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Trends and climate

Trends
How would you describe the current merger control climate, including any trends in particular industry sectors?

Until 2013, the Competition Board dealt with a significant number of merger control cases. Since the notification threshold was increased by Communiqué 2012/3 on the Amendment of Communique 2010/4 on the Mergers and Acquisitions Subject to the Approval of the Competition Board, this trend has changed and the number of transactions reviewed by the Competition Authority has gradually decreased. As expected, the board shifted its focus from merger control cases to concentrate on the fight against cartels and abuse of dominance. The board finalised 303 merger control cases in 2012 – this number fell to 213 in 2013 and 215 in 2014 (a drop of approximately 30%). 

According to the 17th Annual Activity Report of the Turkish Competition Authority for 2015, the board finalised 158 merger control cases. Among these 158 transactions, four were granted conditional approval and one was prohibited.

The 158 overall transactions included one merger, 124 acquisitions, 25 joint ventures and eight privatisations. Considering the fact that in 2014, the board assessed 215 transactions and seven were taken into Phase II review, the significant increase in the number of Phase II reviews and conditional approval decisions in 2014 and 2015 leaves the impression that the board will not hesitate to go into Phase II review and seek commitments if it deems this necessary based on the potential competition law concerns. This strongly indicates that remedies and conditional clearances are becoming increasingly important under Turkish merger control enforcement. In line with this trend, the number of cases in which the Competition Board decided on divestment or licensing commitments, or other structural or behavioural remedies, has increased dramatically over the past four years. Traditionally, the Turkish Competition Authority has paid particular attention to transactions in sectors where competition law infringements are frequently observed (eg, the cement and ready mixed concrete sector) and the concentration level is high. Concentrations concerning strategic sectors that are important to the national economy (eg, automotive, telecoms, energy, pharmaceuticals and airlines) attract particular scrutiny.

Reform
Are there are any proposals to reform or amend the existing merger control regime?

The major development expected in the Turkish competition law regime is the adoption of the draft law amending Law 4054 on the Protection of Competition. To that end, the draft law was officially submitted to the presidency of the Turkish Parliament on January 23 2014 and was reviewed by a parliamentary sub-committee. However, the parliamentary sub-committee could not conclude its work on the necessary changes within the relevant parliamentary legislative year. Therefore, at present the draft law is statute barred. In order to re-initiate the parliamentary process, the draft law must again be proposed and submitted to the presidency of the Turkish Parliament. Although it is impossible to say when this will happen, it is likely that a draft reform law will remain on the competition law agenda.

The draft law aims to achieve further compliance with the EU competition regime, on which it is closely modelled. It adds several new dimensions and changes which should result in a procedure that is more efficient in terms of time and resource allocation. The draft law proposes several significant changes in terms of merger control:

  • The substantive test for concentrations will be changed. The EU significant impediment of effective competition test will replace the existing dominance test.
  • In accordance with EU competition law, the draft law will adopt the term ‘concentration’ as an umbrella term for mergers and acquisitions. 
  • The draft law will eliminate the exemption for acquisition by inheritance. 
  • The draft law will abandon the Phase II procedure (which was similar to the investigation procedure) and provide a four-month extension for cases requiring in-depth assessments. During in-depth assessments, parties can deliver written opinions to the Competition Board, which will be akin to written defences.
  • The draft law will extend the appraisal period for concentrations from the existing period of 30 calendar days to 30 business days, which equates to approximately 40 days in total. As a result, the period in which to obtain a decision on a preliminary review is expected to be extended.

Further, the draft law proposes to abandon the fixed turnover rates for certain procedural violations, including failing to notify a concentration and hindering onsite inspections; and to cap the monetary fines imposed for these violations. This new arrangement gives the board discretion to set fines by conducting case-by-case assessments.

Another significant anticipated development is the Draft Regulation on Administrative Monetary Fines for the Infringement of Law on the Protection of Competition, which will replace the Regulation on Monetary Fines for Restrictive Agreements, Concerted Practices, Decisions and Abuse of Dominance. The draft regulation is heavily inspired by the European Commission’s guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation 1/2003. Thus, the introduction of the draft regulation clearly demonstrates the authority’s intention to bring the secondary legislation into line with EU competition law during the harmonisation process. The draft regulation was sent to the Turkish Parliament on January 17 2014, but as yet no enactment date has been announced.

