Communiqué No. 2022/2 on the Amendment of Communiqué No. 2010/4 ("Communiqué No. 2010/4") on the Mergers and Acquisitions Subject to the Approval of the Competition Board ("Amendment Communiqué") has been published on the Official Gazette on March 4, 2022 and will enter into force on May 4, 2022.
Below are some remarks and comments in terms of the substantive amendments introduced by the Amendment Communiqué:
(I) The Amendment Communiqué raised the Turkish merger control thresholds. A transaction is now notifiable in Turkey if one of the following alternative turnover thresholds is triggered:
- The aggregate Turkish turnover of the transaction parties exceeding TL 750 million (approximately EUR 71.9 million or USD 84.9 million) and the Turkish turnover of at least two of the transaction parties each exceeding TL 250 million (approximately EUR 23.9 million or USD 28.3 million), OR
- The Turkish turnover of the transferred assets or businesses in acquisitions exceeding TL 250 million (approximately EUR 23.9 million or USD 28.3 million) and the worldwide turnover of at least one of the other parties to the transaction exceeds TL 3 billion (for 2021 approximately EUR 287.9 million or USD 339.7 million),
(II) In a nutshell, the Amendment Communiqué updates the Turkish merger control thresholds as follows: (i) the previous TL 30 million threshold (approximately EUR 2.8 million or USD 3.3 million) is now raised to TL 250 million threshold (approximately EUR 23.9 million or USD 28.3 million), (ii) the previous TL 100 million threshold (approximately EUR 9.5 million or USD 11.3 million) is now raised to TL 750 million threshold (approximately EUR 71.9 million or USD 84.9 million), and (iii) the previous TL 500 million threshold (approximately EUR 47.9 million or USD 56.6 million) is now raised to TL 3 billion threshold (approximately EUR 287.9 million or USD 339.7 million). All currency conversions are based on the Turkish Central Bank's applicable average buying exchange rates for the financial year 2021.
This update in notification thresholds came in after the previous thresholds remained in force for more than 9 years, during which the exchange and inflation rates increased significantly. Based on the USD and EUR equivalents of the applicable thresholds at the time of their introduction, the update will serve as an equaliser as the new thresholds in USD and EUR are very close to the levels applicable when the previous updates were enacted. To illustrate:
- The previous update on notifiability thresholds was made as long way back as February 2013, which means the Turkish competition law enforcement regime has used the same thresholds for more than 9 years now. Before the February 2013 amendments, the older figures had remained in use for only a little more than 2 years;
- Back in February 2013, the USD and EUR equivalent of the applicable thresholds were in the vicinity of, respectively, (i) USD 57 million - EUR 42 million, (ii) USD 17 million - EUR 13 million, and (iii) USD 286 million - EUR 210 million;
- The corresponding figures in USD and EUR are now very close to the figures that were applicable back in February 2013: (i) USD 53 million - EUR 48 million, (ii) USD 18 million - EUR 16 million, and (iii) USD 212 million - EUR 192 million;
- That means the Amendment Communiqué has brought figures close to their 2013 levels to catch up on the increases in exchange and inflation rates.
(III) In light of the rapid changes in the technology industry and in order to catch killer acquisitions, the Amendment Communiqué also introduced a new merger control regime for "technology undertakings". Further to the Amendment Communiqué, "the TL 250 million Turkish turnover thresholds" will not be sought for "technology undertakings" active in the Turkish geographical market, which conduct research and development activities or provide services to Turkish users. Article 1 of the Amendment Communiqué defines "technology undertakings" as "Undertakings that are active in digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies sectors or their assets related to these sectors". Therefore, based on these exceptional jurisdictional thresholds, the 250 million turnover threshold will not be sought for technology undertakings.
(IV) The Amendment Communiqué also updates the rules that apply to the calculation of turnover of the financial institutions in accordance with the recent changes on the financial regulations. The recent updates of Article 9 of Communiqué No. 2010/4 are as follows: (i) for the calculation of financial institutions' turnovers, the Amendment Communiqué aligns the wordings and terms in view of the applicable banking and financial regulations - it excludes the term "participation banks" and refers to the term "banks" in general which covers all legal forms of banks, (ii) the Amendment Communiqué updates the names and references of the relevant regulations issued by the Banking Regulatory and Supervisory Agency and the Capital Markets Board referred in Article 9 of Communiqué No. 2010/4.
(V) Under Communiqué No. 2010/4, the notification form and its attached documents are submitted to the Turkish Competition Authority's headquarter in Ankara by physical delivery. The recent updates allow notifying parties to submit the notification form via "e-Devlet", an elaborate system of web-based services, including electronic submission. E-devlet was already made available for submissions, especially during the pandemic period. Now, Communiqué No. 2010/4 explicitly mentions this alternative way of submission to make it official.
(VI) The dominance test applicable to the review of mergers was reformulated from the "creation or strengthening of a dominant position, thereby significantly lessening of competition" test into the proper SIEC (significant impediment to effective competition) test back in June 2020. To align with this modification in the underlying regulation, the Amendment Communiqué now provides that "Mergers and acquisitions which would result in a significant lessening of effective competition within the entirety or a portion of the country, particularly in the form of creating or strengthening a dominant position are prohibited". This is a reflection of the recently-introduced SIEC test as the wording of "one or more undertakings with a view to creating a dominant position" was replaced with "particularly in the form of creating dominant position".
(VII) The Amendment Communiqué also revises the structure and content of the notification form, which is annexed to the Communiqué. In terms of the definition of affected markets, the Amendment Communiqué excludes the expression "possibly affected by the transaction subject to the notification and". It instead provides that "in Turkey affected markets consist of all the relevant product markets and geographical markets where a) two or more of the parties are engaged in commercial activities in the same product market (horizontal relationship), b) At least one of the parties are engaged in commercial activities in the downstream or upstream market of any product market in which the other operates (vertical relationship)"
(VIII) The Communiqué No. 2010/4 provided that the information requested under Sections 6, 7 and 8 of the notification form (such as the import conditions, supply structure, demand structure, market entry conditions and potential competition, efficiency gains, etc.) was not required in cases where (i) the aggregate market share of the parties did not exceed 20% in terms of the horizontal relationships and (ii) where the market share of one of the parties did not exceed 25% in terms of the vertical relationships within the affected markets. The new template form, on the other hand, requires the parties to provide some of the detailed information sought under the Sections 6, 7 and 8 of the former template form, in cases where there are affected markets in Turkey, irrespective of market shares held by the parties in such markets, whereas some of them are required to be provided even in case there are no affected market in Turkey.
(IX) As opposed to the previous template notification form, information subject to request for confidential treatment is expected to be highlighted in red.
(X) The template form stresses that the transaction value reflects the value of all assets and pecuniary and non-pecuniary benefits (denominated in TL) that the acquirer has acquired or will acquire from the seller within the scope of the transaction. In this respect, the transaction value now includes all pecuniary payments to be made within the scope of the transaction, voting rights, securities, movable and immovable assets, conditional payments, additional payments for non-compete obligations (if any) as well as obligations of the acquirer.
Gönenç Gürkaynak, the Founding Partner of ELIG Gurkaynak Attorneys-At-Law, has stated the following about the new threshold levels introduced: "An update for the applicable local turnover thresholds of notifiability was due for a very long time. The last update was 9 years ago in 2013. With the adjustment of the applicable thresholds through a 5 times multiplier for the worldwide turnover threshold and approximately a 7 times multiplier for the Turkish turnover thresholds, the USD and EUR equivalent value of the thresholds are restored to almost exactly where they were 9 years ago. That said, the TCA has now made it clear with the threshold exemptions in the new regulation that they want to review the transactions of companies active in digital platforms, software, fintech, biotech, pharmacology, agriculture chemicals, or health technology, regardless of whether they exceed Turkish thresholds, so far as they reach Turkish markets and users."
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