. The Board did not choose to impose a separate turnover-based administrative monetary fine within the scope of Article 17 of the Law No. 4054, which is calculated on a daily basis, since the relevant conditions for such fine had not been met, considering that the authorization for access had been granted within the course of the same day.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2020. A link to the full Legal Insight Quarterly may be found here

Footnotes

1. The Board's decision dated November 7, 2019, and numbered 19-38/582-248.

2. The preliminary investigation was initiated on June 17, 2019.

3. The Board's decision dated July 7, 2015, and numbered 15-28/336-108.

4. Ankara 14. Administrative Court's decision, dated April 26, 2017, and numbered E: 2016/236 and K: 2017/1323, and Ankara Regional Administrative Court's (7. Administrative Trial Chamber) decision, dated December 6, 2017, and numbered E: 2017/331 and K: 2017/609.

5. Given that the turnover-based administrative monetary fine at the rate of  0.1% remained below the minimum administrative fine amount at the time of the fining decision, the administrative fine was increased to the minimum amount applicable until December 31, 2019 (i.e., TRY 26,027).

6. The Board's decision dated November 7, 2019, and numbered 19-38/584-250.

7. The decision of the 13th Chamber of the Council of State, dated March 22, 2016, and numbered E: 2011/2660, K: 2016/775.

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