In its decision published in the Official Gazette on 20 June 20231, the Constitutional Court (the "Court") ruled that the lack of a judge's decision prior to the on-site inspection conducted by the Turkish Competition Authority (the "TCA") resulted in a violation of the inviolability of domicile of the undertaking subject to the on-site inspection.
CASE SUMMARY
Ford Otomotiv Sanayi A.S. (the "Applicant") filed an individual application to the Court on 5 December 2019 regarding the use and scope of the TCA's authority during the on-site inspection. The Applicant claimed that, pursuant to Article 21 of the Constitution, the right to inviolability of domicile can only be interfered with by a judge's decision and that the on-site inspection was carried out by the Authority's experts at the Applicant's workplace without sufficient legal safeguards.
The Applicant claimed in its application (i) that the on-site inspection, conducted under the authority conferred by Law No. 4054 on the Protection of Competition (the "Law"), was in fact against the law and thus violated the inviolability of domicile, (ii) that the imposition of an administrative fine for the alleged anti-competitive behaviour violated the right to property, (iii) that the failure to consider the export turnovers of other entities in determining the amount of the fine, but including the applicant's export turnover, violated the prohibition of discrimination in relation to the right to property, (iv) that the investigation of the same act for the second time violated the principle of not being tried or punished twice, (v) that the long trial period of 9 years 10 months and 26 days violated the right to a reasonable trial, and (vi) that the abolition of the stage of decision correction with a law enacted during the trial violated the right of access to the court.
The on-site inspection procedure is carried out with the approval of the Turkish Competition Board (the "Board") in necessary cases, based on Article 15 of the Law. The third paragraph, later added in Article 15, states that in the event of obstruction or the likelihood of obstruction to such an on-site inspection, it may be carried out on the condition of obtaining the relevant judge's decision. The purpose of these inspections is to obtain evidence to identify and reveal violations of competition by examining documents, books, e-mail systems and the entire information technology infrastructure used by employees of the inspected undertakings, and by taking physical samples and copies thereof. Under this Article, written and oral statements may also be requested from the investigated undertakings on certain matters, and on-site inspections may be conducted on all assets of such undertakings.
As part of the on-site inspection carried out in this case, the experts gathered 78 documents, including e-mails from the computers of the company employees. The Board ruled that the investigated company committed acts that restricted competition, and imposed an administrative fine. Subsequently, the company exhausted all legal remedies and finally filed an individual application to the Court.
Pursuant to the Court's decision, the areas of headquarters, branches, and facilities where on-site inspections are conducted, and that are not open to the general public, can be considered as domicile. The Court emphasised, by referring to various decisions, that the office where a person practices their profession, the registered headquarters where the activities of a company operated by a private person are carried out, and the registered headquarters, branches, and other workplaces of legal persons can also be qualified as domicile. In this context, the decision states clearly that the areas in the workplaces of the undertakings subject to on-site inspections, which are not freely accessible to everyone, should be considered as domicile.
In line with this reasoning, it was ruled that such areas are protected under the inviolability of domicile as defined in Article 21 of the Constitution. According to the second sentence of the first paragraph of the same Article, no one's residence may be entered and searched unless there is a judicial decision or a written order from the authority empowered by law for cases where delay is harmful. The Court, referring to the additional protective nature of this provision, stated that it also covers situations where public officials want to enter these areas without the consent of the individuals. The Court further stated that the regulation in Article 15 of Law No. 4054 which deems the Board's approval sufficient for on-site inspections, i.e. "the regulation that does not exclusively confine on-site inspections to cases where delay in executing the Board's order is harmful", is in fact in conflict with this additional protection provided by Article 21 of the Constitution. The Court referred to the provision in its current wording as a "structural problem" and decided to notify the Grand National Assembly of Turkey to remedy this issue.
In a dissenting opinion, it was noted that the on-site inspection was conducted at the Applicant's workplace in relation to a specific case, that no search or seizure took place, and that the procedure was carried out under the authority conferred by the Law, of which the Applicant had prior legal knowledge. It was also added that the Applicant raised no objection during that inspection. Attention was also drawn to the existence of a legitimate purpose, as referred to in the Law, to carry out that inspection, and it was concluded that no action went beyond that legitimate purpose during the on-site inspection and that the intervention as viewed in this context was proportionate in nature.
Evaluation and conclusion
The Court's decision is in line with the approach adopted by the European Court of Human Rights (the "ECHR") in similar applications made against other states. Indeed, in its 2014 Delta Pekárny2 decision, the ECHR considered that the powers given to competition law authorities within the scope of on-site inspections without a judicial decision are incompatible with Article 8 of the European Convention on Human Rights, which regulates the privacy of private life.
The Constitutional Court's decision, while being aimed at better protecting the constitutionally protected rights such as inviolability of domicile, privacy of private life, and the right to a fair trial for undertakings and their employees subject to on-site inspections, can be seen as potentially slowing down the process of detecting competition infringements.
Furthermore, it can be noted that the Court has embraced the idea of increasing judicial oversight, specifically with regard the on-site inspection powers of institutions in the application of competition law. Following the controversial decision of the Court, the probability of the legislative body adopting a regulation on this matter in the near future has now increased.
This decision is expected to have implications for competition law practice and judicial decisions in the upcoming future.
Footnotes
1. Turkish Constitutional Court, Individual Application No. 2019/40991 dated 23.03.2022.
2. DELTA PEKÁRNY a.s. v. the Czech Republic, No. 97/11, 02.10.2014
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