Competition Board Fine of Banks and Financial Institutions for Not Providing Information and Documents
Introduction
In the recently published decisions of the Competition Board ("Board"), it is observed that undertakings were fined due to the fact that requested information and documents were not provided at all, or were provided incompletely. The most interesting of these decisions[1] is the decision (“Decision”)[2] dated 02.07.2020 and numbered 20-32/397-179 regarding some banks and financial institutions failing to provide requested information and documents within the scope of the preliminary investigations[3] initiated by the Board. Even though the aforementioned Decision attracted attention at first glance due to the high amount of the fines imposed on these banks and financial institutions, it also brings with it important legal debates concerning the authority of the Board, the latter’s approach to the effect principle and single economic unit, and its evaluations on the protection of personal data.
The Legal Regulation that forms the Basis of the Decision
The Board can request all kinds of information that it deems necessary from all authorities, undertakings, or association of undertakings, in the performance of its duties that is given by Law on Protection of Competition numbered 4054 (“Law No. 4054”). For the same reason, the Board may request written or oral explanations from undertakings or associations of undertakings on certain topics during on-site inspections. Otherwise, an administrative fine will be imposed in line with Article 16 paragraph (c) of Law No. 4054.
The Requested Information and Documents and the Responses of the Undertakings to the Requests
This Decision is based on the fact that some undertakings did not provide some information and documents within the scope of the preliminary investigation initiated by the Board. Such preliminary investigation was initiated to determine whether or not the banks, financial institutions, and their representatives that are operating in Turkey are violating Law No. 4054 in their operations related to deposits, credit, foreign currencies, bills, bonds, stocks and brokerage services. Within the scope of the preliminary investigation, on-site inspections were carried out at several banks and financial institutions, including Citibank A.Ş. (“Citibank”), Goldman Sachs TK Danışmanlık A.Ş. (“Goldman Sachs”), ING Bank A.Ş. (“ING”), JPMorgan Chase Bank, National Association Merkezi Colombus Ohio Istanbul Turkey Branch (“JPMorgan”), and Türkiye Garanti Bankası A.Ş. (“Garanti”). Following these inspections, two information requests were sent to such undertakings.
The first information request was to submit recordings of all the correspondence made by the traders of the undertakings on the Bloomberg and Reuters platforms within a certain period of time. The second information request was on the submission of the correspondence of the top 10 traders with the highest Turkish Lira (“TRY”) quoted transaction volume amongst the traders of the undertakings and their parent companies, who are employed in the USA and England, and trading in TRY on Bloomberg and Reuters platforms, within a certain period of time.
JPMorgan, Citibank, Garanti and ING did not provide the relevant documents requested by the Competition Authority (“Authority”) by claiming certain reasons. Firstly, Goldman Sachs stated that it does not have traders and operation licenses, in Turkey, and also added that it will not provide any data on their traders employed abroad by the undertakings that are within the same economic unit, pursuant to the definition of undertaking under Law No. 4054. On the other hand, JPMorgan, Citibank, ING and Garanti replied to the initial information request and sent the information to the Authority; however, in response to the second information request, they stated that they could provide no documentation or information to the Authority. The aforementioned undertakings put forward various reasons to the Authority, accordingly. Among those reasons, they stated that the requested data was not under their control, and that the information request should have been made to the foreign undertakings, provided that the relevant procedural rules are taken into account, that the requested information and documents were beyond the authority of the Board, and that the information and documents should have been requested from the parent companies in line with the European Union General Data Protection Regulation (“GDPR”).
The Claim that the Requested Information and Documents are not Accessible and Irregular Notice was given
In reply to the explanations of the parties that are stated, above, the Board rendered an extensive assessment, the first of them to rebut the claim as to irregular notice. The Board stated that notice was duly given to the relevant undertakings in line with the previous decisions of the Board (Board’s decision on Syndication Credits[4]) and EU practices, together with the effects principle and the economic integrity approach, and concluded that the notice to the subsidiary to be delivered to the parent company complies with the law. In addition, the Board carried out a conformity assessment within the scope of the articles of the group of companies regulated under the Turkish Commercial Code. In this respect, the Board concluded that on the grounds of the dominant undertaking"s obligation to act prudently, a dominant undertaking, who is deemed to be a merchant, cannot claim that the relevant information request was not delivered to it through its subsidiaries, or was unaware of it.
Moreover, the Board assessed that in line with the sole undertaking approach, due to the fact that the undertaking stated that it does not possess or have access to the information, alone, will not prevent the imposing of sanctions. Additionally, by referring to the practices of the European Commission and the practices in the United States, the Board explicitly pointed out that the argument stating that the requested data cannot be submitted due to the violation of another country’s rules will not be accepted as just cause.
