Hergüner Competition Monthly - February 2023

Personal Data Wipe Requests Made to the TCA by Banks

The Turkish Competition Board (“Board”) published a new decision within the scope of the preliminary investigation[1] on the decision of Garanti BBVA, Citibank, and JP Morgan, which was included in our December and November bulletins.

This preliminary investigation was initiated to determine whether certain banks and financial institutions operating in Turkey and their representative oices violated Act No. 4054 on the Protection of Competition (“Turkish Competition Act”) while carrying out their activities related to deposits, loans, foreign exchange, bonds, bills, stock, and brokerage services. As a result of this preliminary investigation[2], the Board concluded that it was not necessary to open an investigation against the parties.

During this preliminary investigation, the Board requested the Bloomberg and Reuters chat room records of the top 10 traders with the highest TRY quoted transaction volume among those who trade Turkish Lira in the US and the UK, including the undertaking controlling the relevant banks and financial institutions, and stated that an administrative fine would be imposed if this data was not provided.

This new Board decision is related to the request of JP Morgan and Citibank for the deletion of the data provided in response to the Board’s request for information and documents.

Following the Board’s information request above, JP Morgan, Citibank, and ING Bank submitted the request records to the Board; however, Goldman Sachs and Garanti Bank both had administrative fines imposed on them for failure to provide the requested information and documents.

The undertakings in question applied to the administrative court for annulment of the information request and the administrative fine decisions. The lawsuit filed by ING Bank for cancellation of the information request was rejected, but the same court decided to cancel the administrative actions related to the lawsuits filed by Garanti Bank, Goldman Sachs, JP Morgan, and Citibank.

Regarding the previously provided records, Citibank and JP Morgan sent a letter to the Board upon receipt of these decisions and stated that:

• The highly sensitive and confidential information and documents containing personal information and client/banking secrets should be qualified as unlawful evidence, and
• The processing and analysis of this data by the Turkish Competition Authority (“TCA”) should be terminated, should not be used within the scope of any administrative proceedings and should not be transferred to third parties.

Citbank and JP Morgan further requested an administrative action from the Board clearly stating that the data cannot be processed, stored, or transferred by the Authority or any third party upon the court decision.

Regarding these statements and requests, the Board stated that:

• The court decisions do not include an assessment as to whether the data in question was lawfully obtained,
• As per Article 28 of Law No. 6698 on the Personal Data Protection Law (“PDPL”), the Authority is exempt from the implementation of some articles of the PDPL, and
• Even if it is accepted that the data generated in the correspondence between the traders includes possible personal data or financial transactions made between traders, the Authority is authorised to obtain and store such data in its possession.

Eventually, it was concluded that the Authority is exempt from the application of some articles of the PDPL and that there is no need to return or delete the data obtained from the undertakings. However, one Board member dissented stating that since there was no ongoing administrative process after the cancellation decision of the court, it would be appropriate to decide that:

• the Board may decide that such data may be destroyed or returned, but
• the data should not be returned/destroyed and should not be used by anyone at least until the decision is finalised, considering the fact that the court decisions are at the appeal stage and the process regarding the merits of the file may continue.

Preliminary Investigation Decision on Car Rental Companies

The Board initiated an ex officio preliminary investigation against 12 undertakings engaged in car rental activities on the grounds of alleged violations of Article 4 of Act No. 4054, with its decision dated 24.07.2020 and numbered 20-35/470-M.

The Board observed that some undertakings engaged in car rental activities can access the competitively sensitive information of their competitors and initiated a preliminary investigation to ascertain whether such information was obtained through direct communication between competitors.

As a result of the on-site inspections carried out by the Board within the scope of the preliminary investigation, it was concluded that the undertakings operating in the car rental sector:

• can closely follow the prices of their competitors through market research and can have information about the price oers of their competitors without the need for additional effort,
• publicly published retrospective information can be obtained by bringing together the information provided in the long-term car rental sector reports published by TOKKDER and all competitors and customers have equal access to these reports,
• can oer a wide range of services and products due to the differences in vehicle segments, and
• Due to the aforementioned reasons, there are also differences in price, which makes it difficult to have a complete understanding about how the price is determined and which services it covers, even if the subsequent price information is available.

Since there was no evidence that the undertakings operating in the car rental sector were party to an information exchange that prevented competition, the Board decided that there is no need to initiate an investigation.[3]

This decision of the Board is noteworthy in terms of demonstrating what kind of information can be shared in the car rental sector without violating the Turkish Competition Act and why the current practices do not violate the Turkish Competition Act.

Biopharma Logistics Decision

Upon the leniency application made by Biopharma Logistics Uluslararası Taşımacılık Sanayi ve Ticaret A.Ş. dated 30.09.2020, the Board initiated an investigation against undertakings operating in the field of biopharma logistics in the qualified local and international door-to-door transport services sector of the health sector. The Board's decision numbered 22-24/390-161 and dated 26.05.2022 regarding this investigation was published on 15.02.2023.

The alleged violation subject to the investigation is that Biopharma Logistics, Transorient, and Tunaset Biopharma violated Article 4 of the Turkish Competition Act by concluding customer allocation agreements and imposing an indefinite non-competition obligation on each other.

