ARTICLE
22 April 2024

The Economic Unity Factor In Determining The Administrative Fines Imposed In The Decisions Of The Turkish Competition Board For Hindering And Complicating On-Site Inspections

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Inal Law Office

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The Turkish Competition Board's (the "TCB" or the "Board") reasoned decision dated 21.09.2023 no. 23-45/840-296 ("Boylular Beton Decision")...
Turkey Antitrust/Competition Law

The Turkish Competition Board's (the "TCB" or the "Board") reasoned decision dated 21.09.2023 no. 23-45/840-296 ("Boylular Beton Decision") regarding the hindering of the on-site inspection of Boylular Gıda Petrol Madencilik İnşaat Turizm Otomotiv ve Orman Ürünleri San. ve Tic. Ltd. Şti.'de ("Boylular Beton") was published on the official website of the Turkish Competition Authority ("TCA"). As a result of the evaluation, the Board has concluded that the actions taken were not of the nature of hindering or complicating the on-site inspection within the scope of Article 16 of the Law No. 4054 on the Protection of Competition (the "Competition Law").

It is noteworthy that, within the scope of the decision, the on-site inspections were conducted in two undertakings that are considered to be within the same economic unity and the assessment was made by taking this into consideration. When the previous decisions of the TCB are analysed, it is seen that separate administrative fines were imposed on different companies within the same economic unity and even on regional directorates of the same company. Within this framework, firstly, the aforementioned reasoned decision will be discussed, and then, by taking the TCB's previous decisions into consideration, how the of economic unity concept is reflected in the application of administrative fines for hindering/complicating the on-site inspections in the decisions will be examined.

I. Boylular Beton Decision

Within the scope of the preliminary investigation initiated based on the Board's decision dated 05.05.2023 no. 23-20/395-M to determine whether certain undertakings active in the ready-mixed concrete production and sales in the Aydın province had violated Article 4 of the Competition Law by price fixing and region/customer allocation, on-site inspections were conducted at various undertakings on 18-19-20 July 2023.

Firstly, in order to conduct an on-site inspection, on 18.07.2023 at 10:12 hours, the undertaking named Boylular Yapı Ümran Boylu ("Boylular Yapı") was visited. Following the information provided, the manager of Boylular Yapı has stated that the undertaking did not operate in the ready-mixed concrete sector and that Boylular Beton, which was controlled by his uncle, was operating in the ready-mixed concrete sector. In response to this statement, the owner of Boylular Beton was informed by phone at 10:21 hours that an inspection would be carried out on his mobile device and was warned not to delete any data as of this notification, since it was thought that these two undertakings were in the same economic unity.

Following the completion of the inspection at Boylular Yapı, Boylular Beton was visited at 13.45. As a result of the examination of the mobile device of the sales manager of Boylular Beton, it was determined that all correspondence in the WhatsApp groups named "Boylular Marketing" and "Boylular Accounting" were deleted at 10:25 hours – after being informed at 10:21 hours – and this was stated in the on-site inspection minute. In the statement made by the Boylular Beton official regarding the deletion of the messages, it was stated that the relevant personnel was in another district at the time he was informed of the investigation, that he had erroneously deleted the correspondence while trying to back up the information containing trade secrets in the WhatsApp groups, but that the other telephone numbers which were also included in the chat were notified to the investigation team, allowing the examination of their chat histories.

The Board evaluated that the deletion had occurred before the time of entry to Boylular Beton (13.45) did not cause the hindering/complicating of the on-site inspection since the employee was not an employee of the undertaking being inspected at that time and is an employee of an undertaking with a separate legal entity regardless of whether the two undertakings were in the same economic unity or not even though the inspection team had warned the official of Boylular Beton, which was not an official or employee of Boylular Yapı, not to perform any deletion on the grounds that it may be in the same economic unity with Boylular Yapı, also considering that the deleted data was accessed by other employees of the same company.

II. Accor/Sodexho/Network Decision (TCB Decision dated 28.04.2006 with no. 06-31/376-99)

As a result of the TCB's decision to open a preliminary investigation against Sodexho Restoran Servisleri A.Ş. ("Sodexho"), Accor Servisleri International A.Ş. ("Accor"), Multinet Kurumsal Hizmetler A.Ş. ("Multinet") and Network Servisleri A.Ş. ("Network"), different investigation teams visited the headquarters of Accor, Network and Sodexho on 19.04.2006 to conduct on-site inspections. On-site inspections were hindered in all three undertakings, but the inspections could be carried out as a result of the decision taken by a criminal court of peace.

