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Process and timing
Is the notification process voluntary or mandatory?
The notification process is mandatory. If the turnover thresholds are exceeded, the transaction is subject to approval by the Competition Board.
What timing requirements apply when filing a notification?
Law 4054 on Protection of Competition provides no specific deadline for filing, but it is advisable to file a transaction at least 45 to 50 calendar days before the projected closing date. It is important that a transaction is not implemented before the Competition Board has approved it.
As for privatisation tenders, according to Communiqué 2013/2 on the Procedures and Principles to be Pursued in Pre-notifications and Authorisation Applications to be filed with the Authority in order for Acquisitions via Privatisation to Become Legally Valid , it is mandatory to file a pre-notification before the public announcement of a tender and to receive the board’s opinion in cases where the turnover of the undertaking or the asset or service production unit to be privatised exceeds TRY30 million. Communiqué 2013/2 promulgates that in order for the acquisitions through privatisation which require pre-notification to the authority to become legally valid, they must be approved board. The application should be filed by all winning bidders after the tender, but before the privatisation administration's decision on the final acquisition.
In case of a public bid, filing can be carried out at a stage where the documentation at hand adequately proves the irreversible intention to finalise the contemplated transaction.
What form should the notification take? What content is required?
Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board provides a complex notification form, similar to Form CO of the European Commission. One hard copy and an electronic copy of the notification form must be submitted to the Competition Authority. Additional documents, such as the executed or existing copies and sworn Turkish translations of the transaction documents, financial statements of the parties and, if available, market research reports for the relevant market are also required. In addition, a signed, notarised and apostilled power of attorney is required in order to represent the party before the authority.
Is there a pre-notification process before formal notification, and if so, what does this involve?
Unlike the EU regime, under Turkish merger control regime there is no pre-notification process. All of the transactions (that are subject to a mandatory filing) should be notified to the Competition Authority by way of a uniformed notification form. However, the notification process differs for privatisation tenders according to Communiqué 2013/2 on the Procedures and Principles to be Pursued in Pre-notifications and Authorisation Applications to be filed with the Authority in order for Acquisitions via Privatisation to Become Legally Valid. According to Communiqué 2013/2, it is mandatory to file a pre-notification before the public announcement of a tender and obtain the Competition Board’s opinion in cases where the turnover of the undertaking or asset or service production unit to be privatised exceeds TRY30 million (approximately €10 million or $11 million). Further, Communiqué 2013/2 states that in order for an acquisition to become legally valid through privatisation (which requires pre-notification to the Competition Authority), board approval is mandatory. The application should be filed by all winning bidders after the tender, but before the privatisation administration’s decision.
Can a merger be implemented before clearance is obtained?
There is an explicit suspension requirement. Therefore, closing a notifiable transaction without the Competition Board’s approval is prohibited.
Pursuant to Article 16 of Law 4054 on Protection of Competition, if the parties to a notifiable transaction violate the suspension requirement (ie, close a notifiable transaction without the board’s approval or fail to notify the transaction at all), a monetary fine (based on the local turnover in the financial year preceding the date of the fining decision at a rate of 0.1%) will be imposed on the participants (ie, the acquirers in case of an acquisition, both merging parties in case of a merger or the parent companies in case of the creation of a joint venture). Article 16 of Law 4054 does not give the board discretion as to whether to impose a monetary fine in case of a violation of the suspension requirement. In other words, if a violation of the suspension requirement is detected, a fine will be imposed automatically.
If, following review of a notifiable transaction that was not notified, the board decides that the transaction is prohibited under Article 7 of Law 4054 (ie, it creates or strengthens a dominant position and significantly hinders competition), the undertakings will be subject to fines of up to 10% of their turnover in the financial year preceding the date of the decision (if this is not calculable, the turnover in the financial year closest to the decision date will be is used). Managers or employees who played a determinative role in the violation may also be fined up to 5% of the fine imposed on the respective party. In determining the fines, the board should consider:
- repeat infringements;
- the duration of the infringement;
- the market power of the undertakings;
- the decisive influence of the undertakings in the infringement;
- whether the undertakings have complied with any commitments given;
- whether the undertakings assist with the examination; and
- the severity of the damage that has occurred or is likely to occur.
