Turkey: The Differences Between Commission’s Assessment Of Vertical Mergers Before The Merger Guidelines And Under The Guidelines

Previously the Commission's competitive assessment of vertical mergers focused predominantly on the parties' ability to foreclose rivals. The Commission infrequently evaluated in-depth the parties' incentives to foreclose rivals. Moreover in certain cases, market power in only one of the affected markets was considered "a sufficient condition" to conclude that the proposed merger was likely to restrict competition in the Common Market.

For example, in Skanska / Scancem, a merger between Sweden's main producers of cement and construction materials (Scancem) and ready-mixed concrete, dry concrete and pre-cast concrete products (Skanska), the Commission examined in detail the ability of the merged entity to foreclose rivals where it had: roughly over 80% of the Swedish market for cement production; roughly between 40-50% of the Swedish market in ready mix concrete; and up to 80% of the Swedish market in other building materials. Based mainly on high market shares, the Commission resulted that; dominant position would be created or strengthened by the merged entity in the Swedish markets in terms of construction materials, ready-mixed concrete, dry concrete and pre-cast concrete products, as a result of which competing ready-mix producers would be essentially dependent on Skanska / Scancem for their supplies of the main raw material and cement. Particularly, the Commission's result did not consider whether the parties had an economic incentive to raise rivals' costs. This absence is remarkable in terms of a foreclosure strategy to be profitable; the revenues unavoidable by the merging parties upstream have to be sufficiently offset by increased profits downstream.

In Neste / IVO, Neste, Finland's essential natural gas producer sought to merge with Finland's leading electricity producer called IVO. The Commission was concerned that usage of strong positions that parties have in the natural gas market in order to raise competing electricity manufacturers' costs since natural gas was an input for electricity production. The Commission focused its analysis on the parties' ability to raise rivals costs however downplayed the fact that only "10% of all electricity production in Finland uses natural gas". The economic incentive to raise rivals costs reduced since limited electricity products used natural gas as an input. Additionally the Commission concluded that "natural gas is strategically very important for electricity production in Finland and that its importance will continue to increase over the next years".

Economic Incentives

Even when the Commission referred to economic incentives to foreclose in its pre-Guidelines decisions, these references were not supported by in-depth analysis. For example, in Telia / Sonera; a merger between Telia, a Swedish telecommunications and cable television operator and Sonera, Finland's largest mobile telephony operator, the Commission concluded, without the benefit of any economic assessment, that Telia would have "an incentive to distort competition to Sonera's advantage". Instead, it was assumed by the commission that it would be logical for Telia to favour its subsidiary Sonera. In the meantime while considering this, an omission occurred about this "favouritism" would actually lower Telia's revenue and another significant striking omission is the decision did not examine whether the strategy would ultimately succeed in foreclosing rivals thereby allowing the merged entity to finally recover its lost revenues. Just prior to the approval of the Guidelines, that the Commission dedicates substantial attention to the analysis of the merged entity's incentive to foreclose. According to its decision in Imperial Tobacco / Altadis, a merger between two manufacturers of cigarettes and tobacco products, the Commission considered the vertical effects rose by the merging parties' distribution activities and eventually concluded that the merged entity would lack the ability to foreclose rivals. Notably, regarding to the study, which have been done by merging parties is foreclosure would not be profitable and that alternative distribution channels existed. The conclusion of the study; "A foreclosure strategy would be profitable for the merged entity only under very extreme conditions, namely a very big increase in sales that is extremely unlikely in a market whose size is relatively stable" has been accepted by the commission.

Assessment under the Guidelines:

According to a comparison with horizontal mergers, non-horizontal mergers are less likely to restrict competition than horizontal mergers. However still there is a potential to hinder effective competition. The theory of harm relied on potential concerns relating to: (i) input foreclosure; (ii) access to supplies or markets; and (iii) coordinated effects. Significantly, after new guidelines came into force the Commission started to analyse both the ability and incentive of the merged entities to foreclose their downstream competitors, in addition to the overall effects of the mergers in downstream markets. Therefore, new approach of commission departed from its pre-Guidelines practice of mainly limiting its analyses to the companies' ability to foreclose rivals.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions