Turkey: Persistent Scrutiny Over Previous Merger Control Filings Continues: The Board Imposes Two Administrative Fines To Brookfield Asset Management Inc. For Gun-Jumping And False And Misleading Information

The Turkish Competition Board's ("Board") reasoned decision¹ on imposing two separate administrative fines on Brookfield Asset Management Inc. ("Brookfield") as per Article 16(a) and Article 16(b) of the Law No. 4054 on the Protection of Competition ("Law No. 4054") due to the findings that (i) Brookfield completed the acquisition of the power solutions business of Johnson Controls International plc ("JCI") without notifying the Board and its approval and that (ii) Brookfield submitted false and misleading information regarding its Turkish turnover figure was recently published.

In its assessment of gun-jumping, the Board compared the closing and notification dates; and consequently found that Brookfield notified the transaction at hand approximately 5 months after the closing, which took place on April 30, 2019. The Board also acknowledged that the contemplated transaction was notified before the European Commission and was unconditionally approved on February 14, 2019². Although Brookfield argued that it realized that the JCI transaction actually required a mandatory merger control filing before the Authority, when assessing a separate transaction involving the acquisition of sole control over JCI's subsidiary Johnson Controls Autobatterie GmbH & Co. KgaA ("JC Autobatterie") by Brookfield,³ the Board concluded that the contemplated transaction of JCI indeed was subject to a mandatory merger control filing before the Authority.

In addition, even though Brookfield indicated that it had no Turkish turnover pre-transaction (in 2018), the Board noted that Brookfield notified the Authority in 2015 regarding its acquisition of Graftech⁴. In light of this previous Brookfield/Graftech acquisition, the Board enquired whether Graftech generated any turnover in Turkey. Accordingly, it determined that Graftech indeed had certain activities in Turkey and as such, Graftech's 2018 Turkish turnover could be attributed to Brookfield, yet this particular turnover was not included in Brookfield's Turkish turnover. Upon the confirmation that Graftech was still under Brookfield's control, the Board concluded that Brookfield misinformed the Authority, when it submitted to the Authority that it had no activities and turnover in Turkey.

As a result, while the Board ultimately approved the transaction, the Board imposed two separate administrative monetary fines of 0.1% of the annual turnover of Brookfield for gun-jumping under Article 16(b) of the Law No. 4054 and for providing false and misleading information under Article 16(a) of the Law No. 4054.

This article was first published in Legal Insights Quarterly by ELIG Gürkaynak Attorneys-at-Law in September 2020. A link to the full Legal Insight Quarterly may be found here.

Footnotes

1. The Board's decision dated April 30, 2020 and numbered 20-21/278-132

2. The European Commission's decision of February 14, 2019 and numbered COMP/M.9224.

3.The Turkish Competition Board granted unconditional clearance to JC Autobatterie transaction through its decision dated 22.11.2019 and numbered 19-41/679-293.

4. Turkish Competition Board's decision dated June 30, 2015 and numbered 15-27/296-81.

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