Answer ... The Amendment Law amended Article 7 of Law 4054 and introduced the ‘significant impediment of effective competition’ (SIEC) test, similar to the approach under the EU Merger Regulation. Under this amendment, the Turkish Competition Authority (TCA) may prohibit transactions that could significantly impede competition, along with those that may create a dominant position or strengthen an existing dominant position in the market. Article 5 of Communiqué 2010/4 defines the scope of notifiable transactions as follows:

• the merger of two or more undertakings; and
• the acquisition of, or the acquisition of direct or indirect control over, all or part of one or more undertakings by one or more undertakings or persons that currently control at least one undertaking, through the purchase of assets or all or part of its shares, through an agreement or through another instrument.

Pursuant to Article 6 of Communiqué 2010/4, the following transactions do not fall within the scope of Article 7 of Law 4054 and therefore are not subject to the approval of the Competition Board:

• intra-group transactions and other transactions that do not lead to a change in control;
• temporary possession of securities for resale purposes by undertakings whose normal activities are to conduct transactions in such securities for their own account or for the account of others, provided that the voting rights attached to such securities are not exercised in a way that affects the competition policies of the undertaking issuing the securities;
• acquisitions by public institutions or organisations further to the order of law, for reasons such as liquidation, winding up, insolvency, cessation of payments, concordat or privatisation; and
• acquisition by inheritance, as provided for in Article 5 of Communiqué 2010/4.

In addition, Article 2 of Communiqué 2017/2 modified Article 8(5) of Communiqué 2010/4. Together with this amendment, the Competition Board can consider transactions realised by the same undertaking concerned in the same relevant product market within a three-year period as a single transaction; this is likewise the case for two transactions carried out between the same persons or parties within a three-year period. Lastly, Article 3 of Communique 2017/2 introduced a new paragraph to Article 10 of Communique 2010/4, which provides an exemption for transactions in which control is acquired from different sellers through serial transactions on the stock exchange. Such transactions may be notified to the Competition Board after their execution, provided that:

• the transaction is notified to the Competition Board without delay; and
• the voting rights connected to the acquired securities are not exercised, in the absence of an exception granted by Competition Board decision, in order to preserve the full value of the investments.

This provision is similar to Article 7(2) of the EU Merger Regulation. Although there was previously no similar specific statutory rule to this effect in Turkey, the case law of the Competition Board has shed light on the matter.

Answer ... Communiqué 2010/4 and the Guideline on the Concept of Control provide a definition of ‘control’ which is similar to the definition of this term in Article 3 of the EU Merger Regulation (139/2004). Article 5(2) of Communiqué 2010/4 stipulates the following:

Pursuant to the presumption regulated under Article 5(2) of Communiqué 2010/4, control will be deemed acquired by persons or undertakings that are the holders of the rights or entitled to the rights under the agreements concerned; or, while not being the holders of the rights or entitled to the rights under such agreements, that have de facto power to exercise those rights.

In short, much like the EU regime, under Law 4054, mergers and acquisitions resulting in a change of control are subject to the approval of the Competition Board. ‘Control’ is understood to be the right to exercise decisive influence over day-to-day management or long-term strategic business decisions, and can be exercised de jure or de facto. Thus, minority and other interests that do not lead to a change of control do not trigger the filing requirement. However, if minority interests acquired are granted certain veto rights that may influence management of the company (eg, privileged shares conferring management powers), then the nature of control may be deemed as changed (eg, a change from sole to joint control) and the transaction may be subject to filing.

Answer ... The acquisition of a minority shareholding may be covered by the merger control regime if and to the extent that it leads to a change in the control structure of the target. In other words, if minority interests acquired are granted certain veto rights that may influence the management of the company (eg, privileged shares conferring management powers), then the nature of control may be deemed as changed (from sole to joint control) and the transaction may be subject to filing. As specified under the Guideline on the Concept of Control, such veto rights must relate to strategic decisions on business policy and must go beyond ordinary ‘minority rights’ - that is, the veto rights normally accorded to minority shareholders to protect their financial interests.

Answer ... According to Article 5(3) of Communiqué 2010/4, joint ventures are also subject to notification to, and approval by, the Competition Board. Article 5(3) stipulates that joint ventures that permanently meet all functions of an independent economic entity are deemed notifiable if the merger control thresholds are met.

The Competition Board evaluates joint venture notifications according to two criteria:

• the existence of joint control in the joint venture; and
• the joint venture being an independent economic entity (ie, having adequate capital and labour, and an indefinite duration).

