Turkish Constitutional Court ("Court") examined the individual application made by Onmed Tibbi Ürünler Pazarlama ve Dis Ticaret A.S. ("Individual Application" or"Application") on April 27, 2016 and rendered a decision on June 17, 2020 where it ruled that the judgment of the High State Court violated the "principle of legality in crime and punishment", which is enshrined under Article 38 of the Turkish Constitution1, as it failed to take into account the turnover which would have led to a more favorable result for Onmed in terms of the amount of the administrative monetary fine. This is a milestone decision in terms of competition law as it is the first time that the Constitutional Court has found a violation of constitutional rights arising from a competition law case. The decision of the Constitutional Court is also important as it clearly acknowledges the existence and clarifies the scope of application of the principle of legality of crime and punishment in administrative monetary fines imposed as per Law No. 4054 on the Protection of Competition ("Law No. 4054").
As a background information on the process concerning the Individual Application and the Court's Decision, the Board launched a full-fledged investigation against Onmed Tibbi Ürünler Pazarlama ve Dis Ticaret A.S ("Onmed or "Applicant") and decided that Onmed violated Article 4 of Law No. 4054 by way of determining the conditions of supply outside the market, fixing the purchase or sale conditions of goods, market partitioning and hindering competitors' activities in the medical consumables market.2 The Board accordingly imposed an administrative monetary fine on the Applicant amounting to 5% of the Applicant's turnover based on the year preceding the date of the last instance of violation as per Article 16 of the Law No. 4054.
Onmed initiated an annulment lawsuit against the Board's fining decision. While the proceedings were still ongoing, per the amendment in the second paragraph of Article 16 of Law No. 4054, the criteria to be applied in determination of the amount of the administrative monetary fines have changed.3 The amendment required the Board to impose administrative monetary fine based on the undertaking's turnover generated by the end of the financial year preceding the date of the decision, or if this is not calculable, its revenue generated by the end of the financial year closest to the date of the fining decision.
The annulment request of Onmed was then rejected. Onmed appealed the decision; however its appeal request was not accepted either. During the appeal process, one of the arguments Onmed brought forward was that the amendment in Law No. 4054 required the administrative monetary fine to be re-calculated based on Onmed's turnover for the year preceding the date of the Board's decision as it would have led to a more favorable result (i.e., smaller amount of administrative monetary fine) for Onmed. However, The Plenary Session of Administrative Law Chambers of the High State Court did not even consider this argument of Onmed and upheld the High State Court's decision. After Onmed exhausted all of the remedies available, it made an individual application before the Constitutional Court, claiming that (i) the decision of High State Court violated the principle of legality in crime and punishment, (ii) the annulment decisions rendered in the lawsuits initiated by other undertakings that were found to be in violation in the same investigation breached the principle of equality4, and (iii) the right to attain the reasoned decision was violated as the reasoning for rendering a divergent decision was not explained.
The Constitutional Court decided that the Application is admissible since the allegation is related to the violation of a fundamental right guaranteed in the Constitution and in the European Convention of Human Rights ("Convention") and it went on to the substantial examination. As for the examination regarding admissibility, the Court emphasized that the principle of legality in crime and punishment is limited to sanctions that can be considered as criminal charges in scope of the Constitution and the Convention, but that the Court interprets the "charge of crime" in terms of the right to a fair trial and that administrative fines, which have a punitive characteristic, are also protected under this principle.
The Court also emphasized the relevant precedents of the High State Court5 where the Board's decisions, which did not take into account the favorable regulation in the calculation of fines, were found to be unlawful and annulled accordingly.
The Applicant claimed that its revenue generated by the end of the financial year preceding the date of the fining decision was lower than its revenue for the year preceding the date of the last instance of violation and the amended law should have been considered when calculating the administrative monetary fine.
The Constitutional Court underlined that the principle of legality in crime and punishment is one of the founding elements of the rule of law. The Court also mentioned some of its relevant precedents6 where it ruled that the principles of the Penal Code may be applicable to misdemeanors as well.
For all these reasons, the Court decided that the imposition of an administrative monetary fine without any assessment regarding the favorable amendment's implementation, and without any explanation as to why the amended provision was not applied, violated the principle of legality in crime and punishment guaranteed under Article 38 of the Constitution and sent the case file for re-examination by the 13th Chamber of the Council of State.
The Court's decision is a significant one for being a first to find a violation of a fundamental constitutional right due to imposition of an administrative monetary fine as per Law No. 4054. It is also an important reminder of the scope of application of the principle of legality in crime and punishment in the field of competition law .
This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in December 2020. A link to the full Legal Insight Quarterly may be found here
1 Article 38 of the Turkish Constitution reads as follows: "No one shall be punished for any act which does not constitute a criminal offence under the law in force at the time committed; no one shall be given a heavier penalty for an offence other than the penalty applicable at the time when the offence was committed".
2 The Board's Onmed decision (16.03.2007; 07-24/236-76)
3 The amendment was published in the Turkish Official Gazette on February 8, 2008.
4 The Board's fining decision was indeed annulled as a result of the annulment lawsuits initiated by some other undertakings that were subject to a fine in the same investigation, according to the principle of legality of punishment and crime.
5 The decision of 23th Chamber of Council of State dated 15/1/2007 and numbered E. 2006/1286, K. 2007/140; the decision of 24th Chamber of Council of State dated 7/5/2010 and numbered E. 2007/14508 K. 2010/3849
6. Mahmut Manbaki, B. No: 2012/731, 15/10/2014, § 47, Samet Öztürk, B. No: 2014/20188, 6/12/2017, § 30).
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