On-site inspections are regulated under Article 15 of Law No. 4054 on the Protection of Competition (“Law No. 4054”). These inspections aim to establish, protect and maintain a competitive market. The Competition Board (“Board”) is the sole authority to conduct on-site inspections. It performs on-site inspections at undertakings and associations of undertakings when it deems necessary to achieve those aims. In this respect, the Board can inspect all kinds of data and documents kept in undertakings’ physical/electronic media and information systems, including company books, meeting notes, agendas, all kinds of documents regarding the company’s assets, company computers, and portable devices.
On-site examinations have the potential to interfere with the fundamental rights and freedoms of undertakings and employees of undertakings. Therefore, they are closely related to the issue of illegally obtained evidence. The concept of “Illegally Obtained Evidence” is based on Article 38 of the Constitution of the Republic of Türkiye No. 2709 (“Constitution”), entitled “Principles relating to offenses and penalties”. The title of the article may give the impression that the provision only applies to judicial penalties. However, the provisions of the Constitution are fundamental legal rules that are also binding for administrative authorities under Article 11 of the Constitution. Indeed, the Constitutional Court previously ruled that this article also applied to administrative jurisdiction. One of its pertinent decisions stated as follows: “Since Article 38 of the Constitution does not distinguish between administrative and judicial penalties, administrative fines are also subject to the principles in this article.” (File No. 2023/41, Decision No. 2023/102) Therefore, the article is also applicable in administrative sanctions. Likewise, the Constitutional Court decided elsewhere as follows: “Paragraph 7 of Article 38 in the Constitution, arising from Article 15 of Law No. 4709 of 03/10/2001, stipulates that ‘Findings obtained through illegal methods shall not be considered evidence.’ By giving examples from the case law of the Court of Appeals and the State Council, the defendant administration claimed that illegally obtained evidence may be accepted as valid evidence in disciplinary law. However, this provision, given in the second part of the Constitution titled ‘Fundamental rights and duties,’ applies to criminal jurisdiction, civil jurisdiction and administrative jurisdiction.” (Application No. 2014/7738, 13/7/2016) Therefore, it is clear that the rule stating “Findings obtained through illegal methods shall not be considered evidence” is also binding in administrative jurisdiction. We may say that the doctrine often agrees with this view. Since on-site inspections are not judicial procedures, there is controversy about the applicability of the prohibition on illegally obtained evidence to them. However, administrative justice may be sought against the Board’s decisions. As a result, the Board is obligated to respect this principle in its on-site inspections. In short, we believe that the prohibition on illegally obtained evidence under Article 38 of the Constitution is also valid for administrative sanctions, regardless of the article’s title, in view of the doctrine and the Constitutional Court’s decisions.
First of all, the Board must respect the relevant regulations during its on-site inspections. Otherwise, the evidence it gathers will be deemed illegally obtained. This is first and foremost a requirement of the rule of law.
Experts coming to the undertaking to conduct an on-site inspection must have an authorization certificate indicating their credentials, the title and address of the undertaking or association of undertakings to be inspected, and the subject and purpose of the inspection. Evidence obtained during on-site inspections carried out without an authorization certificate will be considered illegally obtained evidence. Moreover, experts may only collect evidence relevant to the subject and purpose of the inspection. Evidence that is not relevant to the subject of the inspection and does not serve the purpose of the inspection may be considered illegally obtained evidence. Apart from this, it is clear that the main purpose of the prohibition on illegally obtained evidence is to protect the fundamental rights and freedoms of individuals. During on-site inspections, some actions infringe certain fundamental rights and freedoms of undertakings and employees of undertakings, especially the right to privacy and the inviolability of domicile. The right to privacy is regulated in Article 20 of the Constitution, where the first two paragraphs state:
“Everyone has the right to demand respect for his/her private and family life. Privacy of private or family life shall not be violated.
Unless there exists a decision duly given by a judge on one or several of the grounds of national security, public order, prevention of crime, protection of public health and public morals, or protection of the rights and freedoms of others, or unless there exists a written order of an agency authorized by law, in cases where delay is prejudicial, again on the above-mentioned grounds, neither the person, nor the private papers, nor belongings of an individual shall be searched nor shall they be seized. The decision of the competent authority shall be submitted for the approval of the judge having jurisdiction within twenty-four hours. The judge shall announce his decision within forty-eight hours from the time of seizure; otherwise, seizure shall be automatically lifted.”
It is often argued that this provision is not respected in the procedures followed during on-site inspections. In fact, unlike the provision, on-site inspections are sometimes performed without a judge’s decision, and almost all documents of undertakings and employees of undertakings are reviewed to this end. Regardless of whether such documents are kept in physical/electronic media or information systems, all of them are included in the scope of inspection. In this context, correspondence exchanged via mobile phones, e-mail applications and platforms (Teams, Outlook, WhatsApp, etc.) may be inspected. Although portable communication devices for personal use (mobile phones, tablets, etc.) are inspected with a quick look, and portable devices for personal use that do not contain data relevant to the undertaking are excluded from the scope of inspection, this action still constitutes a violation of the right to privacy.
