The Competition Board initiated an investigation (with its decisions dated May 7, 2020 and numbered 20-23/299-M and June 18, 2020 and numbered 20-29/378-M) against a number of undertakings operating in the anti-viral face mask industry, based on the allegations concerning excessive price increases for the anti-viral face masks during the COVID-19 outbreak ("Face Mask Investigation").
Having analyzed all the information submitted by the investigated parties, as well as the relevant third parties, the Board concluded that there is no need to impose monetary fines to the relevant undertakings and referred the matter to the Ministry of Treasury and Finance and the Unfair Price Assessment Board.1
However, the Board's recently published reasoned decisions reveal that the Board imposed an administrative monetary fine to a third party, for failure to provide the requested information in full, within the requisite period of time.
Article 14 of Law No. 4054 provides that the Board may request any information it deems necessary from all public institutions and organizations, undertakings and associations of undertakings while carrying out the duties assigned by this Law. Such authorities, undertakings and associations of undertakings are obliged to provide the requested information within the period to be determined by the Board. Accordingly, in the Face Mask Investigation, the Authority adopted its usual practice and requested information from third parties - including various face-mask manufacturers, importers, and fabric suppliers, as well as public authorities. One of the information requests was directed to Apex Teknik Tekstil ve Saglik Ürünleri San. Tic. Ltd. Sti. ("Apex"), a face-mask and fabric manufacturer.
The Authority initially considered Apex only as a fabric manufacturer and requested Apex to provide information on its sales and customer lists as well as technical information on the fabrics and explanations on recent official and legal developments in the sector in light of the COVID-19 outbreak. The information request was sent electronically and in hard copy. Apex initially responded the information request electronically by noting that although the envelope of the information request was addressed to them, the hard copy letter contained therein did not refer to their entity and consequently, the request was not put into action. Therefore, the Authority reissued the information request (first set of information) to the entity on a later date – on June 3, 2020. In the meantime, within scope of information collated during the investigation, the Authority realized that Apex was also a manufacturer of face masks and therefore requested a separate set of information (second set of information) from the company, on June 17, 2020.
Responses to both sets of information requests were provided by Apex but only after the deadlines set by the Authority (on June 23, 2020) despite several reminders by the Authority through e-mail messages or telephone calls. The Authority set two separate deadlines for submission of first set of information and initially, one deadline for submission of the second set of information; however Apex missed the relevant deadlines. As a result, in its first decision, the Authority imposed (i) an administrative monetary fine of 0.1% of Apex's 2019 gross annual income for being late in providing the first set of information related to fabrics, and (ii) a daily administrative monetary fine of 0.05% of Apex's 2019 gross annual income for a period of 12 days for failure to provide the full and complete information within scope of the first and second sets of information requested, on time (Apex I decision).2 Subsequent to the analysis of the information submitted, the Authority found that the information provided especially in relation to face-mask production activities in response to the second set of information request, was inadequate. The Authority continued to ask for submission of the missing information – which consisted of a breakdown of face-mask production data. On this note, with its request on June 24, 2020, the Authority ordered Apex to provide the full and complete information before the newly set deadline (July 8, 2020) and noted that the entity would face a daily administrative fine for each day of delay over the deadline3 (Apex II Decision). Indeed, despite extended discussions with Apex and the Authority`s efforts to clarify or explain its requests, Apex refused to provide the relevant information based on the requested breakdowns and was found to be unwilling to cooperate with the Authority - especially when compared to other players in the market who provided relevant information in the requested/similar format and content.
Accordingly, the Authority imposed a daily administrative monetary fine of 0.05% of Apex's 2019 gross annual income, for a delay period of 30 days, due to its failure to comply (Apex III decision).4 When setting the duration for the daily fine, the Authority calculated the number of days delayed by counting from the day following the deadline (July 9, 2020) until the date the investigation report of the case handlers was completed (August 7, 2020). Consequent to the completion of the investigation report, the Authority decided that it no longer needed the information and documents requested from Apex and thus, did not decide to wait further until Apex would provide the full and accurate information within scope of the investigation.
Face Mask Investigation ended with a plot twist. Whilst the parties to the investigation did not face any fines, Apex, which was not even a party to the investigation faced not one but two sets of sanctions for merely failing to provide full and accurate information within the requested time.
Apex brought an annulment lawsuit before the 18th Administrative Court of Ankara and requested stay of execution of the Board's Apex III decision. The lawsuit itself is ongoing however Apex's stay of execution request has been dismissed by the 18th Administrative Court of Ankara, 5 and so did their appeal before the 8th Administrative Chamber of Ankara Regional Administrative Court.6
We are yet to see how the case will play out in the end. However, the Board has yet again underlined the significance of compliance to competition rules at all fronts – on substantial and procedural grounds – in its Apex decisions.
Lately, an increasing number of undertakings are fined for failing to provide information, timely,7 or accurately.8 Currently, the Apex decisions stand out as the most recent examples of the Authority's firm and consistent stance against failure to meet procedural requirements attached to information requests in competition law investigations.
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in March 2021. A link to the full Legal Insight Quarterly may be found here
1 See the Board's short decision announcement: https://www.rekabet.gov.tr/Dosya/nihai-karar-aciklamalari-tefhim-duyurulari/maske-nihai-karar-internet-duyurusu-20210105115424831-pdf (accessed on February 1, 2021).
2 The Board's Apex I decision dated July 2, 2020 and numbered 20-32/410-187.
3 The Board's Apex II decision dated July 17, 2020 and numbered 20-34/451-199.
4 The Board's Apex III decision dated August 20, 2020 and numbered 20-38/528-236.
5 Ankara 18th Administrative Court's Decision dated November 12, 2020, Case No:2020/1695.
6 8th Administrative Chamber of Ankara Regional Administrative Court's Decision dated December 10, 2020 numbered 2020/720.
7 The Board's Ani decision dated February 13, 2019 and numbered 19-07/86-36; DVS Dogalgaz decision dated June 20, 2019 and numbered 19-22/354-160, Türk Eczacilari Birligi decision dated 07.11.2019 and numbered 19-38/582-248; Çerkezköy Kuyumculuk decision dated January 2, 2020 and numbered 20-01/1-1.
8 The Board's Adiyaman decision dated July 3, 2017 and numbered 17-20/310-136; Türk Telekomünikasyon decision dated 16-15/255-110 and numbered May 3, 2016.
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