In addition to the monetary penalty, the board is authorised to:
- take all necessary measures to terminate the transaction;
- reverse all de facto legal consequences of every action that has been unlawfully taken; and
- return all shares and assets, if possible, to the persons which owned them before the transaction or, if such measure is not possible:
- assign them to third parties;
- forbid participation in control of the undertakings until such assignment takes place; and
- take all other necessary measures.
Guidance from authorities
What guidance is available from the authorities?
The notification form to be used during the notification process is provided in Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board. The notification form is similar to the European Commission’s Form CO and each section has own annotations indicating exactly what sort of information is required. In addition, the Competition Board has enacted guidelines in order to provide guidance regarding the merger control process:
- the Guideline on Cases Considered as Mergers and Acquisitions and the Concept of Control;
- the Guideline on the Assessment of Horizontal Mergers and Acquisitions;
- the Guideline on the Assessment of Non-horizontal Mergers and Acquisitions;
- the Guideline on Market Definition;
- the Guideline on Undertakings Concerned, Turnover and Ancillary Restrictions in Mergers and Acquisitions; and
- the Guideline on Remedies Acceptable in Mergers and Acquisitions.
What fees are payable to the authority for filing a notification?
No filing fee is payable under the merger control regime.
Publicity and confidentiality
What provisions apply regarding publicity and confidentiality?
Once notified, the Competition Authority publishes transactions on its official website, including the parties' names and the areas of their commercial activity. All final decisions of the Competition Board are published on the Competition Authority's website after confidential business information is redacted. The main legislation regulating the protection of commercial information is Communiqué 2010/3 on the Regulation of Right to Access to File and Protection of Commercial Secrets. Communiqué 2010/3 places the burden of identifying and justifying information or documents as commercial secrets on the undertaking. An undertaking must request that certain information or documents be treated as confidential by the Competition Board and justify the reasons for this request. The request must be made in writing.
While the board can also evaluate the information or documents ex officio, the general rule is that information or documents that are not requested to be treated as confidential are assumed to be non-confidential.
The reasoned decisions of the board are published on the authority’s website after confidential business information has been redacted.
Under Article 15(2) of Communiqué 2010/3, the authority may not take into account confidentiality requests relating to indispensable information and documents to be used as evidence for proving infringement. In such cases, the authority can disclose information and documents that could be considered trade secrets by weighing the balance between public and private interest and in accordance with the proportionality principle.
Are there any penalties for failing to notify a merger?
In the event that the parties to a notifiable transaction violate the suspension requirement (ie, closing a notifiable transaction without having obtained the approval of the Competition Board or failing to notify the notifiable transaction), the acquirer (for formation of a fully functioning joint venture, all of the parent companies are deemed to be the acquirer separately) would receive a turnover-based monetary fine at a rate of 0.1% of the annual Turkish turnover in the financial year preceding the date of the decision. In mergers, both merging parties will be fined. In any event, the minimum administrative monetary fine is TRY17,700 for 2016 and this is revised annually. This fine does not depend on whether the Competition Authority will ultimately clear the transaction, but rather is a fixed ratio (0.1%). The Competition Board has no power to increase or decrease such fine. Therefore, the acquirer will incur the administrative monetary fine automatically once a violation of the suspension requirement has been detected.
If, however, there is a real risk that the transaction is problematic under the dominance test applicable in Turkey, the Competition Authority may:
- ex officio launch an investigation into the transaction;
- order structural and behavioural remedies to restore the situation as before the closing (restitutio in integrum); and
- impose a turnover-based fine of up to 10% of the parties’ annual Turkish turnover.
Executive members and employees of the undertakings concerned who are determined to have played a significant role in the violation (ie, failing to file or closing before approval) may also receive monetary fines of up to 5% of the fine imposed on the undertakings. The transaction will also be invalid and unenforceable in Turkey.
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