Cases and Precedents – Mergers: Turkey

This is an extract from the 2023 edition of Cases and Precedents: Mergers published by Global Competition Review. The whole publication is available here.

Merger control review has seen substantial improvement since the adoption of The Law on Protection of Competition No. 4054 (the Competition Law) in Turkey in 1994. Indeed, the Competition Law went through the most comprehensive set of amendments in 2020. The amendments to the Competition Law have spanned a range of new mechanisms with regard to the selection of cases, behavioural and structural remedies for anticompetitive conduct and procedural tools including commitments and settlements. The amendments also include a new substantive test for merger control, namely the Significant Impediment to Effective Competition (SIEC) test. Although merger control under the Turkish Competition Law regime has always borne certain similarities to the relevant legislation under the European Union competition law regime, the introduction of the SIEC test promises to align the two merger control regimes even further. In line with the EU competition law stipulations, the SIEC test replaced the former dominance test, thereby allowing the Turkish Competition Board (the Board) to prohibit not only transactions that may result in the creation of a dominant position or the strengthening of an existing dominant position, but also those transactions that significantly impede effective competition.

The Turkish Competition Authority (the Authority) deals with a large number of cases each year. Indeed, it would be fair to say that, over the past decade, the Authority has been dealing with an average number of approximately 200 cases annually. While most transactions were dealt with during a Phase 1 review, a fair number of transactions were taken into a Phase 2 review, which is a full-fledged investigation. Indeed, certain cases that were found to be high-risk concentrations became a great challenge both for the Authority and the parties, eventually resulting in a constructive experience and creating useful future references for the Competition Law enforcers, scholars and practitioners.

During its assessment concerning the transactions, the Board first determines the relevant product and geographic markets that are affected by the transaction in question and then conducts its substantive assessment on whether the transaction will result in a significant lessening of effective competition. During the substantive assessment, the Board evaluates the competitive landscape of the relevant markets by taking into account the various market characteristics as indicators of competitive pressures in the market that can potentially offset or abate the effects of high market shares and concentration levels. The barriers to entry and expansion, countervailing buyer power, potential switching, supply and demand structure, the competitors’ market positions and other specific market dynamics are also considered within the scope of the Board’s assessment.

Based on precedent, the Authority takes quite a strong stance on merger control and thoroughly evaluates various theories of harm to ensure the continuation of effective competition in the relevant markets.