Failure to file a notification or closing a notifiable transaction before the Turkish Competition Board's (“Board”) approval may trigger all or part of the following consequences:
Monetary fines (mere violation of the suspension requirement)
In the event that the parties to a notifiable merger or an acquisition close the transaction without the approval of the Board, a turnover-based administrative monetary fine of 0.1% of the turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision will be taken into account) shall be imposed on the acquirer(s) (or both of the merging companies in the case of a merger). There have been many cases in the past where the Board imposed administrative monetary fines for failure to notify in Turkey or closing before clearance, even when there was no overlap in Turkey.
The minimum amount of administrative monetary fine for 2019 is TL 26,028 TL (approx. USD 5,388 and EUR 4,582). This administrative monetary fine is not contingent upon whether or not the Board will ultimately clear the transaction. Also, there is no difference between "filing the transaction but closing it before the approval" and "not filing the transaction at all" in terms of imposition of administrative monetary fines.
Legal status risk
Article 7 of the Law No. 4054 on the Protection of Competition (“Competition Law”) and Article 10 of the Communiqué No. 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board (“Communiqué No. 2010/4”) provides that a notifiable concentration is invalid with all its legal consequences, unless and until it is approved by the Board. The implementation of a notifiable transaction is suspended until clearance by the Board is obtained. Therefore, such notifiable transactions cannot be closed in Turkey before the clearance of the Board. In such situations, the companies might be unable to enforce their rights under the agreement before Turkish courts.
Termination of infringement and interim measures
Article 9(1) of the Competition Law provides that, the Board shall order the companies, by a resolution, to take the necessary actions in order to restore the same status as before the completion of the transaction infringing the Competition Law, and thereby restore the pre-transaction level of competition in cases where it finds any infringement of Article 7. Similarly, the Board is authorized to take interim measures until the final resolution on the matter, in case there is a possibility for serious and irreparable damages to occur.
Problematic transactions that were not notified to the Board
If the Board decides, at the end of its review of a notifiable transaction that was not notified, that the transaction is problematic under the dominance test applicable in Turkey, the companies shall be subject to fines of up to 10% of their turnover generated in the financial year preceding the date of the fining decision (if this is not calculable, the turnover generated in the financial year nearest to the date of the fining decision will be taken into account). Employees and/or managers of the companies that had a determining effect on the creation of the violation may also be fined up to 5% of fine imposed on the companies.
In addition to the administrative monetary fine sanction, the Board is also authorized to take all necessary measures to terminate the transaction, remove all de facto legal consequences of every action that has been unlawfully taken unlawfully, return all shares and assets if possible to the places or persons where or who owned these shares or assets before the transaction or, if such measure is not possible, assign these to third parties; and meanwhile to forbid participation in control of these undertakings until this assignment takes place and to take all other necessary measures.
The wording of Article 16 of Law No. 4054 does not give the Board discretion on whether to impose a monetary fine in case of a violation of suspension requirement. In other words, once the violation of the suspension requirement is detected, the monetary fine will be imposed automatically.