The rulings of the Constitutional Court are instructive in understanding this controversial situation.
As published in Official Gazette of 30 March 2023, the Constitutional Court reviewed the request for the annulment of the phrase “take copies and physical samples thereof”, amended on 16/06/2020, in Article 15 of Law no. 4054, in respect of the privacy and protection of private life. The ground for the request was that the phrase contradicts Article 20 of the Constitution that states, “… unless there exists a written order of an agency authorized by law, … neither the person, nor the private papers, nor belongings of an individual shall be searched, nor shall they be seized. The decision of the competent authority shall be submitted for the approval of the judge having jurisdiction within twenty-four hours. The judge shall announce his decision within forty-eight hours from the time of seizure; otherwise, seizure shall automatically be lifted.” (File No. 2020/67, Decision No. 2022/139, 9/11/2022) The annulment of the phrase in Article 15/1/[a] of Law No. 4054 was requested on the grounds that (i) it enabled the copying and sampling of all kinds of documents of undertakings without any limitation, (ii) there was no requirement that the representative of the undertaking be present during this procedure, (iii) the rule authorizing access to undertakings’ data on trade secrets and customer circles did not provide any safeguards for the acquisition and processing of personal data, and (iv) this situation was incompatible with the principle of legal certainty and was not proportionate. In this case, the Court first referred to Article 20 of the Constitution and stated that personal data could only be processed with the explicit consent of the data subject and in cases stipulated by law. Then, the Court affirmed that the authority granted to the Board, whose annulment was requested, was clear and unambiguous in terms of its subject, scope and limits and that the rule complied with the principle of lawfulness as it fulfilled the criteria of certainty, accessibility and foreseeability. In addition to the assessment of lawfulness, the Court also made a proportionality assessment and concluded that the on-site inspection was proportionate due to the reasons that (i) it was carried out by submitting documents, (ii) the Board did not have the authority to use coercion, (iii) the issues that the parties were not given the right to defense could not be used as a basis for the decision, (iv) the Board was subject to the obligations stipulated in Law No. 6698 on the Protection of Personal Data (“Law No. 6698”) and (v) special categories of personal data were subject to stricter conditions. Thus, the Court ruled that the relevant phrase complied with the Constitution. In this decision, the Court assessed the relevant phrase regarding the Board’s authority to perform on-site inspections for the protection of competition within the framework of the principles of proportionality and lawfulness. Therefore, this decision may guide the relevant practices. This decision is also important because it implies that legal entities may benefit from the protection in Law No. 6698 and that the Board is subject to the obligations in Law No. 6698.
Another constitutional right that needs to be addressed regarding on-site inspections is the inviolability of domicile, which is regulated in Article 21 of the Constitution. Requiring a judge’s decision for entries into dwellings, the article is as follows:
“The domicile of an individual shall not be violated. Unless there exists a decision duly given by a judge on one or several of the grounds of national security, public order, prevention of crime, protection of public health and public morals, or protection of the rights and freedoms of others, or unless there exists a written order of an agency authorized by law in cases where delay is prejudicial, again on these grounds, no domicile may be entered or searched or the property seized therein. The decision of the competent authority shall be submitted for the approval of the judge having jurisdiction within twenty-four hours. The judge shall announce his decision within forty-eight hours from the time of seizure; otherwise, seizure shall be automatically lifted.”
The Constitutional Court, in parallel with the decisions of the European Court of Human Rights (“ECHR”), stated in its decisions that the concept of domicile also applied to workplaces. Thus, the office where a person performs their profession, the registered headquarters where their company operates, as well as the registered headquarters, branches and other workplaces of legal entities can also be considered as domicile. In the case Niemitz v. Germany, the ECHR ruled that it would be compatible with the main purpose of Article 8 of the European Convention on Human Rights (“ECHR”) to interpret the words “private life” and “home” to include professional or commercial activities or facilities. In this context, professional life would also be deemed private life, and a workplace should benefit from the same protection as a home (Application No. 137/1088, 16/12/1992). Likewise, in its well-known Ford Otosan Decision, the Constitutional Court stated that on-site inspections should benefit from constitutional guarantee under Article 21, and that such procedures could only be carried out upon a judge’s decision (Application No. 2019/40991, 23/3/2023). The Court recognized that the action could be taken upon a written order of an agency authorized by law in cases where delay was prejudicial, while underlining that the decision should be submitted to the approval of the judge within twenty-four hours. In the case, the Court determined that the applicant company did not attempt to obstruct the on-site inspection, and the inspection carried out without a judge’s decision constituted a violation of constitutional rights. Thus, the Court concluded that the on-site inspection power under Law No. 4054 was contrary to the guarantees set out in Article 21 of the Constitution. The Court stated that this violation was caused by the regulation in Law No. 4054. As a result, it ruled for the determination of the violation and the retrial for the redress of the victimization caused by the violation.