In recent years the Competition Board has consistently applied the ‘full-functioning’ test in determining whether a joint venture is an independent economic entity. If the transaction is found to bring about a full-function joint venture in view of the two criteria mentioned above, the standard SIEC test is applied. Additionally, under the merger control regime, a specific section in the notification form aims to collect information to assess whether the joint venture will lead to coordination. Article 13/III of Communiqué 2010/4 provides that the Competition Board will carry out an individual exemption review of notified joint ventures that emerge as an independent economic unit on a lasting basis, but that have as their object or effect the restriction of competition between the parties or between the parties and the joint venture itself. The wording of the standard notification form also allows for such a review

Answer ... Foreign-to-foreign transactions are caught under Law 4054 regardless of whether the joint venture has a Turkish nexus or generates any Turkish turnover. In other words, whether the joint venture has a Turkish nexus is not relevant for the notifiability analysis under the Turkish merger control regime. Additionally, according to Communiqué 2010/4, whether an ‘affected market’ exists will not be considered in assessing whether a transaction triggers the notification requirement. However, the concept of affected market carries weight in terms of the substantive competitive assessment and the notification form.

As long as the joint venture is a full-function joint venture and the jurisdictional thresholds set out under Article 7 of Communiqué 2010/4 are reached, the relevant transaction will be subject to mandatory merger control in Turkey. The Competition Board’s precedents also illustrate this approach (eg, Engie/FCA (Decision 21-15/187-79 of 18 March 2021); Housing Development/Warburg Pincus (Decision 21-13/167-72 of 11 March 2021); Astorg/Nordic (Decision 21-08/109-45 of 18 February 2021); Partners Group/Warburg Pincus (Decision 21-05/60-27 of 28 January 2021); TransnetBVV GmbH/MHP (Decision 21-04/43-18 of 21 January 2021); Warner Bros/Universal (Decision 20-25/324-152 of 21 May 2020); BP/RIL-RBPML (Decision 20-21/284-138 of 30 April 2020); Warburg Pincus/Archimed-Polyplus (Decision 20-19/252-121 of 9 April 2020); SGIS/JFE-Baosteel (Decision 20-14/180-92 of 12 March 2020); Elliott/Apollo-EP Energy (Decision 20-13/171-90 of 5 March 2020); Toyota/Mitsui-KINTO (Decision 20-13/166-85 of 5 March 2020); Generali/Apleona-Sansa (Decision 20-12/140-77 of 27 February 2020); Daimler/Swiss (Decision 20-10/105-61 of 13 February 2020); Sumitomo/Toyota/Lewis-MMP (Decision 20-10/101-59 of 13 February 2020); Generali/Union-Zaragoza Properties (Decision 20-08/73-41 of 6 February 2020); Alpla Holding/PTT Global (Decision 20-04/37-19 of 16 January 2020); HSI/Hilton Sao Paulo Morumbi (Decision 20-04/33-16 of 16 January 2020); Mitsubishi Corporation/Wallenius Wilhelmsen (Decision 20-04/35-18 of 16 January 2020); FSI/Snam-OLT Offshore (Decision 20-03/18-8 of 9 January 2020); AMG/Shell (Decision 20-03/20-10 of 9 January 2020); Engie/EDF/CDC/La Poste (Decision 19-45/747-321 of 19 December 2019); Bamesa/Steel Center (Decision 19-44/739-316 of 12 December 2019); Astorg/eResearch Technology (Decision 19-44/730-310 of 12 December 2019); CDC/Total (Decision 19-42/700-299 of 29 November 2019); BP/Bunge (Decision 19-35/526-216 of 11 October 2019); Faurecia/Michelin-SymbioFCell (Decision 19-33/491-211 of 26 September 2019); Leoni/Hengtong (Decision 19-08/93-38 of 21 February 2019); Daimler/Volkswagen-MT Holding (Decision 19-06/61-25 of 7 February 2019); DENSO/Aisin Seiki (Decision 19-04/32-13 of 17 January 2019); Adient/Boeing (Decision 18-21/364-180 of 28 June 2018); GE/Rosneft (Decision 18-14/259-124 of 8 May 2018); IBM/Maersk (Decision 18-08/138-68 of 15 March 2018); Daimler/Volkswagen-AutoGravity (Decision 17-28/463-202 of 7 September 2017); NIPIgas/Technip/Linde/JV (Decision 17-23/366-159 of 19 July 2017)). Against the foregoing, full-function joint venture transactions will be subject to mandatory merger control filings whenever the jurisdictional turnover thresholds are exceeded, even in cases where the joint venture is not/will not be active in Turkey.

Additionally, the foreign-to-foreign nature of the transaction does not prevent the imposition of an administrative monetary fine (for violation of either the suspension requirement or Article 7), in and of itself. In case of failure to notify (ie, closing before clearance), foreign-to-foreign mergers are caught under Law 4054 to the extent that they have effects on the relevant markets within the territory of Turkey.

As an example, in Simsmetal/Fairless (Decision 09-42/1057-269 of 16 September 2009), in which both parties were exporters into Turkey, the Competition Board imposed an administrative monetary fine on acquirer Simsmetal East LLC under the first paragraph of Article 16 of Law 4054, totalling 0.1% of its gross revenue generated in fiscal year 2009, because the transaction closed before the Competition Board’s approval had been obtained. Similarly, Longsheng (Decision 11-33/723-226 of 2 June 2011), Flir Systems Holding/Raymarine PLC (Decision 10-44/762-246 of 17 June 2010) and CVRD Canada Inc (Decision 10-49/949-332 of 8 July 2010) are instances in which the Competition Board imposed a turnover-based monetary fine based on violation of the suspension requirement in a foreign-to-foreign transaction.

