January 2020 – The Turkish Competition Authority ("TCA") has published its Report on the Review of Mergers and Acquisitions for 2019 ("Report"). The Report provides general information on M&A transactions in Turkey in 2019, as well as brief statistical information on merger control filings. Below is a summary of the Report's main findings:
- In 2019 the Turkish Competition Board decided on 208 merger control filings. Among these transactions, 38 were concluded among Turkish companies, while 115 transactions involved foreign companies only. The remaining 51 transactions were realised between Turkish and foreign companies. On average between 2013 and 2019, the Turkish Competition Board rendered 202 decisions per year.
- Although the number of foreign-to-foreign transactions examined by the TCA dropped slightly in 2019 (to 115 from 121 in 2018), it can be said that the total number of foreign-to-foreign transactions brought before the TCA has been on a rising trend since 2013, as shown in this chart.
- The Report also highlights the total transaction values of notified transactions. The total transaction value of transactions realised among Turkish companies was TRL 6.86 billion (approx. EUR 1.04 billion), while the total transaction value concluded among foreign companies was TRL 2.86 trillion (approx. EUR 430.62 billion). Total transaction value of transactions between Turkish and foreign companies was TRL 19.75 billion (approx. EUR 2.98 billion).
- The Report shows that foreign investors invested into Turkish companies in 46 separate transactions in 2019, while this number was 36 in 2018. Among foreign investors, Japanese companies were the most active, with 7 transactions in 2019. The total value invested by foreign companies in Turkish companies via these transactions was TRL 36.18 billion (approx. EUR 5.46 billion) in 2019, nearly three times the amount invested in 2018, which totalled TRL 14.9 billion (approx. EUR 2.74 billion).
- The Report also provides information with respect to the distribution of the number and value of transactions in terms of economic activities in 2019. The highest number of transactions were realised in the sector of "the production, transmission and distribution of electricity," and there were 12 transactions concerning this economic activity. The leading economic activity in terms of transaction value was "financial intermediary institutions," which accounts for 36.1% of the total value of transactions concluded in 2019, i.e., TRL 16.5 billion (approx. EUR 2.8 billion).
- On average the review period of the TCA for merger control filings was 14 days in 2019. However, this 14-day period is calculated from the latest submission to the TCA (for example a response to a request for information or submission of an additional information petition), and not from the initial submission of the notification package to the TCA.
Which transactions are subject to approval in Turkey?
Communiqué No. 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board ("Communiqué No. 2010/4") describes the transactions that are subject to mandatory filing in Turkey.
First of all, there must be (i) a merger of two or more undertakings, or (ii) an acquisition of direct or indirect control over all or part of one or more undertakings by one or more undertakings or by one or more persons who currently control at least one undertaking, through the purchase of shares or assets, through a contract or through any other means. Secondly, the transaction must result in a permanent change in control, which can be achieved de jure or de facto by acquiring decisive influence over an undertaking. Lastly, the transaction must trigger the turnover thresholds defined under Article 7 of Communiqué No. 2010/4. There are two alternative thresholds, which are;
(a) The aggregate Turkish turnover of the transaction parties exceeding 100 million Turkish Liras and the Turkish turnover of at least two of the transaction parties each exceeding 30 million Turkish Liras, or;
(b) (i) The Turkish turnover of the transferred assets or businesses in acquisitions exceeding 30 million Turkish Liras and the worldwide turnover of at least one of the other parties to the transaction exceeds 500 million Turkish Liras, or (ii) the Turkish turnover of any of the parties in mergers exceeding 30 million Turkish Liras and the worldwide turnover of at least one of the other parties to the transaction exceeds 500 million Turkish Liras.
The turnover thresholds provided under Article 7(b) are two separate tests; Article 7(b)(i) is applicable only in case of acquisition transactions (as well as joint ventures) and Article 7(b)(ii) is applicable only in case of merger transactions.
Transactions that do not trigger the merger control thresholds do not need to be filed to the TCA. The Turkish merger control regime does not include an affected market test and any transaction that triggers the thresholds are subject to mandatory notification.
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.