Legislation, triggers and thresholds

Legislation and authority
What legislation applies to the control of mergers?

The principal legislation on merger control is Law 4054 on Protection of Competition and Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board. In particular, Article 7 of Law 4054 governs mergers and acquisitions.

Article 7 of Law 4054 authorises the Competition Board to regulate which transactions should be notified in order to be legally valid. Further to this provision, Communiqué 2010/4 is the primary instrument in assessing merger cases and sets out the types of transaction that are subject to the board’s review and approval.

In order to harmonise Turkish competition law with EU competition law, the authority has published the following guidelines:

  • 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 is the relevant authority?

The Competition Authority – a legal entity with administrative and financial autonomy – is responsible for enforcing Law 4054 on Protection of Competition in Turkey. The authority consists of the Competition Board, the presidency and main service units. As the competent body of the authority, the Competition Board is responsible for, among other things, reviewing and resolving M&A notifications. The board consists of seven members and is seated in Ankara.

The main service units of the authority consist of five different supervision and enforcement departments and the following units:

  • the decisions department;
  • the economic analyses and research department;
  • the information management department;
  • the external relations, training and competition advocacy department;
  • the strategy development department;
  • the regulation and budget department;
  •  the press department; and
  • the cartel on-the-spot inspections support division.

There is a sectoral job definition for each supervision and enforcement department.

Transactions caught and thresholds
Under what circumstances is a transaction caught by the legislation?

According to Article 7 of Law 4054 on Protection of Competition and Article 13 of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, mergers and acquisitions that do not create or strengthen a dominant position or significantly impede effective competition in a relevant product market within the or part of Turkey will be cleared by the Competition Board. Accordingly, Communiqué 2010/4 defines the scope of notifiable transactions in Article 5 as follows:

  • a merger of two or more undertakings; or
  • the acquisition of direct or indirect control over all or part of one or more undertakings by one or more undertakings or persons which currently control at least one undertaking through:
    • the purchase of assets or some or all of its shares;
    • an agreement; or
    • another instrument.

Concentrations that result in a change of control on a lasting basis are subject to the board’s approval, provided that they exceed the applicable thresholds. Communiqué 2010/4 and the Guideline on Cases Considered as Mergers and Acquisitions and the Concept of Control provide a definition of ‘control’ which does not fall far from the definition included in Article 3 of Council Regulation 139/2004. According to Article 5(2) of Communiqué 2010/4, control can be constituted by rights, agreements or any other means which, either separately or jointly, de facto or de jure, confer the possibility of exercising decisive influence on an undertaking. These rights or agreements have decisive influence – in particular, in terms of ownership or the right to use all or part of the assets of an undertaking, or rights or agreements which confer decisive influence on the composition or decisions of the organs of an undertaking.

Pursuant to Article 6 of Communiqué 2010/4, the following transactions do not fall within the scope of Article 7, and are therefore exempt from board approval:

  • intra-group transactions and other transactions that do not lead to a change in control;
  • temporary possession of securities for resale purposes by undertakings whose normal activities involve conducting transactions with such securities for their own account or that of others, provided that the voting rights attached to such securities are not exercised in a way that affects the competition policies of the undertaking issuing the securities;
  • acquisitions by public institutions or organisations further to the order of law, for reasons such as liquidation, winding-up, insolvency, cessation of payments, concordat or privatisation; and
  • acquisition by inheritance, as provided by Article 5 of Communiqué 2010/4.

Do thresholds apply to determine when a transaction is caught by the legislation?