The Board found that there was an anticompetitive agreement on customer allocation between the Transorient-Tunaset economic entity and Biopharma which was separate from the Transorient-Tunaset economic entity.

Due to the agreement between Transorient-Tunaset and Biofarma being in violation of Article 4 of the Turkish Competition Act, the Board decided [4] by a majority of votes to impose administrative fines on the undertakings in question.

However, the Board decided not to impose a penalty on Biopharma, which had made a leniency application to the TCA regarding the violation subject to the investigation in accordance with Article 4 of the Regulation on Active Co-operation for the Purpose of Uncovering Cartels (Leniency Regulation), taking into account its co-operation during the investigation process.

Two members of the Board dissented with the majority opinion. In the dissenting votes submitted by these members, it was assessed that the agreement between Transorient-Tunaset and Biopharma does not restrict competition on the grounds that:

• There is no economic justification for undertakings engaged in biopharma transport activities to be party to an agreement in the form of customer allocation,
• The agreement was made in order to prevent the misuse of commercial know-how and investment, and its purpose was not to restrict competition in the relevant market as the buyer power in the relevant market would already prevent such an objective from being realised,
• It cannot be said that an agreement preventing the exchange of information is intended to restrict competition completely, and
• In terms of effect analysis, it does not cause any structural competition restriction.

Does the Enforcement Trend Deviate From the Prohibition on Negotiation in Settlement Procedures?

As we emphasized in our previous bulletins, the settlement procedure, which undertakings have increasingly resorted to, remained up-to-date in February as well. According to the reasoned decision [5] ("Reasoned Decision") published on the TCA’s website on 03.02.2023, while the investigation was concluded with a settlement, the decision is likely to have a major impact on the implementation of Art. 7 para. 4 of TCA’s Regulation on Settlement Procedure (“Regulation”): "the matters included in the settlement interim decision cannot be subject to negotiation by the undertakings."

On 30.06.2022, the Board initiated an investigation against Olka Spor Malzemeleri Ticaret A.Ş. ("Olka") and Marlin Spor Malzemeleri Ticaret A.Ş. ("Marlin") on the grounds that Olka and Marlin violated Article 4 of the Turkish Competition Act by interfering with the resale price of their dealers and restricting internet sales. Olka and Marlin applied for the settlement procedure on 29.03.2022. As a result of the settlement negotiations, the Board unanimously decided to grant a 25% reduction on the administrative fine amounts to be applied to the undertakings who accepted the violation with the interim decision on the settlement process dated 16.06.2022 and numbered 22-27/434 ("Interim Decision").

In the Reasoned Decision, it was decided by a majority of votes to impose an administrative fine different from the Board's interim decision based on the requests of Olka and Marlin. Therefore, three Board members submitted dissenting votes against the Board's decision.

During the investigation process, Olka and Marlin, explicitly accepted the existence of the violation, the rate and amount of the administrative fine to be applied to them, and requested for the administrative fines to be calculated at the minimum margin. As stated in the dissenting vote, the Board's acceptance of the undertakings' request for a reduction in the rate based on abstract grounds indicates that negotiations have taken place with the settlement parties. In addition, it is emphasised that the existence of a negotiation is contrary to Article 7/4 of the Regulation, which states "Matters included in the interim settlement decision cannot be made the subject of negotiation by the settlement parties.”

With this decision, it has become an issue of concern whether the Board will be able to evaluate the request if the undertakings request a reduction in the rate and amount of the administrative fine stipulated in the interim decision on the settlement process. We will see how the relevant provision of the Regulation, which is considered to prohibit negotiation, will be interpreted in future settlement decisions.

Another New Investigation Against Google

With its announcement dated 02.02.2023, the Board announced that it has initiated an investigation against the economic entity consisting of Alphabet Inc., Google LLC, Google International LLC, Google Ireland Limited and Google Reklamcılık ve Pazarlama Ltd. Following the preliminary investigation conducted to determine whether the aforementioned economic entity violated Article 6 of Act No. 4054 by abusing its dominant position in the general internet search services market, the Board deemed that the findings are serious and sufficient enough to initiate an investigation against the economic entity consisting of Alphabet Inc., Google LLC, Google International LLC, Google Ireland Limited and Google Reklamcılık ve Pazarlama Ltd. Şti. with decision numbered 23-03/27-M.

As a result of the investigation initiated against the same undertakings in 2021, the Board concluded that the undertakings abused their dominant position in the general internet search services market and imposed an administrative fine of TRY 296,084,899.49 on the undertakings jointly and severally.

[1] The preliminary investigation regarding whether banks and financial institutions operating in Turkey and their representative oices violate Law No. 4054 on the Protection of Competition in their activities regarding deposits, loans, foreign exchange, bonds, bills, stock, and brokerage services was initiated with the decision dated 17.01.2020 and numbered 20-05/48-M

[2] Board decision dated 26.08.2021 and numbered 21-40/576-279

[3] Board decision dated 21.07.2022 and numbered 22-33/526-212

[4] Board decision dated 26.05.2022 and numbered 22-24/390-161

[5] Board decision dated 30.06.2022 and numbered 22-49/488-197

First published by Hergüner Bilgen Üçer Attorney Partnership, March 2023

Tagged with: Hergüner Bilgen Üçer Attorney Partnership, Kayra Üçer, Competition