Shifting Alliances under Turkish Merger Control Regime

Pursuant to Article 5(1) of Communiqué No. 2010/4 Concerning Mergers and Acquisitions Requiring the Approval of the Competition Board (Communiqué No. 2010/4), which is akin to Article 3(1) of the EU Merger Regulation (EUMR), a merger or acquisition is considered a “concentration” if it results in a lasting change in control, allowing parties to exercise decisive influence over a target undertaking. Decisive influence is achieved through specific voting rights or veto rights that enable parties to block actions shaping the strategic direction of the target. Joint control, which can result from equality in voting rights, veto rights, or joint voting rights, requires that multiple parties can exercise such decisive influence. However, if no single party gains lasting control after a transaction, then the transaction does not qualify as a concentration, and thus, it does not need to be notified to the Turkish Competition Authority (Authority) under the merger control regime.

In cases where joint control is analysed, the Authority examines whether the involved parties have veto rights or decision-making powers over strategic business matters, such as budgets, business plans, or appointments of senior management. If these powers are present, joint control is deemed to exist. However, similar to the EUMR, under the Turkish merger control regime, paragraphs 66 and 75 of the Guidelines on Cases Considered as a Merger or Acquisition and the Concept of Control indicate that the possibility of changing coalitions/shifting alliances between minority shareholders will exclude the assumption of joint control since in such a case, there is no stable majority in the decision-making procedure and the majority can on each occasion be any of the various combinations possible among the shareholders. The decisional practice of the Turkish Competition Board (Board) also indicates that if a transaction would result in shifting alliances (i.e., none of the parties will acquire control after the envisaged transaction), such a transaction would not constitute a concentration under Turkish merger control regime and it would not require a mandatory merger control filing before the Authority (e.g., Kayı (08.12.2016; 16-43/701-315), Silver Lake Partners (18.11.2009; 09-56/1337-340), Bain Capital Investors (09.10.2007; 07-78/965-366), Orica Limited (29.03.2007; 07-29/268-98)).

In this respect, the transactions which result in a shifting alliances/changing coalitions structure post-transaction (i.e., where the acquired entity will not be controlled by any of its shareholders after the transaction) do not qualify as notifiable concentrations within the meaning of Communiqué No. 2010/4. In such cases, the Board typically considers these joint venture transactions as cooperation agreements and analyses these cooperation agreements under Article 4 of Law No. 4054 on the Protection of Competition (e.g., Turkland (27.08.2018; 18-29/491-242), Turkland (27.08.2018; 18-29/492-243), Turkcell/Anadolu Grubu/Zorlu/Kök Ulaşım/BMC/TOBB (26.09.2018; 18-34/566-279)).

For more information on shifting alliances under Turkish merger control regime, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.