Obligation For Notification Of Merger Or Acquisition Transactions To The Competition Authory Under The Turkish Competition Law

Mergers or acquisitions constitute one of the principal keystones of the competition law. Most of the advantages expected from the competition law are procured through mergers or acquisitions. For instance, a bigger actor enters the market as a result of a merger and acquisition transaction, and thus yields benefits for the economy. On the other hand, the entry into the market of a bigger actor exhorts the other undertakings to spend more efforts to produce competitive products. In consequence, the number of competitive products increases and the price of the products decreases in favour of the consumers.

However, some undertakings may acquire a huge dimension as a result of a merger and acquisition transaction and thus prevent small-size undertakings from staying in the market or new actors from entering into the market. Within this scope, the Act No. 4054 on the Protection of Competition (the “Competition Act”) stipulates a control mechanism through the notification of mergers or acquisitions to the Competition Authority (the “Authority”). This control mechanism is explained in detail in the Communiqué No. 2010/4 concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board (the “Communiqué No. 2010/4”). As a matter of fact, monitoring, regulating and supervising the market in order to ensure free market economy is amongst the missions of the Authority.

What is a Merger or Acquisition Transaction?

The definition of mergers or acquisitions is stated in Article 5 of the Communiqué No. 2010/4. As per this definition, the merger of two or more undertakings, or the acquisition of direct or indirect control over all or part of one or more undertakings by one or more undertakings or by one or more persons who currently control at least one undertaking, through the purchase of shares or assets, through a contract or through any other means shall be considered a merger or acquisition transaction, provided that there is a permanent change in control.

The transactions which do not constitute a merger or acquisition transaction are also stated under Article 6 of the Communiqué No. 2010/4. As per this article,

  • Intra-group transactions and other transactions which do not lead to a change in control,
  • In case of undertakings whose ordinary operations involve transactions with securities on their own behalf or on behalf of others; temporarily holding the securities purchased for resale purposes, provided that the voting rights from those securities are not used in a way to affect the competitive policies of the undertaking which issued the securities in question,
  • Acquisition of control by a public institution or organization by operation of law and due to divestment, dissolution, insolvency, suspension of payment, bankruptcy, privatization or a similar reason,
  • Occurrence of the events considered as a merger or acquisition as a result of inheritance.do not constitute a merger or acquisition transaction.

 Which Merger or Acquisition Transactions are Subject to Control?

The cases where merger or acquisition transactions are subject to control are stipulated in Article 7 of the Competition Act. The relevant article stipulates a two-step test. Accordingly, a merger or acquisition transaction shall be subject to control only if it creates a dominant position or strengthens its existing dominant position in the relevant market, which would result in significant lessening of competition in the relevant market.

This control mechanism established under the Competition Act is not in compliance with the European Union legislation. Indeed, as per the Regulation No. 139/2004 in force in the European Union, the principal criterion for a merger or acquisition transaction to be subject to control is that it significantly lessens the competition in the relevant market; this significant lessening of competition may arise either from the creation of a dominant position or from the strengthening of an existing dominant position.

How to Determine Whether a Merger or Acquisition Transaction is Subject to Control?

A common threshold system for turnovers, which is applicable for all undertakings, has been developed in order to determine in which cases a merger or acquisition transaction should be subject to control. In case the turnover thresholds are exceeded, then the relevant merger or acquisition transaction should be subject to control.

As per Article 7 of the Communiqué No. 2010/4, for transactions deemed as a merger or acquisition, if:

  • The total turnover of the transaction parties in Turkey exceeds one hundred million TL, and turnovers of at least two of the transaction parties in Turkey each exceed thirty million TL, or (the “First Item”)
  • The asset or activity subject to acquisition in acquisition transactions, and the turnover of at least one of the parties of the transaction in merger transactions in Turkey exceeds thirty million TL and the global turnover of the other party of the transactions exceeds five hundred million TL (the “Second Item”)

the permission of the Competition Board is required for the relevant transaction to be legally valid.

How the Turnover is Calculated?

In competition law, the economic independency of the undertakings is essential, rather than their legal independency. For this reason, while calculating the turnover thresholds, not only their turnover but also the turnover of their affiliated undertakings is taken into account. A detailed explanation as to the calculation of the turnover is stated under the Communiqué No. 2010/4. As per Article 8 of the Communiqué No. 2010/4, the turnover thresholds specified hereinabove are calculated by taking into consideration the turnover of the following undertakings:

  • The undertaking concerned,
  • Persons or economic units in which the undertaking concerned;
  • holds more than half of the capital or commercial assets, or
  • holds the power to exercise more than half of the voting rights, or
  • holds the power to appoint more than half of the members of the board of supervisors, the board of directors or the bodies authorized to represent the undertaking, or
  • holds the power to manage operations,
  • Persons or economic units which hold the rights and powers listed in (b) over the undertaking concerned,
  • Persons or economic units over which those listed in (c) hold the rights and powers listed in (b),
  • Persons or economic units over which those listed in (a-d) jointly hold the rights and powers listed in (b).


