Introduction
Revised guidelines
Recent decisions
Comment
In a further indication that modernisation will be one of the Competition Authority's top priorities in 2013, the authority recently issued secondary legislation on the merger control regime. The revised Guideline on Undertakings Concerned, Turnover and Ancillary Restraints in Mergers and Acquisitions aims to reflect the changes introduced to the merger control regime in recent months.
The authority began the year by introducing Communiqué 2012/3, which amends Communiqué 2010/4 on Mergers and Acquisitions Subject to Competition Board Approval (for further details please see "Merger control thresholds revised"). The revised communiqué came into effect as of February 1 2013 and amended the jurisdictional turnover thresholds. In this respect, the first prong of the alternative threshold provided by Communiqué 2010/4 concerning the turnover generated by parties in Turkey remained unchanged; the second prong of the alternative turnover thresholds was raised from TRY5 million to TRY30 million and is now based on the transferred assets or businesses, rather than any of the parties to the transaction. Furthermore, the existence of an affected market is no longer necessary when determining whether a respective transaction triggers a mandatory merger control notification (under Communiqué 2010/4, except for joint ventures, transactions that did not result in an affected market were not notifiable even if the notification thresholds were exceeded).
To accompany the release of Communiqué 2010/4, the authority issued guidelines that aimed to increase certainty and predictability in relation to the communiqué's application. In light of the above changes, the authority has therefore issued a revised set of guidelines providing explanations regarding the concepts of undertakings concerned and how to calculate turnover. The revisions are limited, reflecting the amendments provided by Communiqué 2012/3. In this regard, the main aspects of the revisions are outlined below.
Turnover
In the first paragraph, the section entitled "Turnover" has been harmonised in line with the applicable turnover thresholds and amended as follows:
"Pursuant to Article 7 of the Communique in cases where the aggregate Turkish turnovers of the transaction parties exceed TL100 million (approximately €44 million and US$56 million) and the Turkish turnovers of at least two of the transaction parties each exceeds TL30 million (approximately €13 million and US$17 million), or the Turkish turnover of the assets or businesses subject to the acquisition in the case of acquisition transactions, or the Turkish turnover of at least one of the parties in the case of merger transactions, exceeds TL30 million (approximately €13 million and US$17 million), and the worldwide turnover of at least one of the other transaction parties exceeds TL500 million (approximately €217 million and US$279 million) the approval of the Competition Board is required for the validity of the respective transaction."
Affected market
The phrases that require the existence of an affected market to determine that a transaction is notifiable (regardless of whether the notification thresholds have been met) have also been removed from the first paragraph. Furthermore, as the concept of 'affected market' will no longer be used as a criterion in such analyses, the authority has also deleted the section entitled "Affected Market", in which detailed explanations were provided.
However, the concept of affected market still has a place in substantive competitive assessment and preparation of the notification form. It remains to be seen whether the concept of affected market as defined in the former guidelines will still be valid. The previous interpretation of this concept has been also cited and used by the Competition Board through its precedents.
In the past, the only legislation that defined 'affected market' was the former guidelines and the authority's sample notification form. According to the notification form, a market is deemed as being 'affected' where:
- two or more of the parties have commercial activities in the same product market (ie, a horizontal relationship); or
- at least one of the parties is engaged in commercial activities in markets which are upstream or downstream from the product market of the other party (ie, a vertical relationship).
However, under the previous guidelines and board precedent, the mere existence of potential global horizontal or vertical overlaps was sufficient to trigger a merger control filing requirement, provided that one of the parties was active in Turkey. The relevant section read as follows:
"the fact that there is a relevant product market where the activities of the parties overlap horizontally or vertically fulfills the condition of the existence of an affected market provided that at least one party operates in Turkey."
In a number of recent decisions the board has concluded that if a transaction could produce effects in Turkey - even on a potential or theoretical basis and regardless of whether one of the parties had a presence or turnover in Turkey - the merger control notification requirement would be triggered.
In Eurodrip(1) the board found the relevant acquisition subject to notification, based on a potential vertical overlap between the activities of one of the acquirer's subsidiaries in Australia and the activities of the target in Turkey.
In Eksim Yapi(2) the board stated that although the joint venture would be established and operate outside of Turkey (in Kuwait), the Turkish market could be indirectly affected. To explain this indirect effect, the board reasoned that the parties that were forming the joint venture had companies that were active in Turkey and their increased market power through the turnover generated from the joint venture in Kuwait would indirectly increase their power in Turkey. As such, the board concluded that the transaction would indirectly affect the Turkish market, and thus should be subject to board approval.
In Ocean(3) the board found that even if there is no current market in Turkey for the field of activities of a joint venture (in this case the general power station configuration aimed toward parabolic gutter technology), with the potential development of such technologies in Turkey in the future, it could be argued that the Turkish market could potentially be affected by the notified transaction. It therefore concluded that the transaction was subject to the merger control regime.
As the section on affected markets has been removed from the guidelines, the sole source providing an indicative definition is the sample notification form. As mentioned above, the wording of the definition solely addresses actual horizontal and potential or actual vertical overlaps between the activities of the parties to the transaction. Thus, the wording of the definition does not appear to extend to potential or theoretical overlaps between Turkish activities and worldwide activities of the parties.
Although the affected market will no longer be taken into account while assessing the notifiability of a given transaction, the notification form that must be submitted to the authority comprises several sections that must be filled in on the basis of affected market(s), such as "the mergers or acquisitions realized by the parties to transaction in the affected markets" and the "sales value and sales amount data, together with the market shares, of the parties to the transaction in the affected markets".
Therefore, unless new legislation is introduced by the authority that provides guidance on how the concept of affected market should be understood, whether the board will retain its broad approach towards the interpretation of this concept remains to be seen.
For further information on this topic please contact Gonenc Gürkaynak at ELIG by telephone (+90 212 327 17 24), fax (+90 212 327 17 25) or email ([email protected]).
Endnotes
(1) October 11 2012, 12-51/1474-504.
(2) May 16 2012, 12-26/759-213.
(3) August 17 2011, 11-45/1106-382.
This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.