Under Article 7 of Communiqué 2010/4, a transaction is notifiable if one of the following turnover thresholds is met:

  • the aggregate Turkish turnover of the transaction parties exceeds TRY100 million (approximately €33 million or $37 million) and the Turkish turnover of at least two of the transaction parties each exceeds TRY30 million (approximately €10 million or $11 million); or
  • either:
    • the Turkish turnover of the transferred assets or businesses in acquisitions exceeds TRY30 million (approximately €10 million or $11 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TRY500 million (approximately €166 million or $184 million); or
    • the Turkish turnover of any of the parties exceeds TRY30 million (approximately €10 million or $11 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TRY500 million (approximately €166 million or $184 million).

Article 7(b)(ii) of Communique 2010/4 applies only to a merger transaction within the meaning of Article 5(1)(a) of Communique 2010/4.

The thresholds are reviewed by the Competition Board every two years. The next deadline for the board to confirm or revise the thresholds is January/February 2017. 

Informed guidance
Is it possible to seek informal guidance from the authority on a possible merger from either a jurisdictional or a substantive perspective?

No. There is no procedural mechanism through which the parties can engage in pre-notification consultation with the Competition Board. Therefore, parties must first submit the notification form and then engage in further discussions if required.

Foreign-to-foreign
Are foreign-to-foreign mergers caught by the regime? Is a ‘local impact’ test applicable under the legislation?

Foreign-to-foreign mergers are covered by Law 4054 on Protection of Competition to the extent that they affect the relevant markets within the territory of Turkey. Regardless of the parties’ physical presence in Turkey, sales in Turkey may trigger the notification requirement to the extent that the turnover thresholds are met. Article 2 of Law 4054 sets out the effects criterion – that is, whether the undertakings concerned affect the goods and services markets in Turkey. Even if the undertakings concerned have no local subsidiaries, branches or sales outlets in Turkey, the transaction could still be subject to Turkish competition legislation if the goods or services of the participating undertakings are sold in Turkey and the transaction would thus affect the relevant Turkish market. In 2015 64 transactions notified to the Turkish Competition Board were foreign-to-foreign transactions.

Joint ventures
What types of joint venture are caught by the legislation?

The Turkish merger control rules applicable to joint ventures are akin to – if not the same as – the EU rules. Article 5 of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board defines a ‘joint venture’, which is close to the definition used in EU law.

In order to qualify as a concentration subject to merger control, a joint venture must be of a fully functional character and satisfy two criteria:

  • joint control in the joint venture must exist; and
  • the joint venture must be an independent economic entity established on a lasting basis (ie, having adequate capital, labour and an indefinite duration).

In addition, regardless of whether the joint venture is fully functional, the joint venture should not have as its object or effect the restriction of competition among the parties or between the parties and the joint venture itself within the meaning of Article 4 of Law 4054, which prohibits restrictive agreements. If the parent undertakings of a joint venture operate in the same market or a downstream, upstream or neighbouring market to the joint venture, it could lead to coordination between independent undertakings that restricts competition within the meaning of Article 4 of the law.

Further, if the joint venture turns out to be non-fully functional, while non-fully functional joint ventures are not subject to mandatory merger control filing, they may fall under Article 4 of Law 4054, which prohibits restrictive agreements. The parties can carry out a self-assessment individual exemption test, which is set out under Article 5 of Law 4054, to determine whether the joint venture meets the conditions of individual exemption (which are also very similar to, if not identical to, the EU regime). It is optional for parties to notify a transaction for individual exemption. 

Notification

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.

Pre-clearance implementation
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.

Fees
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.

Penalties
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.

Procedure and test

Procedure and timetable
What procedures are followed by the authority? What is the timetable for the merger investigation?

The notification is deemed to have been filed when received in complete form by the Competition Authority. If the information requested in the notification form is incorrect or incomplete, the notification is deemed to have been filed on the date when the information is completed or corrected.

The Competition Board, in its preliminary review (ie, Phase I), will decide either to approve or investigate the transaction further (ie, Phase II).

The board notifies the parties of the outcome within 30 calendar days following a complete filing. There is an implied approval mechanism whereby tacit approval is deemed if the board does not respond within 30 calendar days of a complete filing. In practice, the board almost always reacts within the 30-day period by either sending a written request for information or – rarely – rendering its decision within the 30 days.

The authority can send written information requests to the parties, any other party relating to the transaction or third parties such as competitors, customers or suppliers.