The Claim that the Requested Information and Documents Can Not Be Provided Due to the GDPR Rules
The Board was not concerned about the undertakings that exhibited efforts to provide information and documents in compliance with the GDPR or relevant national regulations (i.e. black outing/anonymizing to hide personal data was found reasonable) without obstructing the current investigation, and it considered this issue to be within the scope of Article 16(c) of Law No. 4054. However, it also clearly expressed that the same approach will not be applicable for undertakings who declare that they will never provide the requested information and documents by solely relying on the GDPR and relevant legislation.
The Claim that the Scope of the Request is Beyond the Authority of the Board
It was claimed that the content of the requested correspondence partially concerned transactions that were not concluded in TRY and, thus, had no effect on the Turkish market. Thereby, it was claimed that the content of the related correspondence is beyond the Authority’s authority to request the information. On the other hand, the Board stressed that the relevant undertakings were informed that the information request essentially covers transactions carried out in TRY in line with the effects principle and, if the data can be separated and provided to the Board without obstructing the current investigation, it is comprised only of the transactions in TRY.
The Assessment on Calculating the Monetary Fine and the Imposed Fine
The Board considered JPMorgan, Citibank, ING and Garanti as financial institutions due to the fact that they are deposit banks; hence, it calculated the revenue that is subject to fine pursuant to Communique[5] numbered 2010/4. As Goldman Sachs operates as a consultancy firm in Turkey, it was not evaluated as a financial institution. In fact, the Board assessed that the parent company, Goldman Sachs International, would better be a party to the ongoing preliminary investigation; however, it also addressed to the practical difficulties of determining the revenue gathered from the Turkish market of an undertaking that is not operating in Turkey. For that reason, the Board decided that Goldman Sachs’ net sales will be taken into account while calculating the monetary fine pursuant Article 3(f) to the Regulation on Monetary Fines.[6]
The Board decided to fine JPMorgan, Citibank, ING and Garanti for failing to provide the requested documentation and information to the Authority pursuant to Article 16 (c) of Law No. 4054 at an amount of one one-thousand of their gross revenues at the end of fiscal year 2019, and also decided to fine Goldman Sachs for the same reasons from the lower bond for the administrative monetary fines that equals TRY 31.903,00. In addition, the Board also declared that if the requested information is not provided to the Board by the end of the normal work day on 16.07.2020, then administrative monetary fines will be applied on a daily basis pursuant to Article 17 of Law No. 4054 (at a ratio of five ten-thousands of their revenues).
Conclusion
Besides the monetary fines imposed on the relevant undertakings, the topics assessed in the Decision are quite important in competition law practices. The Board made the assessment that within the sole undertaking approach, the claim of the subsidiary that a document is not under their reach or control, or it does not have access to information, does not prevent sanctions from being imposed. Also, in parallel with economic integrity term, the notice to the subsidiary to be delivered to the parent company was found to be in compliance with the law. Moreover, the Decision addressed the request for information and document within the scope of the data protection legislation. Hence, as it provided that the ongoing investigation is not obstructed, the Board found it reasonable for undertakings to provide data by taking the necessary precautions as to concerns arising from the GDPR or other relevant national regulations.
[1] Apex decision, No. 20-32/410-187, 02.07.2020, https://www.rekabet.gov.tr/Karar?kararId=b5cd5da7-0b56-4e7b-a8d6-8cb5da9d5d88, Çerkezköy Kuyumculuk decision, No. 20-01/1-1, 02.01.2020, https://www.rekabet.gov.tr/Karar?kararId=53fafe39-7453-44e9-ab59-ec08263495d9 (Access Date: 11.11.2020).
[2] See: https://www.rekabet.gov.tr/Karar?kararId=d2b439ee-f9fb-434d-9626-5142a09f11ed (Access Date: 11.11.2020).
[3] The preliminary investigation of the Board initiated with Decision No. 20-05/48-M, 17.01.2020.
[4] See: Decision No. 17-39/636-276, 28.11.2017, https://www.rekabet.gov.tr/Karar?kararId=b8a26358-485b-4af7-9d42-dc40652899fb (Access Date: 11.11.2020).
[5] See: The Communique on Mergers and Acquisitions Calling for the Authorization of the Competition Authority, Article 9, titled “Calculation of Revenue for Financial Institutions.” https://www.rekabet.gov.tr/Dosya/tebligler/2010-4-20200210100639796-pdf (Access Date: 11.11.2020).
[6] See: the Regulation on Fines to Apply in Cases of Agreements, Concerted Practices and Decisions Limiting Competition and Abuse of Dominant Position https://www.rekabet.gov.tr/Dosya/yonetmelikler/rekabeti-sinirlayici-anlasma-uyumlu-eylem-ve-kararlar-ile-hakim-durumun-kotuye-kullanilmasi-halinde-verilecek-para-cezalarina-iliskin-yonetmelik-20180219102616054.pdf (Access Date: 11.11.2020).
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