An Important Decision of the Court of Appeal Regarding the Hindrance of On Site Inspection Under Competition Law!

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As it is known, the Competition Board, with its decision dated 07.11.2019 and numbered 19-38/584-250, decided to impose an administrative fine on Unilever Sanayi ve Ticaret Türk Anonim Şirketi [Unilever] due to the hindrance/complication of the on-site inspection to be carried out at Unilever’s center.

In the aforementioned decision, it was stated, in summary, that the Office 365 program for correspondence was used by the officials of the undertaking; IT officials of the undertaking stated that it is necessary to consult Unilever Global in order to access to search for correspondence of employees within this program. After the consultation, Unilever Global officials stated that such a search should be made through the Office 365 application via “eDiscovery” and global permission should be granted in order to use. Thereupon, competition experts in charge of on-site inspection requested access to the data of Unilever Turkey’s users with a “discovery management role” to search only for Turkish employees. In order to obtain these permissions, negotiations with Unilever Global were started at 11:00. In this process, at 12:30 at first, the competition expert in charge of the on-site inspection was verbally informed that the permissions for “eDiscovery” had been obtained, and it was informed that the on-site inspection process would begin immediately after the necessary search authorization and permission were assigned to the IT personnel of the undertaking in order to use “eDiscovery”. However, after a short while, it was stated by the undertaking official that it was necessary to obtain permission once again to carry out the on-site inspection, and on top of that, the competition expert reiterated that the scope of the on-site inspection would be limited to “Turkey Unilever users”. However, it has been stated that the “admin” authority to be granted by the authorities of the undertaking for the on-site inspection is at a global level, the authority regarding Turkey’s data cannot be separated from the search authority for all global data, and the competition expert is not authorized to carry out this on-site inspection, so such a search cannot be made. In addition, it has been stated that a few days are needed to separate and make available Turkey’s data. As a result of all these experiences, competition experts continued to examine the available information and documents. However, at 17:45, the authorities of the undertaking stated to the competition experts that the necessary permits had been obtained and that an “eDiscovery” search could be made.

In line with the above-mentioned plotline, it was concluded, by the Competition Board that the on-site inspection was hindered by Unilever by not allowing the on-site inspection to be carried out within the scope of the undertaking’s information system between 10:10 and 17:45, and it was decided to impose an administrative fine of five per thousand of its gross income within the scope of Article 16/d of The Act No. 4054 on the Protection of Competition [The Act No. 4054].

As a result of Unilever’s application to administrative jurisdiction, this decision of the Competition Board was annulled by the Ankara 6th Administrative Court with its decision dated 06.07.2021 and numbered 2020/268 E. and 2021/1283 K. Upon the appeal application of the Competition Authority, 8th Administrative Court Division of Ankara District Administrative Court, with its decision dated 10.02.2022 and numbered 2021/1523 E. and 2022/222 K., decided to reject the case with the annulment of the decision of the Ankara 6th Administrative Court. In this decision of the Court, the following determinations were made in summary:

  • The basis of the dispute concentrated on the determination of whether this situation hindered the on-site inspection since the inspection requested to be made through “eDiscovery” within the scope of the “office 365” application used in the computer systems of the plaintiff company, is made after a period of time of approximately 6 hours and 45 minutes,
  • It was clearly stated by the officials of the competition authority that the inspection in question was limited to the Turkish organization of the undertaking and that the request for the system permission to be given separately from the world scale was clearly stated to the authorities of the plaintiff company,
  • In this case, the scope of the examination to be made has been determined as the units within the Turkish organization of the plaintiff company. There is no legally admissible and valid reason for the requirement to obtain permission from a limited number of managers working abroad for an inspection to be made on the business and transactions carried out within the Turkish Organizational structure of the undertaking and subject to audit.
  • It is clear that this justification put forward by the plaintiff company is a matter of determining the duties, authorities, and responsibilities in the internal functioning of the plaintiff undertaking. The plaintiff which operates in accordance with the current law and regulations in Turkey should know how to carry out its business and transactions within this responsibility by acting prudently and in line with predictability.
  • The fact that the plaintiff company has not determined the authorized and responsible unit to give permission regarding the event in dispute based on its activities in Turkey, will not relieve the plaintiff company’s responsibility.
  • In accordance with the authority given by the provisions of Act No. 4054, the experts of the defendant administration have been assigned and authorized to conduct an on-site inspection within the plaintiff company. Within this framework, the competition experts decided to conduct an examination of the computer systems of the units of the plaintiff company in Turkey, based on “specific dates and keywords”. In this context, while the plaintiff company should be provided with this opportunity without delay, the on-site inspection was hindered for a period of 6 hours and 45 minutes without a legally admissible and valid justification.

This decision is of great importance, especially within the framework of competition investigations carried out against foreign-based enterprises’ subsidiaries operating in Turkey. Because, in line with this decision, even if it is technically possible for undertakings to make available access to the correspondence of their employees, there should be no deficiency in the scope of permission/authority.

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