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Merger review

Significant changes occurred on the subject of mergers with the implementation of the New Turkish Commercial Code, which became effective on 1 July 2012. According to the Code (as was the case with the former Code), there are two types of merger: a merger by way of acquisition in which one party is acquired by the other party; and a merger by way of the formation of a new company in which both parties merge through a newly formed company.

Under the New Turkish Commercial Code there is a new regulation regarding mergers that annuls a former provision prohibiting a merger of companies with different company types. As such, there is no longer any legal obstacle regarding a merger of companies of different types (e.g., a limited liability company and a joint-stock company now have the right to merge). The likely impact of this change will be an increase in the number of mergers taking place.

As mentioned above, to avoid any possible illegal market dominance, as established in the Competition Act and related communiqués, certain types of merger are subject to the approval of the Competition Authority. Authorisation of the Competition Board will be required for the relevant transaction to carry legal validity if the total turnovers of the transaction parties in Turkey exceed 100 million Turkish liras, and the turnovers of at least two of the transaction parties in Turkey each exceed 30 million Turkish liras.

Merger and acquisition transactions that increase prices for customers, decrease variety and undermine innovations are prohibited under Article 7 of Act No. 4054.

Cases that are considered as mergers or acquisitions under Article 7, mergers or acquisitions requiring the authorisation of the Competition Board, and the procedures, principles concerning the notification thereof to the Competition Board are regulated by the Communiqué on the Mergers and Acquisitions Calling for the Authorisation of the Competition Board (Communiqué No. 2010/4).

There is no provision that precisely prescribes a deadline for the notification that shall be made to the Authority regarding a merger of companies that exceeds the above-mentioned thresholds. Additionally, in the absence of a notification, the Authority shall make an inquiry regarding the concerned merger and, if the merger is deemed to be unlawful, the Authority will take measures regarding the merger and initiate an investigation; however, if the merger is deemed lawful, the Authority will charge an administrative fine to both parties for failing to provide notification. As per Communiqué No. 2018/1 on increasing the Minimum Limits of the Administrative Fines Specified in Article 16.1 of Law No. 4054, the minimum amount of administrative fine prescribed for mergers that take place without notification is 21,036 Turkish liras.

The Competition Authority has released a Draft Guideline on the Evaluation of Horizontal Mergers and Acquisitions and a Draft Guideline on the Evaluation of Non-Horizontal Mergers and Acquisitions (together, Draft Guidelines), which intend to establish the general principles to be considered in the assessments made by the Competition Authority concerning horizontal and non-horizontal mergers and acquisitions, for public discussion. As a result, the Turkish competition regulations will have a more specific and measurable base for additional legislation and secondary legislation.

i Significant cases

The following transactions are noteworthy:

  1. 29 November 2018: request for authorisation for the acquisition of all shares of Cast Future Holdings SpA by Robertshaw SRL;
  2. 22 November 2018: request for authorisation for the acquisition of all shares of Apollo Aviation Holdings by TC Group LLC;
  3. 19 September 2018: request for authorisation for the acquisition of 80 per cent shares of Arimpeks Aluminyum by Aluflexpack AG;
  4. 15 November 2018: request for authorisation for the acquisition by The Global Infra Co JS Arl of Simba Holding SARL's 50 per cent shares in Corning Corporation;
  5. 15 November 2018: request for authorisation for the acquisition of all shares of BDP International Inc by Greenbriar Holdings IV LLC;
  6. 8 November 2018: request for authorisation for the acquisition of all controls of Unifeeder A/S by the DP World Investments BV;
  7. 11 October 2018: request for authorisation for the acquisition of 100 per cent shares of Goat TopCo GmbH by Grupa Azoty SA;
  8. 4 October 2018: request for authorisation for the acquisition of all controls of Sanyo Special Steel Co Ltd by the Nippon Steel & Sumitamo Metal Corporation; and
  9. 26 September 2018: request for authorisation for the acquisition of all controls of Bohai Capital Holding Co Ltd by Onix Aviation System Ltd.

All requests for authorisation for acquisitions were accepted by the Competition Authority.

ii Trends, developments and strategies

In 2018, 223 operations concerning mergers, acquisitions and specialisations were notified to the Authority. Those included 210 mergers and acquisitions, and 13 specialisations. Of the merger and acquisition notifications, 150 were cleared, two were cleared under conditions, one was blocked and 30 did not satisfy the thresholds.

iii Outlook

As a result of the public discussion on the Draft Guidelines, the Turkish competition regulations will have a more specific and measurable base for additional legislation and secondary legislation.

In addition, considering the annulment of the prohibition on mergers of two companies of different types, a rise in the number of mergers and acquisitions is likely.