Compliance Obligations with International Laws and Competition Board’s Data Access Requests

Introduction

In the Competition Board’s (“Board”) decision dated 07.11.2019 and numbered 19-38/581-247 (“Decision”),[1] it was discussed whether Siemens Healthcare Sağlık A.Ş. (“Siemens Healthcare”) hindered or complicated the on-the-spot inspection on 02.10.2019 at the Siemens premises. The on-the-spot inspection decision has been taken in accordance with the Board’s preliminary investigation decision dated 07.02.2019 and numbered 19-06/55-M (“Preliminary Investigation Decision”). The Decision is remarkable, since the Siemens Healthcare employees did not accept the case handlers’ search demand of all of the Siemens Healthcare employees based on the fact that Siemens Healthcare’s global headquarters is Siemens Healthineers AG, and that such search demand shall be positively responded to through global approval mechanisms.

Therefore, the Decision lights the way to the question as to whether the Competition Authority’s authority is restricted when the investigated undertakings has a global headquarters and, accordingly, the global security mechanisms and relevant law requirements must be followed.

Legal Framework

Article 15 of Competition Act numbered 4054 (“Competition Act”) explains “on-the-spot inspections,” in detail. Moreover, Article 16 (1) (d) of the Competition Act states that the Board shall impose administrative monetary fines on the undertakings that hinder or complicate on-the-spot inspections by five in one thousand of its gross revenue which generate by the end of the financial year preceding the decision, or which generate by the end of the financial year closest to the date of the decision if it would not be possible to calculate it.

Article 17 (1) of the Competition Act states that without prejudice to the penalties set forth in Article 16, paragraph one, the Board shall, for each day, impose on undertakings administrative fines by five in ten thousand of annual gross revenues of the relevant undertaking that was generated by the end of the financial year preceding the decision, or generated by the end of the financial year closest to the date of the decision, if it is impossible to calculate it, and which would be determined by the Board in the following cases:

• failure to comply with the obligations imposed, or commitments made, by a final decision or interim measure decision;
• preventing or complicating on-site inspection;
• failure to provide the information or documents requested within the due period with respect to the implementation of Articles 14 and 15 of the Act, pursuant to paragraph one, sub-paragraphs (a) and (c), and administrative fines may be imposed as of the date when the due period for complying with the obligations in the decisions mentioned in these sub-paragraphs has expired. The administrative fines related to the act in sub-paragraph (a) may be imposed from the day following the notice of this decision, if the decision imposing the obligation has not established a definite period, and the administrative fine related to the acts in sub-paragraph (b) may be imposed from the day following the date upon which the act in question has been realized.

What Happened

On the on-the-spot inspection day, Siemens Healthcare employees did not accept the case handlers’ search demand of all of the Siemens Healthcare employees based on the fact that the requested search method should have been directed to Siemens Healthineers AG, Siemens Healthcare’s (“Siemens Global”) global headquarters. Siemens Global has responded that such search shall be conducted via “eDiscovery” specification and, for such method, the global approval mechanisms shall be positively exhausted.

The case handlers then requested to limit their search to the employees who were resident in Turkey; therefore, international calls were made, and the global headquarters was informed regarding the on-the-spot inspection’s content and scope. The case handlers also informed the authorized employees of the undertaking that the inspection will be limited to the Siemens Healthcare users, and the case handlers may be accompanied by Siemens Healthcare employees during the eDiscovery search. However, the undertaking rejected the inspection based on the fact that the eDiscovery search shall mean the search among the employees who are resident in the European Union, and this may give rise to concerns in other fields of law. In addition, Siemens Healthcare has stated that in order for no international laws to be infringed upon, if the date and the search parameters are to be shared by the Competition Authority, the relevant data established may be prepared and submitted by itself. The case handlers have responded to the undertaking that the on-the-spot inspection procedure would not be met via the requested method, and the on-the-spot inspection minutes comprising the relevant details have been prepared.