Answer ... The Amendment Communiqué (see question 1.1) has amended the turnover thresholds that a given merger or acquisition must exceed in order to be subject to notification for the purposes of the Turkish merger control regime. Following the enactment of the amendments, the thresholds under Article 7 are as follows:

• Article 7(a): The total turnover in Turkey of the parties to a concentration exceeds TL 750 million and the Turkish turnover of at least two parties each exceeds TL 250 million.
• Article 7(b): Either:
• • the Turkish turnover of the transferred assets or businesses being acquired (as well as joint ventures) exceeds TL 250 million and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (Article 7(b)(i)); or
  • the Turkish turnover of any of the parties being merged exceeds TL 250 million and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (Article 7(b)(ii)).
• The tests under Article 7(b) thus include two separate tests: Article 7(b)(i) is applicable only to acquisitions (as well as joint ventures), while Article 7(b)(ii) is applicable only to mergers.

Furthermore, the Amendment Communiqué has introduced a threshold exemption for undertakings active in the following fields:

• digital platforms;
• software or gaming software;
• financial technologies;
• biotechnology;
• pharmacology;
• agricultural chemicals; and
• health technologies.

Pursuant to the Amendment Communiqué, special thresholds will apply to acquired undertakings active in, or assets relating to these fields if they:

• operate in the Turkish geographical market;
• conduct research and development activities in the Turkish geographical market; or
• provide services to Turkish users.

Therefore, the Amendment Communiqué does not require a Turkish nexus for activities to qualify for the threshold exemption. In other words, it will suffice if the target is active in one of the relevant fields anywhere in the world in order for the threshold exemption to apply. Accordingly, for the threshold exemption to apply, the target need not:

• generate revenue from customers located in Turkey;
• conduct research and development activities in Turkey; or
• provide services to Turkish users.

If the target is active in one of the relevant markets/sectors, the following thresholds will apply:

• The aggregate Turkish turnover of the transaction parties exceeds TL 750 million; or
• The worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion.

Accordingly, where an undertaking that meets these criteria is being acquired, the transaction will be notifiable if either:

• the aggregate Turkish turnover of the target and the acquirer exceeds TL 750 million; or
• the worldwide turnover of the acquirer exceeds TL 3 billion.

Clarifications on the meaning and the scope of the relevant markets/sectors are provided in question 1.2.

Where the transaction does not meet the above thresholds, the transaction will not be deemed notifiable. Furthermore, Communiqué 2010/4 does not require the existence of an ‘affected market’ in assessing whether a transaction triggers a notification requirement.

In terms of the above threshold exemption for certain undertakings, reasoned decisions of the Competition Board have begun to be published, slowly creating precedent on the issue. Of the approximately 10 decisions in which the relevant exemption was applied, examples include:

• IFGL/Cinven (Decision 22-23/372-157 of 18 May 2022), which concerned an undertaking active in the digital platform markets;
• Airties/Providence (Decision 22-25/403-167 of 2 June 2022), which concerned a programming undertaking;
• Affidea/GBL (Decision 22-27/431-176 of 16 June 2022), which concerned a biotechnology undertaking;
• Clayton/TPG/Covetrus (Decision 22-32/512-209 of 7 July 2022), which concerned a pharmacology undertaking;
• Astorg/Corden (Decision 22-25/398-164 of 2 June 2022), which concerned a pharmacology undertaking;
• Biocon Viatris (Decision 22-23/380-159 of 18 May 2022), which concerned a pharmacology/molecular medicine undertaking;
• Citrix/Tibco (Decision 22-21/344-149 of 12 May 2022), which concerned a software undertaking; and
• Impala Bidco/HG Capital/EQT Fund/TA (Decision 22-21/354-152 of 12 May 2022), which concerned technology undertakings.

Finally, Communiqué 2017/2 Amending Communiqué 2010/4 on Mergers and Acquisitions Requiring the Approval of the Board removed the provision of Article 7(2) of Communiqué 2010/4 stating that “The thresholds … are re-determined by the Board biannually”. As a result, the Competition Board is no longer required to review the turnover thresholds for concentrations every two years.

Answer ... The following transactions are not subject to the approval of the Competition Board:

• intra-group transactions and other transactions that do not lead to a change of control;
• temporary possession of securities for resale purposes by undertakings whose normal activities are to conduct transactions with such securities for their own account or for the account of others, provided that the voting rights attached to such securities are not exercised in a way that affects the competition policies of the target;
• statutory and compulsory acquisitions by public institutions or organisations for reasons such as liquidation, winding-up, insolvency, cessation of payments, concordat or privatisation; and
• acquisition by inheritance.

There is no de minimis exception under the Turkish merger control regime.