Article 7 of the Law on the Protection of Competition No. 4054 (“Competition Law”) covers only mergers and acquisitions that result in a change of control on a lasting basis. Other mergers and acquisitions do not lead to a change in the market structure permanently so they do not fall under merger control rules. The concept of “change of control on a lasting basis” is explained in Article 5 of Communiqué No. 2010/4 Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board (“Communiqué No. 2010/4”). Even some types of agreements with a definite/limited duration may lead to a change of control on a lasting basis, if they are renewable or the period of the agreement is sufficiently long to infer the existence of a permanent change of control.
The Guidelines on Cases Considered as a Merger or an Acquisition and the Concept of Control (“Guidelines”) provide three exemplary cases where two transactions occur within a short time period from each other and assess which transaction should be considered as leading to a change of control on a lasting basis.
Companies A, B and C acquire Company X. Prior to the acquisition, they agreed to divide the acquired assets once the transaction has been completed. The acquisition of Company X (former transaction) is considered to be a separate acquisition which results in a change of control, yet not on a lasting basis. That is because Company A, B and C acquire Company X only for the time necessary to carry out the immediate division of the acquired assets. The latter transaction, on the other hand, is permanent and constitutes several changes of control on a lasting basis. Therefore, the latter transaction would be assessed under Article 7 of Competition Law.
Companies A, B and C have joint control over Company X for a transitional period, not on a lasting basis. Eventually, the joint control is converted into sole control by Company A. In this case, the initial joint control does not result in a change of control on a lasting basis. Therefore Company A’s acquisition of sole control is the transaction which falls under Article 7 of Competition Law. In such successive transactions, the joint venture is usually temporary and the period of joint control does not exceed one year.
An interim buyer (Bank A) acquires Company X and holds its shares until it is sold to the ultimate acquirer, Company A. More precisely, Bank A acquires shares on behalf of Company A, which bears the biggest part of the economic risks. In such circumstances, the first transaction is only undertaken to facilitate the second and the interim buyer, Bank A, is directly linked to the ultimate acquirer, Company A. Therefore, the Board will consider the transaction by which Bank A acquires control as the first step leading to the acquisition of control on a lasting basis by Company A.
Please also see the “merger control notification form” for further information.