Background

The Turkish Competition Board (“TCB”) recently amended the notification thresholds and rules relating tomergers and acquisitions. The TCB has amended Article 7 of the Communiqué No 2010/4 Concerning Mergers and Acquisitions that Require the Permission of the Competition Board. The amendments became effective on February 1, 2013.

Highlights

The key changes are:

  • All merger and acquisition transactionsmeeting the new thresholdsmust now be filed for approval to the TCB even if there is no affected market as a result of the transaction.
  • New higher thresholds are imposed for filings, and a clarification is introduced to include the target entity’s turnover in acquisition transactions.

Private equity buyers and strategic buyers acquiring companies or assets with whom there is no market overlap now lose a time advantage in acquisitions and need to submit notifications whenever the new thresholds are reached. This should be calculated in the transaction timetable.

Previous Position for Notifications

Before the amendment, Article 7 of the Communiqué provided that amerger or acquisition transactionmust be filed for approval of the TCB:

  1. if the aggregate turnover in Turkey of the relevant parties exceeds 100 million TL and if at least two of the parties' turnover in Turkey individually exceeds 30 million TL, or
  2. if the worldwide turnover of one of the parties exceeds 500 million TL and if one of the other parties’ turnover in Turkey exceeds 5 million TL.

However, the old version of Article 7 provided for a specific exception fromfiling if there was no affectedmarket as a result of amerger or an acquisition transaction even if the parties' turnovers exceed the thresholds (the “no affectedmarket exception”). This exception was not applied in the context of joint venture transactions.

New Position for Notifications

The recent amendments that came into effect on February 1, 2013 mean that there will no longer be a “no affectedmarket exception”. Accordingly, as of February 1, 2013, transactions that are caught by the new turnover thresholds will need to get the approval of the TCB even if there is no affectedmarket as a result of the relevantmerger or acquisition transaction. This amendment is an indication that the TCB would like tomonitor all concentrations that are caught by the thresholds and not leave it to the assessment of the parties as to whether there is an affectedmarket or not.

The other key amendment is the higher thresholds for notification provided in paragraph (b) of Article 7, paragraph (a) of Article 7 remain unchanged. Pursuant to the amendments to paragraph (b) of Article 7, the parties will be required to submit the transactions for the approval of the TCB:

  1. if, in an acquisition transaction, the turnover in Turkey of the acquired entity exceeds 30 million TL and one of the other parties' worldwide turnover exceeds 500 million TL, or
  2. if, in amerger transaction, one of the parties' turnover in Turkey exceeds 30 million TL and one of the other parties' worldwide turnovers exceeds 500 million TL.

With this amendment, 5million TL threshold for the Turkey-based turnover under the old regime has been increased to 30million TL, and a clarification has been introduced with respect to which entities' turnovers will be taken into account in the transactions.

The other thresholds and rules remain unaffected by the recent amendments.

Co-authored by Gamze Cigdemtekin.