Turkey: Revision On Turkish Merger Control Thresholds

Ever since the Turkish Competition Authority changed the Communiqué No. 1997/1 on the Mergers and Acquisitions Subject to the Approval of the Competition Board ("Communique No. 1997/1") by introducing Communique No. 2010/4 on the Mergers and Acquisitions Subject to the Approval of the Competition Board ("Communique No. 2010/4"), there have been debates in the Turkish Competition Law circles as to whether the revised jurisdictional thresholds could decrease the workload of the Turkish Competition Authority in relation to merger control cases.

When the figures concerning total number of merger control cases reviewed by the Turkish Competition Authority in 2011 (which is the first the year during which Communique No. 2010/4 was in force) were revealed, it was clear that the 5 million TL (approximately € 2.2 million and US$ 2.8 million US$) threshold was too low.

Amendments on the jurisdictional thresholds came immediately. As of 29.12.2012, "Communique No. 2012/3 on the Amendment of Communique no. 2010/4 on the Mergers and Acquisitions Subject to the Approval of the Competition Board" (Communique No. 2012/3) which amends the turnover thresholds that a given merger or acquisition must exceed before becoming subject to notification for the purposes of the Turkish merger control regime, has been published in the Official Gazette.  As a result of Communique No. 2012/3, Article 7 of Communique No. 2010/4 has been amended in the following manner:

Article 7

1) In a merger or acquisition as defined by Article 5 of this Communique; it is required to obtain the approval of the Competition Board in order for the relevant transaction to have legal validity where;

a) The aggregate Turkish turnovers of the transaction parties exceeds TL 100 million (approximately € 44 million and US$ 56 million) and the Turkish turnovers of at least two of the transaction parties each exceeds TL 30 million (approximately € 13 million and US$ 17 million), or

b) The Turkish turnover of the assets or businesses subject to the acquisition in the case of acquisition transactions, or the Turkish turnover of at least one of the parties in the case of merger transactions, exceeds TL 30 million (approximately € 13 million and US$ 17 million), and the worldwide turnover of at least one of the other transaction parties exceeds TL 500 million (approximately € 217 million and US$ 279 million).

As it can be seen from the abovementioned, after the amendments, the new regulation no longer seeks the existence of an "affected market" in assessing whether a transaction triggers a notification requirement. The parties no longer need to go into the trouble of checking to see whether the transaction results in an affected market. This amendment is designed to have an impact solely on notifiability analyses. The concept of affected market still carries weight in terms of the substantive competitive assessment and the notification form. Unless and until amended, the provisions of the guidelines about the concept of affected market and the conditions under which a transaction would result in an affected market within the meaning of Turkish competition laws also remain valid and effective.

The first prong of the alternative turnover thresholds remained unchanged. Therefore, a transaction would trigger a notification requirement in cases where "total turnovers of the transaction parties in Turkey exceed 100 million TL (approximately € 44 million and US$ 56 million), and turnovers of at least two of the transaction parties in Turkey each exceed 30 million TL (approximately € 13 million and US$ 17 million)".

The second prong of the alternative turnover thresholds has been revised as follows:

  1. The Turkish turnover threshold has been raised from 5 million TL (approximately € 1.94 million and US$ 2.8 million US$ as of December 31, 2012) to 30 million TL (approximately € 13 million and US$ 17 million).
  2. The Turkish turnover threshold of 30 million TL (approximately € 13 million and US$ 17 million) will now be sought for "the transferred assets or businesses in acquisitions, and at least one of the parties to the transaction in mergers". Prior to the amendment, the Turkish turnover threshold could be satisfied so long as "one of the transaction parties" had over 5 million TL (approximately € 2.2 million and US$ 2.8 million) Turkish turnover and the other transaction party had over 500 million TL (approximately € 217 million and US$ 279 million) global turnover. After the amendments, parties to an acquisition will need to seek the Turkish threshold for the target asset/business only. For mergers, the regime has not changed apart from the increase in the amount of the Turkish turnover threshold.
  3. The amount of the worldwide turnover threshold has remained the same, i.e. 500 million TL (approximately € 217 million and US$ 279 million).

As ELIG, Attorneys-at-Law handles approximately 50 merger control filings per year, and it has by far the largest volume of merger control filings of any law firm in Turkey. This allows ELIG to monitor the impact of this revision in the second alternate threshold much better than any other single entity, apart from the Turkish Competition Authority itself. According to ELIG's internal study based on the merger control filings handled since the entry into force of Communique No. 2010/4 on the Mergers and Acquisitions Subject to the Approval of the Competition Board ("Communique No. 2010/4") two years ago, more than half of the merger control filings would not have been notifiable under the recently revised alternate threshold. To that end, approximately 50% - 55 % potential decrease over the overall number of merger control filings in Turkey can be expected, which should in turn allow the Turkish Competition Authority to focus on those competition law matters which have a more visible nexus with the Turkish markets.

A potential impact of the Communique No. 2012/3 could occur during the transition period. The Communique No. 2012/3 will enter into force as of February, 1, 2013. Therefore, there could be some strategic timing calls at the business side concerning the closing timing of transactions that are notifiable under the previous threshold, but not notifiable under the newly introduced merger control threshold.

Footnote

1. Based on the average exchange rate for 2012 determined by Turkish Central Bank.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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