In 2018, 208 mergers and acquisition transactions ("M&A") were notified to the Turkish Competition Authority ("TCA") although 21 of them were not subject to notification for various reasons. Of these 208 notifications, 113 were part of global deals that were closed outside of Turkey. We would like to clarify the conditions of the notification requirement for an M&A by explaining the concept of change of control and the notification thresholds. It would be also practical to bring up the new merger test and the acceptable remedies for notifying more challenging transactions.

1. Is there a change in the control structure?

The Turkish merger control system requires parties to make notification of an M&A before closing the agreement. The conditions of notification are regulated with the Communique Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board, numbered 2010/4 ("Communique"). Transactions that result in a permanent change in the control of an undertaking are deemed as an M&A for the purposes of the Communique. Control may be acquired in various ways, such as the purchase of shares, assets, ownership rights or operating rights. Control change can also be attained through a contract or a similar instrument which allows de facto or de jure exercise of decisive influence over the structure or decisions of the bodies of an undertaking.

Changed control may constitute the overall undertaking or only a part of one or several undertakings. For instance, acquisition of an undertaking's subsidiary, or a part of an undertaking's assets may result in a change of control, provided that such assets constitute a part of an undertaking to which a market turnover can be attributed.

Control may be acquired by one or more undertakings, as well as one or several persons provided that such persons already control at least one other undertaking or conduct other economic operations on their behalf.

2. Are turnover thresholds exceeded?

The second checkpoint for deciding whether a transaction is subject to notification is turnover thresholds. The TCA's approval is required for an M&A to become legally valid, if:

  1. the total Turkish turnover of the transacting parties exceeds TRY 100 million, and Turkish turnover of at least two of the transacting parties each exceed TRY 30 million.
  2. the asset or activity subject to acquisition, and at least one of the parties has a Turkish turnover exceeding TRY 30 million and the other party of the transactions has a global turnover exceeding TRY 500 million.

Whereas the above-mentioned thresholds appertain to the transacting parties' turnovers and the acquired assets, there are no required thresholds regarding market shares or transaction values.

The TCA aims to attain the most accurate and reliable turnover figures to evaluate the effects of a transaction and its upcoming results in relevant markets. Therefore, while calculating the transacting parties' specified turnovers, all persons or economic units' turnovers are taken into account to determine and evaluate the total volume of the transacting parties. Also, within the scope of the legal certainty principle, turnover is calculated under the uniform accounting plan and from the net sales generated as of the end of the financial year preceding the date of the notification, or, if this cannot be calculated, of those generated as of the end of the financial year closest to the date of notification being made to the TCA.

3. Are you aware of the new SIEC test?

The Turkish merger control regime became more similar to the European Union's when the dominance test was replaced with the Significant Impediment to Effective Competition ("SIEC") test last June. The SIEC test provides the TCA with the authority to prohibit an M&A that would significantly impede effective competition in a market even if such transactions do not create or strengthen a dominant position.

While the SIEC test still largely considers dominance, its intervention threshold, however, is essentially concerned with how much competition is lost in a market. Within this widened scope of evaluation, the TCA's approvals are likely to require deeper economic analysis.

The SIEC principle in merger controls entitles the TCA to prohibit transactions when it is convinced that they will reduce the numbers of competitors in oligopoly markets, or increase market transparency, or prevent a competitive market structure, or pave the way for cartel creation. It is not only horizontal, but also vertical and conglomerate M&A that are at risk of being caught by the SIEC test.

The aim is to contain and control transactions that do not result in creating or strengthening a dominant position but that may have anti-competitive effects. When considering that the TCA's old dominance test's principle was already based on the significant impediment of competition, the uncertainties of how the SIEC test will be applied, and in the absence of a secondary regulation, it is possible to speculate that the SIEC practice will not change the main fundamentals of the settled evaluation criteria.

4. Just in case, do you have a remedy package in hand?

In 2018, 3 out of 208 M&A were cleared by the TCA subject to conditions. Similar to the European merger regime if the TCA determines that there are serious competition concerns with an M&A, they will take a transaction to the in-depth investigation phase and notify merging parties of its concerns. The merging parties may choose to make appropriate remedy proposals, suggesting particular changes in a transaction to resolve the TCA's concerns. The general procedures and principles concerning the types of remedies that are acceptable in cases of such concentrated transactions are regulated under the Guideline on Remedies Acceptable in Mergers and Acquisitions ("Remedy Guideline").

Whereas it is the TCA's responsibility to evaluate and demonstrate that an M&A may significantly impede effective competition through the creation or strengthening of a dominant position, or through another way in the market concerned, it is at the undertakings' sole discretion to submit any remedies. It is also the transacting parties' responsibility to satisfy the TCA that competition concerns resulting from a transaction will be resolved through the suggested remedies and to provide the required information that demonstrates the sufficiency of the commitments and remedies in eliminating the competitive concerns.

The TCA only accepts proposed remedies if they are sufficient to respond to and eliminate all competitive concerns relating to a transaction without uncertainty and in a sustainable manner. While the proposed remedies must be sufficient to prevent all the anti-competition risks and bring practicable, accurate and clear solutions, it is not expected that these remedies should make the market more competitive, the proposed remedies must only serve to protect competition at the level that it had existed before the transaction.

The remedies and commitments from transacting undertakings must be practicable and realistic, and their conditions must be accurate, sound, and clear. In the scope of determining their efficiency to protect competition, the TCA evaluates proposed remedies on the basis of whether they are sufficient and proportionate to respond to each competition concern and to resolve competition problems brought about by a transaction.

The remedies proposed may be structural or behavioural. While the former mainly includes the divestiture of a business, the latter involves the arrangement of the future market behaviour of the parties. The divestiture and transfer of a business enables the creation of an environment that generates new competitors or strengthens the existing competitors through the divestiture of a business that can compete in the market by itself. Behavioural remedies, which are accepted as less effective than the structural ones, may provide the granting of access to infrastructure, network, technologies or intellectual property rights and essential input to facilitate market entry by competitors. These remedies must prove that the lowering of entry barriers through granting such access rights will enable the entry of new competitors in the relevant market.


M&A in Turkey are regulated through the TCA's notification based merger control regime. As a principle, any merger and acquisition that results in a "significant impediment of effective competition" within the market is prohibited by Competition Law. Therefore, undertakings who are party to an intended transaction, must notify ex-ante and obtain the TCA's approval. There are various checkpoints to decide whether a transaction is deemed as an M&A and whether such an M&A is subject to notification. Turkey's new merger control regime applies the SIEC test which complies with the European merger control regime. Since there is no secondary regulation yet regarding the application of the new merger test, there is still uncertainty as to how the TCA's benchmarks will be applied in determining a "significant impediment".

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.