On the same date, in addition to the headquarters of the three undertakings in question, the Ankara and İzmir regional directorates of Sodexho and Accor were visited with the aim of conducting on-site inspections based on the information in the file, but the inspections were also hindered by regional directorates. Similarly, the inspections could only be carried out upon the obtainment of the orders from a criminal court of peace.

The Board considered that the on-site inspections were hindered and that the hinderance of the inspection to be carried out in each regional directorate had different results and effects, and decided to impose the following administrative fines on the undertakings1:

- (i) TRY 3,184 to Sodexho for hindering the inspection at its head office, (ii) TRY 3,184 to Sodexho for hindering the inspection at its Ankara regional directorate, and (iii) TRY 3,184 to Sodexho for preventing the inspection at its İzmir regional directorate,

- TRY 3.184 to Accor for (i) hindering the inspection at its headquarters, (ii) hindering the inspection at its Ankara regional directorate, TRY 3.184 to Accor for hindering the inspection at its Ankara regional directorate and (iii) hindering the inspection at its İzmir regional directorate,

- TRY 3,184 for preventing Network from conducting an on-site inspection at its headquarters.

The dissenting vote in the decision stated that Sodexho and Accor should be evaluated with a single administrative fine, not separately, since they prevented on-site inspections in Istanbul, Ankara and Izmir and they are within the same economic unity.

III. Horizon/Pasifik Decision (TCB Decision detaed 01.12.2022 with no. 22-53/797-327)

With the Board's decision dated 03.11.2022 no. 22-50/737-M, it was decided to conduct a preliminary investigation on Horizon Hızlı Tüketim A.Ş. ("Horizon") and Pasifik Tüketim Ürünleri Satış ve Ticaret A.Ş. ("Pasifik"), and subsequently, on 08.11.2022, a visit was made to the Yıldız Holding building to conduct an on-site investigation at Horizon, Pasifik and Ülker Bisküvi Sanayi A.Ş.'de ("Ülker Bisküvi").2

During the inspection, it was determined that four different employees, one Horizon and three Pasifik employees, had deleted WhatsApp groups and messages. In this framework, it was evaluated that Horizon and Pasifik had hindered /complicated the on-site inspection by deletion of data by some employees after the on-site inspection had started at 09.20 hours on 08.11.2022.

As a result of the assessment made by the Board for the determination of the administrative fine, it was decided to impose administrative fines on both companies separately over their gross revenues, even though the employees who had committed the act of hindering/complicating the on-site inspection were the employees of two different companies within the same undertaking (same economic unity).

IV. Evaluation and Conclusion

In the Board's decisions on on-site inspections, it is observed that the principle of economic unity has been evaluated in various ways, and that this principle has an impact on the determination of administrative fines. It is important for undertakings3 to take this approach into consideration in order to minimize the risk of facing allegations for hindering/complicating the on-site inspections. When the previous decisions are examined, it is observed that separate administrative fines were imposed on companies and even on regional directorates within the same economic unity. This situation shows that the attitude of the undertakings during the on-site investigations may result in more serious consequences.

In the Boylular Beton Decision, the Board has decided to not impose an administrative fine due to the fact that the deletion of data by an employee of a company with a different legal entity which is considered to be within the same economic unity, was not physically present at the relevant company and the inspection had not actually commenced, even though a warning that an inspection would be conducted was made by telephone prior to the of deletion data. Within the scope of the decision, the fact that the evaluation of two companies' being within the same economic integrity or not is not of importance, a different approach regarding the concept of economic unity at the on-site inspections has been revealed. As a matter of fact, this decision sheds light on how the deletions made prior to the physical attendance at different premises of different companies physically located at different places, even if they are within the same economic integrity shall be evaluated.

Within the context of the administrative fines imposed for the hindrance/complication acts at on-site inspection, which are frequently encountered recently, at the Board's making its decisions by taking the characteristics of each case and the increased sensitivity of the on-site inspections into consideration, may result in important consequences for undertakings.

Footnotes

1. Within the scope of the Decision, administrative fines were also imposed on persons serving on the boards of directors of undertakings, which are not included in this section.

2. Since these companies operate under the umbrella of Yıldız Holding, the on-site inspection was conducted directly at Yıldız Holding premises.

3. Especially those holdings, conglomerates, group companies, subsidiaries, affiliates, subsidiaries, controlling companies and similar undertakings that can be considered within the scope of economic unity from a competition law point of view.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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