Constitutional Court Decision On The Turkish Competition Authority's On-Site Inspection Powers

The Constitutional Court of Türkiye ("Constitutional Court") recently ruled by majority that the on-site inspection powers of the Turkish Competition Board governed under Article 15 of Law No. 4054 on Protection of Competition ("Turkish Competition Act") are not contrary to the Constitution.

This decision is of particular importance as it constitutes the first examination of Article 15 within the framework of constitutional review upon referral (close to "preliminary ruling procedure" under the EU law) following the Constitutional Court's individual application ruling in 2023, which was rendered upon the application of Ford Otomotiv Sanayi A.Ş. ("Ford Otosan Decision"). In Ford Otosan Decision, the Constitutional Court held that due to its very nature and way of enforcement, on-site inspections restricted the inviolability of domicile safeguarded under Article 21 of the Constitution and thus, on-site inspections conducted without a prior judicial warrant violate the Constitution which necessitates the judicial warrant to restrict the inviolability of domicile subject to certain conditions.

Assessment of the Constitutional Court

In the applications referred to the Constitutional Court through constitutional review upon referral by the 13^th Chamber of the Council of State and Ankara 11^th Administrative Court, the constitutionality of two separate wording within Article 15 of the Competition Law was examined:

• With respect to the first paragraph, the provision granting the Competition Board the power to conduct on-site inspections at undertakings and associations of undertakings "where deemed necessary (by the Competition Board)"; and
• With respect to the third paragraph, the provision allowing on-site inspections to be conducted upon a judge decision in cases where the inspection is obstructed or there is a risk of obstruction.

The Constitutional Court examined these provisions separately and rejected the objection for both provisions with procedural grounds for the first paragraph and on the merits for the third paragraph.

1. Procedural Rejection for the Third Paragraph

The Court found that the cases pending before the referring courts:

• did not concern actions based on a judicial decision obtained pursuant to Article 15 due to obstruction or the risk of obstruction of an on-site inspection; but rather
• concerned administrative fines imposed under Article 16 of the Competition Law.

Accordingly, the Court concluded that the third paragraph of Article 15 did not constitute an applicable rule in the pending cases before the referring courts and therefore dismissed the annulment request on grounds of lack of jurisdiction.

2. Substantive Review of the First Paragraph

The Constitutional Court assessed the constitutionality of the challenged provision primarily in light of Article 2 of the Constitution, which enshrines the rule of law principle, and Article 167, which imposes on the State the positive obligation to ensure protection of competition and proper functioning of markets. In this context, the Court held that:

• The Turkish Competition Authority's on-site inspection power serves a constitutionally legitimate aim under Article 167, namely protection of competition and the proper functioning of markets.
• While the rule of law principle requires legal rules to be clear and foreseeable, the challenged provision does not grant the Turkish Competition Authority unlimited or arbitrary powers. Rather, the on-site inspection power is limited to the duties assigned to the Authority under the Turkish Competition Act and is functionally linked to detection of competition law infringements.
• On-site inspections are conducted by authorized case handlers acting on behalf of the Authority, upon presentation of an authorization certificate. Where an inspection is obstructed or there is a risk of obstruction, the use of force is possible only upon a judge decision, meaning that the Authority does not possess autonomous coercive powers.
• Given that competition law infringements may arise in diverse and unforeseeable factual forms, it is not feasible for the legislator to regulate all possible scenarios in detail. Whether an on-site inspection is necessary must therefore be assessed in light of the circumstances of the specific case, which constitutes a natural outcome of the discretion afforded to the legislator.
• The protection of competition serves not only undertakings, but also consumers and society as a whole, and the on-site inspection power functions as a tool to prevent monopolization and cartelization in pursuit of this constitutional objective.

Based on these considerations, the Constitutional Court concluded that the phrase "where deemed necessary" in the first paragraph of Article 15 does not create uncertainty, and that the provision complies with Articles 2 and 167 of the Constitution.

Notably, the Court did not assess the objected provision within the framework of Article 13 of the Constitution governing limitations on fundamental rights, nor did it consider Article 21 on the inviolability of domicile as a relevant constitutional benchmark and also made no reference to the Ford Otosan Decision.

Dissenting Opinions

In the dissenting opinions attached to the decision, the dissenting judges emphasized that the on-site inspection power is directly linked to the right to inviolability of domicile protected under Article 21 of the Constitution in parallel to the Constitutional Court's Ford Otosan Decision.

In this respect, the Dissenting Opinions re-emphasized that management offices, working rooms, and digital data rooms of undertakings that are not freely accessible to the public constitute "domicile" within the meaning of Article 21, and that the Constitutional Court had expressly classified these areas as such in the Ford Otosan Decision. Where on-site inspections target these areas, the resulting interference is equivalent to search and seizure measures within the Turkish Criminal Procedure in terms of its practical effects.

The dissenting opinions further underlined that "non-obstruction" of an on-site inspection, when carried out under the threat of substantial administrative fines, cannot be regarded as valid consent. On this basis, it was argued that reliance on consent to bypass the judicial warrant requirement is incompatible with the protection regime established under Article 21 of the Constitution.

One dissenting opinion specifically highlighted that, despite the Constitutional Court's explicit finding of unconstitutionality regarding the Turkish Competition Authority's on-site inspection powers in the Ford Otosan Decision, the Constitutional Court failed to establish any connection between the on-site inspection power and Article 21 in the present constitutional review upon referral. While acknowledging that the Court has the authority to depart from its previous case law, the said dissenting opinion particularly emphasized that such deviation must be seperately grounded by clear and convincing reasoning. Failure to provide legal ground and reasoning for such deviation from previous precedents causes legal certainty and foreseeability principles to be undermined.

From this perspective, it was argued by the Dissenting Opinions that the primary constitutional benchmark in the constitutionality review should have been Article 21, and that examining the provision solely under Articles 2 and 167, despite the Court's recent individual application judgment finding a violation of Article 21, raises concerns in terms of legal consistency and predictability.

In addition, the Dissenting Opinions found that:

• the wording "where deemed necessary" in the first paragraph of Article 15 confers a broad discretion entirely to the Competition Board, and
• this is incompatible with the principles of legality, legal certainty and prevention of arbitrariness safeguarded under Articles 2 and 13 of the Constitution.

They further argued that limiting the judicial warrant requirement solely to cases of obstruction or risk of obstruction unduly narrows the scope of judicial safeguards and is inconsistent with the explicit wording of the Constitution.

From a procedural standpoint, the dissenting opinions also criticized the Constitutional Court's approach to the concept of an "applicable rule", noting that under the Court's established case law, all rules capable of affecting the procedural course or outcome of the case should be regarded as applicable rules in constitutional review upon referral. Accordingly, in actions seeking annulment of administrative fines imposed for obstructing or complicating an on-site inspection, both the first and third paragraphs of Article 15 should have been considered applicable rules.

Conclusion

With this decision, the Constitutional Court appears to have departed from the approach adopted in the Ford Otosan Decision and rendered its decision within the limits of the subject matter of the objection. While the Court had previously held that on-site inspections conducted without a judicial warrant violated Article 21 of the Constitution, it refrained from treating that provision as a relevant constitutional benchmark in its recent review upon referral, instead limiting its assessment to Articles 2 and 167, and ultimately concluding that Article 15 of the Competition Law does not violate the Constitution.

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