Constitutional Court's Evaluation of the Competition Board's Authority to Conduct On-Site Investigations

Background

One of the amendments made in Law No. 4054 by Law No. 7246, published in the Official Gazette numbered 31165 on 24.06.2020, is related to the on-site inspection authority of the Board. Under this amendment, it has been regulated that the Authority's experts can examine the records, physical and electronic data, and documents of the enterprise or associations of undertakings, and can take copies and physical samples of them, and the practical application of the Authority which existed before the regulation has been put on a legal basis.

As the Constitutional Court stated in the judgment, as a result of the recent non-stop developments in information technologies, personal data is processed much more and faster than traditional methods. Accordingly, many data that were previously considered unrelated to each other are brought together centrally and the capacity to generate new data increases by subjecting the data to analysis with advanced technological means such as data mining, and personal data becomes a valuable asset for commercial enterprises. On the other hand, the sensitivity regarding the protection of personal data has increased as the attempts of terrorism and criminal organizations to obtain this processed data have also increased with the more widespread processing of data. Therefore, the Personal Data Protection Authority ("KVKK") has become more active in parallel with this sensitivity and continues to do so.

Due to the sensitivities mentioned above, the board authority granted by Law No. 7246 to Authority experts for on-site inspections has been a subject of much debate in terms of the protection of personal data. In this respect, it has been stated that the rule regulated in Article 15/1(a) of Law No. 4054, which allows the copying and sampling of all kinds of documents of undertakings without any limitation, and does not include any guarantee regarding the acquisition and processing of personal data, which also grants access to commercial secrets and customer data of undertakings without any requirement of the representative of the relevant undertaking being present during this process, and the legal certainty of the relevant rule is problematic.

Assessment of the Constitutional Court

During its evaluation of the provision regarding on-site inspections regulated by the Law No. 4054, the Constitutional Court underlines the importance that it attributes to the protection of personal data. First, the court states that personal data is guaranteed under the confidentiality of private life scope in Article 20 of the Constitution. Then, the Constitutional Court examines the scope of the provision and therefore the protection of personal data for individuals. The court notes that the phrase "everyone" is mentioned in Article 20 of the Constitution and therefore the data related to legal entities should also be evaluated within the scope of the article. However, the decision states that as well as real persons with civil rights, legal entities also have legal standing to apply individually.

The Constitutional Court's approach is quite important and remarkable. In fact, the European Data Protection Directive No. 95/46/EC dated February 20, 1995, which is the main law for the Personal Data Protection Law No. 6698 ("KVKK") dated March 24, 2016, excludes data related to legal entities. The court shows that this different approach is justified by the technological developments in recent years and the fact that legal entities are considered personal data owners in the electronic communication sector under the European Parliament and Council Directive No. 2002/58/EC of July 12, 2002.

After determining that legal entities are also within the scope of personal data protection, the Constitutional Court accepts that the provision requested to be cancelled imposes a restriction, and evaluates the conformity of the provision with the Constitution.

Legality Assessment

After referring to Article 20 of the Constitution and stating that personal data can only be processed in cases where the explicit consent of the relevant person is given and it is provided by law, the Constitutional Court states that the competence granted to the Board in the challenged provision is clear and precise in terms of subject, scope, and limitations and therefore complies with the principle of legality since it meets the criteria of clarity, accessibility, and predictability.

Proportionality Assessment

During the proportionality assessment, the Court firstly emphasizes the obligation imposed on the state by the second paragraph of Article 48 and Article 167 of the Constitution to ensure the functioning of free markets and prevent collusion and states that the relevant provision is aimed at a legitimate purpose. In this context, the court notes that healthy and regular functioning of markets is a mandatory requirement and, in some cases, it is difficult to find evidence without the challenged provision, and therefore, the necessity element of the provision is satisfied.

Moreover, it is accepted that the evidence to be obtained by the experts of the Authority will prevent market malfunctions, monopoly, and collusion. In addition to this point, the Constitutional Court states that due to technological developments and data storage methods, it is not possible to examine violations of competition on data such as corporate structures and market power, and therefore, the provision is suitable for this purpose.

Finally, the Court reviews the relevant provision in terms of proportionality and concludes that it is proportionate, taking into account (I) the fact that the review is carried out by submitting documents, (II) the fact that the Board does not have the power to use force, (III) the fact that issues for which the parties were not given the right to defend themselves cannot be relied upon, (III) the fact that the Board is subject to the obligations provided for in the KVKK, and (IV) the fact that special categories of personal data are subject to stricter conditions

Grounds for Dissenting Votes

The reasons for dissent can be grouped under two headings. The first is that the provision whose annulment is requested does not comply with the legality principle, and the second is that the relevant provision is contrary to Article 21 of the Constitution, which regulates the inviolability of the home.

Legality

In the dissenting opinions, it is argued that although the authority to obtain copies and physical samples of all kinds of data and documents has been regulated in the provision whose annulment is requested, the conditions required by Article 20 (3) of the Constitution for how these copies and physical samples obtained will be used, where they will be processed and stored, are not provided with the necessary guarantees, and it is not specified how this information and documents will be used, whether there is an opportunity to object to such information, and the period and procedure for their erasure are not provided, which undermines the certainty requirement of the legality principle and therefore contradicts the legality principle.

Immunity of Domicile

Another reason for dissent is the inviolability of the home. According to this view, places that are not entirely dedicated to work should be considered as part of the home, and decisions of the European Court of Human Rights and the Constitutional Court supporting this view are cited.^[1] Therefore, according to the relevant dissenting opinion, if workplaces are considered as part of the home, the express consent of the workplace owner is required for an inspection to be carried out. In cases where the workplace owner does not give express consent, a court order is required. According to the last paragraph of Article 15 of Law No. 4054, if the workplace owner does not allow an inspection, this is considered as obstruction of inspection and the relevant undertaking will face an administrative fine, so even if the undertaking owner consents to an inspection on site, this consent cannot be considered as express consent.

Conclusion

In conclusion, the Constitutional Court accepts the Board's power to conduct on-site inspections as a proportional and lawful means of protecting competition. On the other hand, it is important to note that the Constitutional Court has stated that legal entities can also benefit from the protection provided in the KVKK and that the Board is subject to the obligations set forth in the KVKK. Although the Constitutional Court has taken a clear stance on this issue, the increasing sensitivity regarding personal data suggests that this debate on personal data and the Board's powers will continue.