News and developments
Of SIEC-Test and Thresholds: Merger Control 2022 in Turkey
Welcoming the SIEC test in Turkey
Just like the EU, Turkey is also in a constant process of improving its legislation. In June 2020, Law No 7246 Amending the Law on the Protection of Competition (“Amendment Law”) entered into force. The Amendment Law was aimed to: (i) harmonize the Turkish Competition Law with the EU legislation even further and (ii) eliminate certain problems encountered in practice. One of the most significant of these amendments relevant to concentration control was the adoption of the SIEC test, which replaced the dominance test for the examination of concentrations. The application of the SIEC test in merger control has been quite contested. For years Turkey considered switching to the SIEC test to ensure compliance with the EU legislation and used a more flexible standard in the detection of anticompetitive concentrations.[1] Following the intense discussions and studies, the SIEC test was eventually introduced into the Turkish Competition Law in 2020. Prior to the amendment, creating or strengthening a dominant position was deemed as a prerequisite to evaluating whether a concentration gave rise to competitive concerns. As of June 2020, Turkey applies the SIEC test for assessing concentrations. Article 7 of the Turkish Competition Law prohibits those merger or acquisition transactions that can result in significant impediment to competition in a relevant market. Article 7 of the Turkish Competition LawFormer Version—Dominance Test | New Version—SIEC Test |
Merger by one or more undertakings, or acquisition by any undertaking or person from another undertaking—except by way of inheritance—of its assets or all or a part of its partnership shares, or of means which confer thereon the power to hold a managerial right, with a view to creating a dominant position or strengthening its/their dominant position, which would result in significant impediment of competition in a market for goods or services within the whole or a part of the country, is illegal and prohibited. | It is illegal and prohibited for one or more undertakings to merge, or for an undertaking or a person to acquire—except by inheritance—assets, or all or part of the partnership shares, or instruments conferring executive rights over another undertaking, where these would result in a significant impediment of effective competition within a market for goods or services in the entirety or a portion of the country, particularly in the form of creating or strengthening a dominant position. |
Thresholds
The notification procedure and time frame of merger control in Turkey are broadly aligned with the ones in the EU. The Turkish Competition Law requires prior notification to the TCA of transactions, which involve a change of control on a lasting basis if the following financial thresholds (applicable as of 4 May 2022) stated in Article 7 of Communiqué 2010/4 are met:- the aggregate turnover of the transaction parties in Turkey exceeds TRY 750 million (approx. EUR 42.13 million),[7] and the turnover of at least two of the transaction parties each in Turkey exceeds TRY 250 million (approx. EUR 14.04 million); or
- either the turnover in Turkey of: (i) the acquired assets or businesses in acquisitions, or of (ii) any of the transaction parties in mergers exceeds TRY 250 million, and the worldwide turnover of at least one of the other transaction parties to the transaction exceeds TRY 3 billion (approx. EUR 168.5 million).
Concluding remarks
The important aspects of Turkish merger control discussed above, and the developments related to them allow a sounder and fairer control over domestic transactions, on the one hand, and constitute a significant step in the sense of international adaptation, on the other hand, where it allows global mergers to be evaluated with the same criteria applied in the EU. Additionally, concentrations involving technology undertakings are placed under a special focus/threshold in Turkey as of May 2022 with a view to catching all concentrations in the digital/high-tech markets and preventing killer acquisitions. While it is different from the “value of transaction test” adopted by its peers in the EU, Germany, and Austria, it may be viewed as a unique Turkish equivalent of the “value of transaction test,” or at least it is expected to bring about the same results from its application. It seems that there will be more merger caseload and increased scrutiny in the technology markets in the upcoming years. This is yet to be seen how the “technology undertaking” exception will be applied in practice. But it is clear already that for practical reasons it would be nice to have a piece of guidance clarifying the terms and principles (such as the description of financial technology services, the definition of the technology company, and what constitutes “operates or carries out R&D activities in Turkey”).by Fevzi Toksoy, Bahadir Balki and Hanna Stakheyeva
[1] This was desirable both to achieve harmonization with the EU and because the revised EU formulation provided a more flexible and refined standard for identifying anticompetitive transactions. // Turkey—Peer Review of Competition Law and Policy, OECD 2005, p. 69. [2] Sesli, E. & Canbeyli, A. Shift of Paradigm in the Merger Control Regime: How Will Turkey Implement the Significant Impediment to Effective Competition (SIEC) Test?, 2021 // Available at https://www.mondaq.com/turkey/antitrust-eu-competition-/1073862/shift-of-paradigm-in-the-merger-control-regime-how-will-turkey-implement-the-significant-impediment-to-effective-competition-siec-test- (accessed November 2, 2021). [3] The case is related to the acquisition of GrandVision N.V.’s (“Grandvision”) sole control by EssilorLuxottica S.A. (“EssilorLuxottica”), see TCA Decision No 21-30/395-199 dated 10.6.2021. [4] EssilorLuxottica, through its various subsidiaries, operates in the wholesale of sunglasses and optical frames; production and wholesale of ophthalmic lenses; production and distribution of ophthalmic machinery, equipment, and consumables; sales of spare parts and after-sales maintenance and repair services; and wholesale and retail sale of sunglasses. Grandvision operates in Turkey in the retail sale of sunglasses, prescription glasses (ophthalmic lenses and optical frames) and contact lenses via its subsidiary Atasun Optik Perakende Ticaret A.Ş. (“Atasun”). Relevant product markets were determined as “wholesale of stock lenses,” “wholesale of semi-processed lenses (RX lenses),” “wholesale of branded sunglasses,” “wholesale of branded and prescription optical eyeglass frames” and “production and distribution of ophthalmic machinery, equipment and consumables” markets. [5] TCA’s Decision No 21-25/307-140 and dated 4.5.2021. [6] TCA’s Decision No 20-37/523-231 dated 13.8.2020. The concentration related to the acquisition of the sole control of Marport Liman İşletmeleri Sanayi ve Ticaret Anonim Şirketi (“Marport”) by Terminal Investment Limited Sarl (“TIL”). [7] With an exchange rate of EUR 1= TRY 17.8, in accordance with the applicable European Central Bank rate as of 26 September 2022.