Any written request by the authority for missing information will stop the review period and restart the 30-day period as of the date on which the responses are submitted.

If a notification leads to an investigation (Phase II), it becomes a full investigation. The investigation (Phase II) takes about six months and, if deemed necessary, it may be extended only once for an additional period of up to six months.

What obligations are imposed on the parties during the process?

As per Article 10(3) of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, if any change occurs during the Competition Board's review of a transaction regarding the information submitted in the filing, the parties have a legal duty to inform the board immediately. As a general rule, the parties are obliged to file correct and complete information with the Competition Authority. If the information requested in the notification form is incorrect or incomplete, the notification is deemed to have been filed only on the date when such information is completed following the Competition Board’s request for further data. In addition, the authority will impose a turnover-based monetary fine of 0.1% of the Turkish turnover generated in the financial year preceding the date of the decision (if this is not calculable, the turnover generated in the financial year closest to the date of the decision will be taken into account) on natural persons or legal entities which qualify as an undertaking or an association of undertakings, as well as the members of these associations, in cases where incorrect or misleading information is provided by the undertakings or associations of undertakings in a filed notification.

What role can third parties play in the process?

Pursuant to Article 15 of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, the Competition Board may request information from third parties, including customers, competitors and suppliers of the parties and other persons related to the merger or acquisition. According to Article 11(2) of Communiqué 2010/4, if the Competition Authority is required by law to seek another public authority’s opinion, this restarts the review period.

Third parties, including customers and competitors of the parties and other persons related to the merger or acquisition, may participate in hearings held by the board during the investigation, provided that they can prove their legitimate interest.

Substantive test
What is the substantive test applied by the authority?

As the Competition Authority has adopted the dominance test for the substantive assessment of concentrations (ie, the Competition Board will clear any concentration that does not create or strengthen a dominant position or significantly lessen competition in a relevant product market within the whole or part of Turkey), transactions that exceed the turnover threshold but do not create or strengthen a dominant position and do not lessen competition in the relevant market may be granted unconditional approval following the board’s Phase I review. In contrast, in cases where the board has concerns that a transaction could create or strengthen a dominant position and significantly lessen competition in a relevant product market, the board will scrutinise the transaction further.

‘Dominance’ is defined as a position enjoyed in a particular market by one or more undertakings which allows it to act independently from competitors and purchasers in determining economic parameters (eg, production, distribution, price and supply). Market shares of 40% or higher and other factors (eg, vertical foreclosure or barriers to entry) are indicators of a dominant position in a relevant product market. In that sense, any transaction that could create or strengthen a dominant position requires further in-depth analysis. Indeed, pursuant to Article 7 of Law 4054 on Protection of Competition, a merger or acquisition can be blocked only if it not only creates or strengthens a dominant position, but also significantly lessens competition in part or all of Turkey. Further, Article 14 of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board enables parties to provide commitments to remedy substantive competition issues at their sole discretion. If the board considers the submitted remedies insufficient, it may allow the parties to make further changes to the remedies. If the proposed remedies are still insufficient to resolve the competition issues, the board may decide not to grant clearance.

Carve-outs
Does the legislation allow carve-out agreements in order to avoid delaying the global closing?

Carrying out global closing before clearance with certain restrictions on local business is recognised only in merger control regimes that allow for carve-out (hold separate) arrangement mechanisms. In the Turkish merger control regime, there is no normative regulation allowing or disallowing carve-out arrangements.

Under Article 10 of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, a transaction is deemed realised (ie, closed) on the date on which the change in control occurs. It remains to be seen whether this provision will be interpreted by the Competition Authority in a way that provides the parties with a notification to carve out the Turkish jurisdiction with a hold-separate agreement. To date, carve-out arrangements have been rejected by the Competition Board (eg, the Total SA Decision 06-92/1186-355, December 20 2006, and the CVR Inc Inco Limited Decision 07-11/71-23, February 7 2007), arguing that closing is sufficient for the imposition of a suspension violation fine and that further analysis of whether a change in control actually took effect in Turkey is unwarranted. The wording of the reasoned decisions did not analyse the merits of the carve-out arrangements, but rather took the position that the carve-out concept was unconvincing in view of the fact that it normally takes entities years to implement a concentration anyway.

