Turkey: Enriched Security for the Concentrations Involving Series of Transactions within the Stock Exchange- Amendments on the Merger Control Regulation in Turkey

Communique No. 2017/2 on the Amendment of Communique No. 2010/4 ("Communique No. 2010/4") on the Mergers and Acquisitions Subject to the Approval of the Competition Board ("Communique No. 2017/2") has been published on the Official Gazette on February 24th, 2017 and entered into force on the same day. Below are our remarks in terms of the substantive amendments introduced by Communique No. 2017/2:

(I) Article 8(5) of Communique No. 2010/4 was stating that "two or more transactions carried out between the same persons or parties within a period of two years shall be considered as a single transaction for the calculation of turnovers listed in Article 7 of this Communiqué". Article 2 of Communique No. 2017/2 amended Article 8(5) of Communique No. 2010/4 as follows:  "two or more transactions carried out between the same persons or parties within a period of three years within the same relevant product market shall be considered as a single transaction for the calculation of turnovers listed in Article 7 of this Communiqué".

(II) Article 3 of Communique No. 2017/2 introduced a new paragraph to be included to Article 10 of Communique No. 2010/4, which reads as follows: "If the control is acquired from various sellers by way of series of transactions in terms of securities within the stock exchange, the concentration could be notified to the Turkish Competition Board after the realization of the transaction provided that the following conditions are satisfied: (a) the concentration should be notified to the Turkish Competition Board without delay, (b) the voting rights attached to the acquired securities are not exercised or exercised solely to maintain the full value of its investments based on a derogation granted by the Turkish Competition Board. For the sake of completeness, the Turkish Competition Board may impose conditions and obligations in terms of such derogation in order to ensure conditions of effective competition. This newly introduced provision by Article 3 of Communique No. 2017/2 is similar to Article 7(2) of European Commission Merger Regulation ("ECMR"). At any rate, although there was no similar specific statutory rule in Turkey on this matter until the promulgation of Communique No. 2017/2, the case law of the Turkish Competition Board were shedding light on this matter. To that end, In Camargo Corrêa S.A. (12-24/665-187, 03.05.2012), the Turkish Competition Board reviewed the merger filing for the acquisition of Cimpor-Cimentos de Portugal, SGPS, S.A. ("Cimpor") by Camargo Corrêa S.A.("Camargo") by way of a public tender offer. In this case, Cimpor is a public company and no single person or entity holds control over it, and rather Cimpor is controlled by a shifting alliance.

At any rate, Camargo had filed this transaction following its public tender offer but before acquiring the shares. As apparent from the reasoned decision, Camargo provided that the exact date for the transfer of shares which will enable the acquisition of control over the Target cannot be determined at the time of filing to the Board. In other words, the share transfer could have happened even before the Board's approval of the transaction. However, Camargo explicitly emphasized that even if it had acquired the shares, it had no intention to exercise the voting rights before obtaining the antitrust clearance regarding this transaction. Accordingly, the Board resolved that in case Camargo acquires the majority of the shares (providing control) before the antitrust clearance, provided that it does not exercise these voting rights, it would not constitute a violation of Law No. 4054 on the Protection of Competition. In this respect, the Board referred to Article 7(2) of the ECMR and stated that in case the transaction is notified for merger control clearance "without delay" and the acquirer does not exercise its voting rights arising from the securities pending the Commission's merger control decision, the transaction may be actualized before the antitrust clearance. To that end, even before the promulgation of Communique No. 2017/2, based on the aforementioned precedent the Board recognized that the parties can close a public bid on a listed company before the Turkish Competition Board's approval, subject to the condition that (i) the transaction is notified to the Turkish Competition Board without any delay; and (ii) the acquirer does not exercise the control over the target pending the Turkish Competition Board's approval decision. That said, since this approach had not been solidified through subsequent decisions on that front and Camargo decision appears to be rather unique,  a legislation based security on these type of concentrations would be most welcomed.  


Mr. Gönenç Gürkaynak is a founding partner and the managing partner of ELIG, Attorneys-at-Law, a leading law firm of 70 lawyers based in Istanbul, Turkey. Mr. Gürkaynak graduated from Ankara University, Faculty of Law in 1997, and was called to the Istanbul Bar in 1998. Mr. Gürkaynak received his LL.M. degree from Harvard Law School, and is qualified to practice in Istanbul, New York, Brussels and England and Wales (currently a non-practising Solicitor).  Before founding ELIG, Attorneys-at-Law in 2005, Mr. Gürkaynak worked as an attorney at the Istanbul, New York and Brussels offices of a global law firm for more than eight years. 

Mr. Gürkaynak heads the competition law and regulatory department of ELIG, Attorneys-at-Law, which currently consists of 3 partners, 2 counsels and 36 associates. He has unparalleled experience in Turkish competition law counseling issues with more than 19 years of competition law experience, starting with the establishment of the Turkish Competition Authority. Every year Mr. Gürkaynak represents multinational companies and large domestic clients in more than 20 written and oral defences in investigations of the Turkish Competition Authority, about a dozen antitrust appeal cases in the high administrative court, and over 45 merger clearances of the Turkish Competition Authority, in addition to coordinating various worldwide merger notifications, drafting non-compete agreements and clauses, and preparing hundreds of legal memoranda concerning a wide array of Turkish and EC competition law topics.

Mr. Gürkaynak frequently speaks at conferences and symposia on competition law matters. He has published more than 150 articles in English and Turkish by various international and local publishers. Mr. Gürkaynak also holds teaching positions at undergraduate and graduate levels at two universities, and gives lectures in other universities in Turkey.

 

Çitlenbik Sokak No. 12
Yıldız Mahallesi
Bes¸iktas¸
34349 Istanbul
Turkey
Tel: +90 212 327 17 24
Fax: +90 212 327 17 25
Gönenç Gürkaynak
gonenc.gurkaynak@elig.com

ELIG is committed to providing its clients with high-quality legal services. We combine a solid knowledge of Turkish law with a business-minded approach to develop legal solutions that meet the ever-changing needs of our clients in their international and domestic operations.

The competition and regulatory department of ELIG currently comprises 3 partners, 2 counsels and 36 associates. All members of the ELIG team are fluent in English.

ELIG represents corporations, business associations, investment banks, partnerships and individuals in a wide variety of competition law matters. The firm also collaborates with many international law firms on Turkish competition law matters.

In addition to an unparalleled experience in merger control issues, ELIG has vast experience in defending companies before the Board in all phases of an antitrust investigation. ELIG has in-depth knowledge of representing defendants and complainants in complex antitrust investigations concerning all forms of abuse of dominant position allegations and all other forms of restrictive horizontal and vertical arrangements, including price-fixing, retail price maintenance, refusal to supply, territorial restrictions and concerted practice allegations. In addition to significant antitrust litigation expertise, our firm has considerable expertise in administrative law, and is therefore well-equipped to represent clients before the administrative courts and the High State Council, both on the merits of a case, and for injunctive relief. ELIG also advises clients on a day-to-day basis concerning business transactions that contain antitrust law issues, including distributorship, licensing, franchising, and toll manufacturing.

During the past year, ELIG was involved in more than 48 merger notification clearances, over 20 defence projects in investigations, and over 12 appeals before the administrative courts; together with approximately 40 antitrust education seminars provided to employees of clients.

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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