  • In the calculation of the turnovers stated under the First Item, in case of a transfer of those parts of the transaction parties with or without legal personality, only the turnover of the part transferred shall be taken into account with regard to the transferor,
  • Turnovers of the economic units with which the undertakings concerned jointly hold the rights and powers listed in (b) hereinabove shall be calculated by being equally divided by the number of undertakings concerned,
  • Turnovers of the joint ventures where the undertakings concerned hold the right to manage business together with third parties shall be calculated by being equally divided by the number of such right holders,
  • Two or more transactions carried out between the same persons or parties within a period of three years, shall be considered as a single transaction for the calculation of turnovers,
  • Turnover, in accordance with the uniform accounting plan, shall consist of the net sales generated as of the end of the financial year preceding the date of the notification, or, if this cannot be calculated, of those generated as of the end of the financial year closest to the date of notification. In the calculation of the turnover, turnovers of persons or economic units listed above generated from sales made to each other shall not be taken into account. In the calculation of the turnover, average buying rate of exchange of the Central Bank of Turkey for the financial year in which the turnover is generated shall be taken into consideration as the rate of exchange.

In order to provide full guidance to the undertakings and to ensure proper and correct calculation of the turnovers, the Guidelines on Undertakings Concerned, Turnover and Ancillary Restraints in Mergers and Acquisition has been published in the official website of the Authority in 2013.

By Whom and How the Notification Shall be Made?

In case there is a merger or acquisition transaction exceeding the turnovers stated hereinabove, the transaction will be subject to the control of the Board. Therefore, such transactions should be notified to the Board.

The notification may be filed jointly by the parties or by any of the parties or by the authorized representatives thereof. The notification shall be filed with the notification form (the “Notification Form”) attached to the Communiqué No. 2010/4 by the relevant persons. Joint notifications shall be made by a single form. The Notification Form and attached documents shall be prepared in electronic form as well, and shall be submitted to the Authority headquarters in Ankara by courier or by mail. In case there are duplicates among the documents, those filing a notification must certify that they conform to the originals. A copy of the final or current version of the agreement concerning the notified merger or acquisition should be enclosed with the Notification Form. If the agreement in question was not issued in Turkish, a Turkish translation thereof must be forwarded, as well. The Board shall decide based on the Turkish translation.

 What is the Consequence of not Duly Filing a Notification?

In case of False or Misleading Information within the Notification Form

The notification must include, completely and correctly, all of the information and documents required. Any change in such information before the Board comes to a decision must be notified forthwith to the Board. Administrative fines shall be imposed on those who include false or misleading information within the Notification Form. The method of calculation of the administrative fines is stated in the Competition Act. Accordingly, the Board shall impose on the undertakings, which have submitted false or misleading information, an administrative fine by one in thousand of annual gross revenues of such undertakings and associations of undertakings or members of such associations which are generated by the end of the financial year preceding the decision or, if this cannot be calculated, which are generated by the end of the financial year closest to the date of the decision and which shall be determined by the Board.

In case of Non-Notification

Where a merger and acquisition transaction whose notification to the Board is compulsory is not notified to the Board, the Board shall by itself put such merger or acquisition under examination whenever it becomes aware of such transaction. As a result of the examination;

  • If the Board decides that the merger or acquisition is not subject to notification, it allows the merger or acquisition, but imposes fines on those concerned due to their failure to notify.
  • If the Board concludes that the merger or acquisition is subject to notification, it decides that the merger or acquisition transaction be terminated, together with fines; all de facto situations committed contrary to the law be eliminated; any shares or assets seized be returned, if possible, to their former owners, or if not possible, be assigned and transferred to third parties, with terms and for durations to be determined by the Board; the acquiring persons may by no means participate in the management of undertakings acquired during the period until these are assigned to their former owners or third parties, and other measures the Board deems necessary be taken. 

In case of Implementation of the Transaction without Authorization

In case a merger or acquisition transaction subject to authorization is implemented without the authorization of the Board, an administrative fine is imposed. In merger transactions, the administrative fine is imposed on each of the parties and, in acquisition transactions, it is imposed only on the transferee.

Conclusion and Evaluation

As it may be seen from the above explanations, there are two principal steps in the control of merger or acquisition transactions. The first one is to determine whether the relevant transaction is subject to the authorization of the Board. The consequences of not notifying a transaction subject to authorization to the Board due to a false evaluation are heavy. The second one is full, correct and complete preparation of the Notification Form and its filing to the Board. The consequences of making errors in this step is also heavy. For this reason, both steps should be studiously and carefully conducted.

The information given in this note are aimed only at providing information, and does not serve as a legal opinion under any circumstances.