Siemens Healthcare employees then submitted a petition dated 08.10.2019, and stated that the Competition Authority’s subject matter request was not positively responded to on the on-the-spot inspection day due to the fact that the relevant request would have infringed many safety protocols, contractual obligations, intellectual property law matters and the data protection laws applied in Europe, the United States, and the rest of the world. The undertaking, on the other hand, has explained that is researching the means through which to fulfill the Competition Authority’s request, and has submitted an access remedy that comprises the following steps: (i) The inspection will be conducted through the Microsoft Safety and Compliance Center; (ii) The access will take place on the date and time determined by the Competition Authority and a Siemens Healthcare information technology specialist will accompany; (iii) it is important to Siemens Healthcare’s legal representatives accompany the Competition Authority representatives; (iv) The Competition Authority representatives will have access to the electronic documents sent or received by both past and present Siemens Healthcare employees; however (v) Some of the documents may be encrypted and, in the event that these documents are requested from Siemens Healthcare, the provision of such data may take time; (vi) the Competition Authority representatives will be provided with additional technical information confirming that the documents have been maintained in their original formats before, after, and at the time of the inspection; and (vii) Since the inspection will be conducted in line with the aligned safety protocol and with the support of Siemens Healthcare employees, both Siemens Healthcare and the Competition Authority will be immune from allegations of any infringements of other laws, and if the Competition Authority approves the explained remedy, Siemens Healthcare is ready to initiate the access procedure immediately.

It was decided that on 15.10.2019 the inspection was to be conducted at the Siemens Healthcare premises in Ankara.

Decision and Reasoning

The remarks in the Decision are as follows:

• The on-the-spot inspection of 02.10.2019 was not productive, since the Competition Authority representatives could not use the eDiscovery method. The Siemens Healthcare’s rejection to allow access has constituted the complicating, or hindering of, on-the-spot inspection. The fact that the Competition Authority representatives were provided with additional technical information explaining that the documents have been maintained in their original formats prior to, after, and at the time of the inspection, does not alter the former determination. Thus, an on-the-spot inspection shall be conducted without prior notice, immediately, quickly, and uninterrupted by its nature.
• It may be determined from the technical data provided by Siemens Healthcare that the undertaking did not make changes to the system between the dates of 02.10.2019 and 11.10.2019, since it activated the “hold” tool. On the other hand, while the eDiscovery search that was planned to be conducted on 02.10.2019 would have provided results of the e-mails that are in the “hard delete” category, which are 30 days prior to 02.10.2019, the on-the-spot inspection on 15.10.2019 covered a more restricted period and, therefore, did not provide the same results as the 02.10.2019 on-the-spot inspection.
• On-the-spot inspections shall be conducted on the date upon which the Competition Authority finds appropriate, and with regard to the undertaking’s entire relevant business units, and upon the documents found to be relevant. Therefore, the fact that an undertaking solely offers the documents it has allowed for the inspection at the time it finds convenient, and via the method it requests, this shall not be understood as not hindering or complicating the on-the-spot inspections.
• During first on-the-spot inspection on 02.10.2019, Siemens Healthcare became aware of the search keywords used by the Competition Authority representatives. Accordingly, they identified the opportunity to conduct detailed researches through the eDiscovery method by using the identified keywords. In addition, it cannot be said that Siemens Healthcare had experienced any technical difficulties on the inspection day that may have blocked the immediate and continuous on-the-spot inspection.

Administrative Monetary Fine

The Board imposed an administrative monetary fine on Siemens Healthcare pursuant to Article 16 (1) (d) by five in one thousand of its gross revenue, since it hindered and complicated the on-the-spot inspection. 

In addition, the Board also imposed an administrative monetary fine on Siemens Healthcare, pursuant to Article 17 (1) (b). Accordingly the Board determined the fined period as 12 days that commenced from 03.10.2019 (the day after first on-the-spot inspection), and ended on 15.10.2019 (the second on-the-spot inspection). 

The Decision was made unanimously.

Comment

The Decision is important since it makes clear that the investigated undertakings’ access rejections based on the fact that it has a global headquarters, as well as liability of compliance to international laws (i.e. data protection law, intellectual property law), still constitutes hindering or complicating on-the-spot inspections, and is not a safe harbor. 

Recent Board investigations have found that the investigated undertakings, which has a global headquarters, are much more reluctant to fully satisfy the Competition Authority’s access requests, based on the fact that the data access would consequence infringements to international laws and security protocols. On the other hand, the Decision alludes to the fact that the relevant reasoning has been tried, and did not change the Competition Authority’s assessment, regarding the understanding of Article 16 of the Competition Act.

[1] Competition Board’s Sahibinden.com decision, No. 07.11.2019 and numbered 19-38/581-247 https://www.rekabet.gov.tr/Karar?kararId=38800013-e0f0-4375-9f16-ce520b83e25c (Access Date: 20.03.2020)