In November 2007, the Turkish Competition Authority (the "TCA") declared on its agenda a new communiqué on merger control. Nearly three years later, the TCA has completed its work on a new Communiqué on the Mergers and Acquisitions Subject to the Approval of the Competition Board ("Communiqué No. 2010/4 or "the new Communiqué"). Communiqué No. 2010/4 was introduced on October 7, 2010, and will become effective as of January 01, 2011. There are many points where the new Communiqué differs from the current Communiqué on Mergers and Acquisitions No. 1/1997 as amended (the "Communiqué No. 1997/1" or "the old Communiqué") differ. This article aims to provide an overview of the highlights of this long-awaited Communiqué.
Definition of a Concentration
Communiqué No. 2010/4 adopted the concept of "change in control on a lasting basis" as a transaction to be regarded as a merger & acquisitions. Although the old regime was majorly adopted from EU Regulation 4064/89, the wording of the old Communiqué was badly drafted such that the requirement of change in control was understood to be only in relation to acquisitions. With respect to acquisitions it led to a misunderstanding that even in the case of acquisitions there should not necessarily be a change in control. The old legislation did not either contain any provision as to the change in control being "on a lasting basis".
The old Communiqué defines among concentrations the creation of joint ventures which perform as an autonomous economic entity possessing labor and assets to achieve their functions, and which do not have as their object or effect the restriction of competition between the undertakings party to the Joint venture, or between these undertakings and the joint venture. In the new system the coordination of competitive behavior is no longer relevant to the definition of a concentration but whether the JV is full – function. Article 5 of the new Communiqué defines as a concentration the creation of a joint venture that performs on a lasting basis all the functions of an autonomous economic entity and leaves the issue of coordination to substantive analysis under the provisions of the Competition Act.
Similar to EU practice, the new notification form incorporated into the Communiqué No. 2010/4 includes a section specifically dedicated to the cooperative effects of a joint venture.
As in the current EC Merger Regulation, transactions that are linked by condition or take the form of a series of transactions in securities within a reasonably short period of time are treated as a single concentration in the new regime.
The new Communiqué abandoned the market share threshold foreseen in the old regime and introduced new turnover thresholds. According to Article 7 of the new Communiqué, if the combined aggregate turnover in Turkey of the parties to the transaction exceeds TL 100 million (approximately EUR 50.8 million as of 03.11.2010) and the aggregate Turkish turnover of each of at least two of the parties to the transaction exceeds TL 30 million (approximately EUR 15.2 million as of 03.11.2010), or if the worldwide turnover of one of the parties exceeds TL 500 million (approximately EUR 254 million as of 03.11.2010) and the Turkish turnover of at least one of the other parties exceeds TL 5 million (approximately EUR 2.5 million as of 03.11.2010), the transaction must be subject to prior notification. There has been some criticism about the level of the thresholds not being realistic, but the new regime foresees revision by the TCA of the turnover thresholds every two years.
An important improvement to the old system is the clarification that where there is no affected market as a result of a transaction, there will no requirement for a notification, with the exception of joint ventures, even if the transactions exceed the turnover thresholds.
With respect to the calculation of turnover thresholds, the TCA has introduced a system similar to that set by the current EC Merger Regulation.
Any two or more transactions between the same persons or undertakings occurring within a two-year period shall be treated as a single concentration for the purpose of calculating the thresholds.
Prior Notification Process
The notification form has been revised to require more detailed information on the transaction than currently required by the existing form.
One of the most useful developments in that regard is the intention to adopt a notification system similar to the "short form notification" applied by the EU Commission. In those cases where (i) a party acquires sole control of an undertaking over which it had already joint control or (ii) the aggregate market share of the parties in a horizontal relationship is less than 20%, or at least one of the parties' market share is less than 25 % in vertical relationships in an affected market in Turkey, the undertakings concerned are not required to complete the entire form.
A welcomed improvement is the introduction of the definition of concept of "affected markets" in the new notification form. The old notification form included a question on the affected markets but the concept led to a lot of controversy since it was nowhere defined in the Turkish competition legislation. The new notification form defines this concept as a product market in which the parties have vertically or horizontally overlapping activities.
Communiqué No. 2010/4 also mandates the announcement of the notified transaction on the TCA official website. The announcement will include information on the parties concerned and their fields of activity. The published summary of the transaction must be drafted in such a way that it contains no confidential information or business secrets.
The Turkish Competition Authority used to require the final version of an agreement to officially start the notification process whereas the new Communiqué does not require the agreement to be final for that purpose.
Substantive Analysis – Remedies
With respect to substantive analysis the old Communiqué cited among other factors to be considered, the benefit of end users and intermediaries. The new Communiqué abandoned the consideration of the benefit of intermediaries and limited its scope to the benefit of consumers.
The new Communiqué also introduced the concept of creation or strengthening of "collective dominance" as a result of a transaction.
One of the most remarkable changes is the inclusion of the concept of "efficiencies" in the TCA assessment of a concentration.
The new Communiqué under Article 14 introduces the concept of commitments which, the undertakings involved may give to eliminate the competition concerns on the creation or strengthening of a dominant market position. The TCA officials have expressed their intention to publish detailed guidelines on the application of the system similar to those published in the EU Commission Notice on Remedies.
The changes constitute a significant step forward for Turkey's merger control regime. With the enactment of Communiqué No. 2010/4 and the adoption of the new notification form, the TCA aims to meet the needs of dynamic competition and eliminate deficiencies of the old merger control regime. It is essential though that Communiqué No. 2010/4 be supported by clear guidelines outlining the general principles applicable to efficiencies, remedies and conditional clearance decisions.
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