Although there are Constitutional Court decisions regarding violations of constitutional rights during on-site inspections, it is still an ongoing practice to perform on-site inspections without a judge’s decision under Article 15 of Law No. 4054. This situation suggests that the decisions of the Constitutional Court might not be very effective in practice.
Another issue that should be considered in conjunction with on-site inspections is the attorney-client privilege. During on-site inspections, the experts can review all kinds of data kept in the physical/electronic media and information systems of undertakings. The possibility that this data may include those that should be protected by the attorney-client privilege causes concern. Attorney-client privilege is regulated under Article 130/2 of the Turkish Criminal Procedure Code No. 5271 (“Code No. 5271”), entitled “The search and seizure in attorneys’ offices, and seizure of mail,” which states:
“If the attorney whose office is searched or the president of Bar or the attorney representing him objects to the search in respect to the items to be seized, at the end of the search, by alleging that those items are related to the professional relationship between the attorney and his client, then those items shall be put in a separate envelope or package and be sealed by the present individuals. In the investigation phase, the judge of peace in criminal matters, or the judge or the Court in the prosecution phase, is to give the necessary decision on this matter. If the judge with venue establishes that the seized items are under the privilege of attorney-client relationship, the seized object shall be promptly returned to the attorney, and the transcripts of the interactions shall be destroyed. The decisions mentioned in this subparagraph shall be issued within 24 hours.”
Likewise, Article 36 of Attorneyship Law No. 1136 states, “Attorneys are prohibited from disclosing information that has been entrusted to them or that they come upon in the course of performing their duties both as an attorney and as members of the Union of Turkish Bar Associations and various bodies of bar associations.”
However, since there is a gap in the legislation regarding whether these regulations are decisive with respect to on-site inspections, the Board’s relevant decisions may be guiding.
In its Sanofi Decision, the Board stated that some documents taken during the on-site inspection should be considered as written correspondence that concerns attorney-client privilege (09-16/374-88, 20.04.2009).
In this decision, the Board first indicated that there was no definitive provision in the Turkish legislation that provided an absolute privilege under Competition Law regarding the information and documents arising from the professional relationship between a lawyer and their client, but that universal legal principles and the AM&S and Akzo decisions might be guiding in this respect. Thus, the Board identified two requirements that must be fulfilled in order for the correspondence obtained during an on-site inspection to be considered within the framework of attorney-client privilege: (i) the written correspondence must have been exchanged between a client and an independent lawyer (who does not have a professional relationship with the client ), and (ii) the written correspondence must be in the client’s interest and within the scope of the right of defense.
In its Dow Decision, the Board reiterated these requirements and emphasized that some documents received during the on-site inspection should be considered as written correspondence within the scope of attorney-client privilege (15-42/690-259,02.12.2015).
The Board addressed the issue in more detail in its Enerjisa decision. As part of the preliminary investigation conducted with Board decision no. 16-39/656-M of 16.11.2016, the Board discussed Information Note no. 2016-1-65/BN of 30.11.2016 prepared for the allegation that some documents obtained during the on-site inspection conducted on 22.11.2016 should be protected within the framework of the principle of confidentiality of attorney-client correspondence. As a result, the Board took decision no. 16-42/686-314 of 06.12.2016. In its Enerjisa Decision, the Board maintained its view on the two requirements stated in its Dow Decision and emphasized that correspondence that was not directly related to the right of defense and that was intended to assist any violation or to conceal an existing or future violation could not benefit from protection, even if it was related to the subject matter of the preliminary investigation, inquiry or inspection. Accordingly, while an independent lawyer’s provision of opinion to their client on whether a particular agreement violates Law No. 4054 benefits from the attorney-client privilege, correspondence on how an undertaking may violate Law No. 4054 may not benefit from it.
In conclusion, although on-site inspections carried out under Article 15 of Law No. 4054 are crucial for the protection and maintenance of a competitive market, this procedure raises some concerns in terms of the protection of rights and freedoms. Beyond concerns, this issue is of critical importance, as the assessment of whether evidence gathered during an on-site inspection has been obtained legally or illegally might have very different consequences for undertakings. Even though the Constitutional Court decisions are a significant guide in determining the legal limits of on-site inspections, there are still some shortcomings and uncertainties in practice. In this context, it would be appropriate to establish a clear and detailed legal framework as required by the principle of legal certainty to prevent potential violations that may occur in practice and to eliminate the concerns caused by ambiguity.
Dila Yıldırım, Associate
