Turkey: Turkey 2017 M&A Status Report: Why does the resolution of filings take such a long time?

On January 6, 2018, the Turkish Competition Authority (TCA) published its annual Mergers and Acquisitions Status Report for 2017.

According to the Report, 184 mergers were notified to the TCA in 2017, and there is a 12 percent decrease if compared to 2016 (there were 209 mergers in 2016.) 90 target companies or joint ventures involved in these transactions were incorporated as per Turkish law, and the total value of these transactions is approximately €4.7 billion. On the other hand, the total transaction value of cases in which all parties were Turkish companies is approximately €1.1 billion.

In 2017, the foreign investors directly investing in Turkish companies were involved in 47 transactions. The total investment value of these transactions is approximately €3.2 billion, and the first two foreign investors were listed as being from the Netherlands and Japan. Moreover, 90 transactions realized by foreign investors—and having an indirect effect to Turkish markets—were also notified to the TCA. Accordingly, there were a total of 137 transactions realized by foreign investors with the prominent invested sectors highlighted as (i) chemicals, (ii) cinema, music, video and television, and (iii) pharma.

On a last note, the Report provides that the mergers and transactions notified to the TCA were resolved approximately within 15 days starting from the final submission.

Although the TCA reveals that the transactions were resolved in a relatively short period of time, a practitioner approach is quite contrasting. In its Report, while calculating the time period to resolve the files, the TCA takes into consideration the 'final submission' which may be interpreted as the stage where all the necessary information and documents, including the request for information and the opinion of a public institution or organization, are in the hands of the Authority. However, in practice, we experience that the TCA usually requests information from the transaction parties or from the public institutions or organizations. When the Authority requests information, the clock stops and the suspension lasts until the required information and documents are duly submitted. Therefore, in practice, final resolution of files may take longer than 15 days.

This usually happens when the TCA requests an opinion of a public institution or organization. As known, in case a transaction requires technical knowledge or another public institution or organization is authorized in the investigated market, the TCA usually is obliged to receive the opinion of such public institution or organization before it can resolve the case. In particular, with transactions realized in markets such as telecommunication, energy or banking, we see that the TCA first received the opinion of public bodies and then concluded the case. For example, in order to address the rising need to request an opinion of a public body in the telecommunication sector, the TCA and the Information and Communication Technologies Authority (ICTA) signed a Cooperation Protocol.^[1] In this regard, the cooperation and coordination between these two public institutions finally had a sound basis. 

In order to conduct an efficient analysis, the information request from public bodies are certainly necessary. However, the other side of the coin shows that there should be a definite time schedule for sending such request and receiving the opinion. This is because the TCA suspends its examination until the relevant opinion is received, and the time period regarding the examination stage shall only commence once the relevant opinion is submitted. Accordingly, there might be filings where the TCA waits for the decision of relevant public bodies for weeks, which also extends the period for resolution as expected. The negative impact of such delay mostly affects the parties and also the investors where the transaction takes places in more than one country.

In the best-case scenario, this burden might be prevented through adopting a regulation that sets out definite time period applicable to all public bodies. Alternatively, the TCA may request such opinion at the initial stage of its examination which obviously shortens the waiting period. However, we should keep in mind that even if the TCA request an opinion at the initial stage of its examination, since there is no definite time period for public bodies to response, the first 15 days of examination period is likely to be passed.