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December 21, 2023

Amendments Concerning The Mergers and Acquisitions

1. INTRODUCTION

Communiqué Amending The Communiqué Concerning the Mergers and Acquisitions Calling For The Authorization Of The Competition Board (Communiqué No: 2010/4) (“Communiqué”) (“Amendment Communiqué”) was published in the Official Gazette dated 04.03.2022 and numbered 31768. In this context, with the Amendment Communiqué, amendments and regulations are made regarding the following:

  1. Turnover thresholds for mergers and acquisitions subject to the authorization of the Competition Authority
  2. Turnover thresholds to be applied to transactions for Technology Undertakings
  • Submission of notification form in electronic media,
  1. Notification form content and format and
  2. Turnover calculation manner in Financial Institutions

 

The amendments, which will be examined under the headings below, will enter into force 2 months after the publication of the Amendment Communiqué and therefore on 04.05.2022.

2. AMENDMENTS ON TURNOVER THRESHOLDS

As is known, two different turnover thresholds are determined within the framework of paragraphs a) and b) of Article 7 of the Communiqué, and if any of these turnover thresholds is exceeded in a concrete merger or acquisition transaction, the authorization of the Competition Board (“Board”) is required for the relevant transaction to gain legal validity. In this context, with the Amendment Communiqué;

  • Regarding the first turnover threshold regulated in paragraph a) of Article 7 of the Communiqué; while the total Turkey turnover of the transaction parties was required to exceed TRY.-100,000,000, this amount is increased to -750.000.000 and before the amendment, the Turkey turnover of at least two of the transaction parties were required to exceed TRY.-30.000.000 separately, while this amount is determined as TRY.-250.000.000 with the amendment.
  • Regarding the second turnover threshold regulated in paragraph b) of Article 7 of the Communiqué; while the Turkey turnover of the asset or activity subject to the transfer in acquisition transactions and at least one of the transaction parties in merger transactions is required to exceed TRY.-30.000.000 before the amendment, this amount is increased to -250.000.000 and on the other hand, while the global turnover of at least one of the other transaction parties was required to exceed TL.-500.000.000 before the amendment, this limit is increased to TRY.-3.000.000.000.

Therefore, with the Amendment Communiqué, the financial limit required for a merger or acquisition transaction to be subject to the authorization of the Board is increased significantly.

3. PARTICULAR OCCASION REGARDING TECHNOLOGY UNDERTAKINGS

In addition to updating the turnover thresholds, the definition of “Technology Undertakings” is added to the Communiqué, and a different notification and turnover calculation method is arranged in terms of transactions in which these undertakings are parties. In accordance with Article 1 of the Amendment Communiqué, Technology Undertakings are defined as “undertakings or related assets operating in the fields of digital platforms, software and game software, financial technologies, biotechnology, pharmacology, agrochemicals and health technologies”.

The most substantial regulation regarding Technology Undertakings made with the Amendment Communiqué is the turnover thresholds to be sought for the transactions in which these undertakings are subject to transfer, for the relevant transaction to be subject to notification to the Board. In this context, pursuant to the amendment made in the second paragraph of Article 7 of the Communiqué; “In transactions regarding the acquisition of technology undertakings operating in the Turkish geographical market or having R&D activities or providing services to users in Turkey; the thresholds of two hundred and fifty million TRY in subparagraphs (a) and (b) of the first paragraph are not sought”. Therefore, in case the following limits are exceeded in the acquisition of the said technology undertakings, the authorization of the Board will be required;

  • In the event that the total Turkey turnover of the transaction parties in Turkey exceeds TRY.-750.000.000 or
  • The global turnover of at least one of the transaction parties exceeds TRY.-3,000,000,000.

As can be seen, within the framework of the application for authorization of the Board in the acquisition of technology undertakings, the impact of the target companies is considerably reduced, the focus has been shifted to the total financial power of the investors, and a merger control system is established in this direction. In this context, in the calculation of the merger control clearance application thresholds for the technology start-ups, which have become very popular today and is subject to more merger control applications within each day, the turnover of the investor companies, funds and/or angel investors and undertakings controlled by real persons will become prominent over the financial size of the undertakings subject to merger or acquisition.

With the said regulation, it is evaluated that the possibility of these transactions not being subject to the notification obligation and therefore not being subject to the control of the Board is considered and it is planned to control these transactions and prevent lethal acquisition of new technological initiatives, taking into account the rapid developments in technology-oriented markets, especially digital platforms, in cases where transactions carried out by undertakings with significant market power in digital markets and acquisitions of newly established or developing enterprises(start-ups).

Thus, in order to eliminate the concerns about the acquisition of newly established and developing undertakings, a practice specific to Turkey is implemented, based on the principle of introducing different notification obligations specific to the acquisitions on technology undertakings operating in the Turkish geographical market or providing services to users in Turkey.

4. AMENDMENTS IN CALCULATION OF TURNOVER IN FINANCIAL INSTITUTIONS

Explanations on how to calculate the turnover of banks, financial leasing, factoring and financing companies, brokerage houses and portfolio management companies, insurance, reinsurance and pension companies and other financial institutions are also revised in accordance with the amendments made by independent administrative authorities and other public institutions in the relevant legislation. In this context, regulatory compliance is assured in terms of the calculation of turnover thresholds for mergers and acquisitions of financial institutions.

5. NOTIFICATION TO THE COMPETITION AUTHORITY THROUGH E-GOVERNMENT

Within the scope of the Amendment Communiqué, the way for the notification form and its annexes being submitted through E-Government has been added in addition to the currently applied methods which are by hand or by e-mail to the Competition Authority headquarters.

6. NEW MERGER AND ACQUISITION NOTIFICATION FORM

With the Amendment Communiqué, the notification form and its annexes, which are being prepared in order to obtain the authorization of the Board in merger and acquisition transactions, are rearranged. The purpose of the Board in making this regulation is to make the form suitable for this structure so that the notification form can be filled and transmitted electronically in the future. The second fundamental change in the notification form is that the information requested in the form is classified under the headings of transaction-related information, information about the parties, information about the market and joint ventures. The purpose of this classification is to ensure that the notifying parties complete the necessary information in a more systematic way, while enabling the experts who will evaluate the form to determine the information they are looking for more easily.

7. CONCLUSION

The first change that comes to the fore in the Amendment Communiqué is the substantial increase in the turnover thresholds required to be a subject to the merger control provisions of the Board in potential mergers and acquisitions. With these amendments, the number of transactions subject to authorization is expected to decrease and a decline in the workload of the Board can be expected. On the other hand, within the scope of the regulations regarding technology undertakings and different notification obligation, a focus is directed to digital markets, and it is aimed that mergers and acquisitions, especially which newly established undertakings are the subject, are under the Board’s control. In addition, regulations are made in the calculation of turnover thresholds in financial institutions in line with compliance with the legislation and in accordance with the importance given to digitalization by the Board, it is aimed to speed up the notification process with a new notification form format, which is easier to fill in electronically and contains a more systematic order to enable applications through the E-Government system.

Authors

Duygu Doğan Şahiner

Duygu Doğan Şahiner

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