Gun Jumping in Turkish Merger Control Regime

Any transaction triggering the thresholds defined under Article 7 of Communiqué No. 2010/4 Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board (Communiqué No. 2010/4) is subject to a mandatory filing before the Turkish Competition Authority (Authority). Even though no specific deadline is set with regard to the timing of the filing, an explicit suspension requirement is set out under Article 11(1)(a) of Law No. 4054 on the Protection of Competition (Law No. 4054) and Article 10(5) of Communiqué No. 2010/4. This suspension requirement dictates that the parties shall not close a notifiable transaction before obtaining the approval of the Turkish Competition Board (Board); therefore, the parties will be in violation if they do not notify such a transaction, or if they close said transaction while the assessment of the Board is yet pending. As referenced in Article 5 of Communique No. 2010/4, completing or closing of the transaction may involve taking steps that could lead to the permanent change of control, such as exchanging commercially and competitively sensitive information, taking administrative actions and/or making recommendations, establishing joint marketing or working teams and initiating the integration process between the undertakings. Any activity showing that the transaction is implemented before the approval decision is indicative of a violation of the suspension requirement.

The Board is quite strict with regard to the assessment of gun jumping, and no effect or impediment on effective competition is needed to be determined for the Board to decide that the parties violated the suspension requirement. Furthermore, whilst determining whether the transaction was closed and the suspension requirement has been violated, the Board is not obliged to assess and prove any effect within the market in Turkey, either (e.g., Ajans Press/PR Net (21.10.2010; 10-66/1402-523) and Labelon/A-Tex (06.02.2016; 16-42/693-311)).

A notifiable merger or acquisition and all its legal consequences shall be deemed invalid unless and until it is approved by the Board. Therefore, no such transaction can be closed in Turkey before the Board grants its approval. Pursuant to Article 16 of Law No. 4054, if the parties to a notifiable transaction violate the suspension requirement, a turnover-based monetary fine will be imposed on the undertakings concerned. The undertakings concerned are defined as both of the merging parties in case of a merger and the acquiring parties in case of an acquisition. In joint ventures, as the acquiring parties will be ultimately controlling the newly formed joint venture, similar to a case of acquisition, the acquiring parties will be liable for the fine. In case of gun jumping, the undertakings concerned are imposed an automatic monetary fine of 0.1% of the turnover in Turkey generated in the financial year preceding the date of the decision. This monetary fine of 0.1% of the turnover is a fixed rate and levied automatically; the Board has no discretion regarding this fine once it finds a violation of the suspension requirement. If 0.1% of the turnover calculated is below the minimum administrative fine amount of the relevant year, then the minimum administrative fine amount is imposed. The automatic monetary fine comes up only where the Board decides to approve the transaction. However, if the transaction does not pass the SIEC test (i.e., it is found to significantly impede effective competition), the Board shall decide against approving the transaction, and in such case, the violation of the suspension requirement may have further legal consequences.

For more information on violation of suspension requirement in Turkey, please feel free to reach out to ELIG Gurkaynak at +90 212 327 1724 or through gonenc.gurkaynak@elig.com.