Test for joint ventures
Is a special substantive test applied for joint ventures?

In order to qualify as a concentration subject to merger control, a joint venture must be of a fully functional character, satisfying two criteria:

  • existence of joint control in the joint venture; and
  • the joint venture being an independent economic entity (ie, having adequate capital, labour and an indefinite duration).

If the transaction is found to create a fully functional joint venture in view of these two criteria, the standard dominance test is applied. In addition, under the merger control regime, a specific section in the notification form aims to collect information to assess whether the joint venture will lead to coordination. Article 13(3) of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board provides that the board will carry out an individual exemption review of notified joint ventures that result in an independent economic unit on a permanent basis, but have as their object or effect the restriction of competition among the parties or between the parties and joint venture. The wording of the standard notification form allows for such a review.

Remedies

Potential outcomes
What are the potential outcomes of the merger investigation? Please include reference to potential remedies, conditions and undertakings.

The Competition Board may either render a clearance or a prohibition decision. It may also give a conditional approval. Where the board grants conditional approval to mergers and acquisitions, such transactions may be implemented, provided that measures deemed appropriate by the board are taken and the parties comply with certain obligations. In addition, as per Article 14 of Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, the parties may propose additional divestment, licensing or behavioural commitments to help resolve potential issues that may be raised by the board. As per the Guideline on Remedies Acceptable in Mergers and Acquisitions, it is at the parties’ own discretion whether to submit a remedy. The board will neither impose any remedies nor ex partechange the submitted remedy. In the event that the board considers the submitted remedies insufficient, the board may enable the parties to make further changes to the remedies. If the remedy is still insufficient to resolve the competition problems, the board may not grant clearance.

The parties may submit to the board proposals for possible remedies together with the notification form, during the preliminary review or the investigation period. If the parties decide to submit the commitment during the preliminary review period, the notification is deemed filed only on the date of the submission of the commitment. In any case, a signed version of the commitment text that contains detailed information on the context of the commitment and a separate summary should be submitted to the authority. 

The form and content of the divestment remedies vary significantly in practice. Examples of the board’s pro-competitive divestment remedies include divestitures, ownership unbundling, legal separation, access to essential facilities and obligations to apply non-discriminatory terms. As per the remedies guideline, the parties must submit detailed information regarding how the remedy would be applied and how it would resolve competition concerns. The remedies guideline states that the parties can submit behavioural or structural remedies. It explains acceptable remedies such as:

  • divestment;
  • ending connections with competitors;
  • remedies that enable undertakings to access certain infrastructure (eg, networks, intellectual property and essential facilities); and
  • remedies on amending a long-term exclusive agreement.

The board conditions its clearance decision on the application of the remedies. Whether the parties may complete the merger before the remedies have been complied with depends on the nature of the remedies. Remedies may be either a condition precedent for the closing or an obligation post-closing of the merger. The parties may complete the merger if the remedies are not designed as a condition precedent for the closing.

Appeals

Right of appeal
Is there a right of appeal?

According to Article 55(1) of Law 4054 on Protection of Competition, administrative penalty decisions of the Competition Board can be submitted for judicial review before the administrative courts in Ankara by filing an appeal within 60 calendar days of receipt of the board’s reasoned decision. The board’s decisions are considered administrative acts, and thus legal actions against them must be taken in accordance with the Administrative Procedural Law. According to Article 27 of Law 2577 on Administrative Procedure, filing an administrative action does not automatically stay execution of the board’s decision. However, on request by the plaintiff, the court may stay execution if the decision is likely to cause irreparable damage or contravene the law.

Do third parties have a right of appeal?

Third parties can challenge the Competition Board’s decision on the transaction before the competent administrative courts on the condition that they can prove a legitimate interest.

Time limit
What is the time limit for any appeal?

The timeframe for appealing final decisions of the Competition Board to the Council of State is 60 calendar days from receipt of the reasoned decision.