Competition Board Approval for Intercompany Mergers and Acquisitions in Antalya

In today’s rapidly changing economic climate, companies are turning to mergers and acquisitions (M&A) as a key component of their growth strategies. These strategic moves offer companies opportunities to enter new markets, increase market share, create synergies, and gain competitive advantage. However, the successful completion of such transactions requires not only financial and operational compliance but also full compliance with legal regulations. In Türkiye in particular, accurately determining whether mergers and acquisitions are subject to Competition Authority approval and properly conducting the process plays a vital role in ensuring the validity of the transaction and the legal security of the parties involved. For companies operating in a dynamic business and commercial center like Antalya, this process becomes even more critical when combined with the unique conditions of the local market.

Legal Framework of Mergers and Acquisitions

Mergers and acquisitions are complex legal transactions shaped by various legal regulations, primarily the Turkish Commercial Code. However, due to the potential impact of these transactions on competition, Law No. 4054 on the Protection of Competition and related communiqués are of particular importance.

Merger and Acquisition Concepts

In legal terminology, a “merger” is the merging of two or more companies into a single company. This can occur either through the dissolution of one existing company within the other (merger through acquisition) or through the liquidation of all companies and the establishment of a new company (merger through new establishment). An “acquisition,” on the other hand, is the acquisition of all or part of another company, particularly shares or assets that confer voting rights, in a manner that gives one company control. These transactions often occur in the form of a share transfer, asset transfer, or the acquisition of management control. For companies in Antalya, making this distinction can directly impact the scope of the notification to the Competition Authority.

Fundamental Principles of Turkish Competition Law

Turkish competition law is regulated by Law No. 4054 on the Protection of Competition. The primary purpose of this law is to prohibit agreements, decisions, and practices intended to prevent, distort, or restrict competition in goods and services markets; to prevent abuse of a dominant position in the market; and to control mergers and acquisitions that distort competition. This increases economic efficiency, protects consumer welfare, and ensures the healthy functioning of the free market economy. Evaluating mergers and acquisitions in accordance with these fundamental principles is the primary factor determining the legality of a transaction.

Why is Competition Board Approval Necessary?

Mergers and acquisitions can significantly impact market structure and competitive conditions. Large-scale transactions, in particular, carry the potential to create or strengthen a dominant market position. This can make it difficult for other companies to enter the market, manipulate prices, and ultimately lead to adverse consumer outcomes. Competition Authority approval is mandatory to prevent these negative effects, ensure effective competition in the markets, and maintain a fair trading environment. Mergers and acquisitions completed without approval or rejected during the approval process may face serious legal penalties, including administrative fines and invalidation of the transaction. Companies operating in Antalya and aiming for growth should not ignore this risk.

Which Mergers and Acquisitions Are Subject to Competition Board Permission? (Turnover Thresholds)

Not every merger and acquisition transaction is subject to the Competition Authority’s approval. The law includes transactions exceeding certain turnover thresholds within the scope of the notification obligation. These thresholds are determined by Communiqué No. 2010/4 on Mergers and Acquisitions and related amendments. Accurately determining turnover thresholds is critical to understanding whether a transaction is subject to a notification obligation.

According to current regulations, at least one of the following turnover thresholds must be met in order for the transaction subject to a merger or acquisition to be notified to the Competition Authority:

1. Total Turnover of Transaction Parties in Turkey: The total turnover of all transaction parties in Turkey exceeds seven hundred and fifty million TL and the turnover of at least two of the transaction parties in Turkey exceeds two hundred and fifty million TL individually.
2. Target Company’s Turnover in Turkey: The turnover of the undertaking subject to the acquisition or at least one of the undertakings party to the merger transaction exceeds two hundred and fifty million TL in Turkey, and the world turnover of at least one of the other transaction parties exceeds five billion TL.

Accurately calculating these thresholds is a complex process requiring expert legal advice in mergers and acquisitions. Turnover calculations, particularly for holding companies or internationally active enterprises, involve specific rules, such as consolidating the turnover of group companies and considering geographic distribution. Large companies operating in Antalya, particularly those focused on tourism, agriculture, or exports, should carefully consider these thresholds.

Competition Board Application Process and Evaluation Criteria

A merger or acquisition transaction exceeding the turnover thresholds must be notified to the Competition Authority. This process involves specific stages and evaluation criteria.

Application Method and Process

Notification is made by completing the “Merger/Acquisition Notification Form” (Form M) prescribed by the Competition Authority. This form includes detailed information regarding the parties to the transaction, the nature of the transaction, relevant markets, revenue information, the reasons for the transaction, and potential impacts on competition. In addition to Form M, the parties’ financial statements, partnership structures, relevant agreements, and other supporting documents must also be submitted. Conducting informal pre-notification meetings with the Competition Authority before the application can help the process proceed more quickly and smoothly. The Board completes its preliminary review within 30 days of the notification date and either approves the transaction or conducts an in-depth review (second-stage review). This period may extend up to six months for a second-stage review.

Evaluation Criteria

The Competition Authority applies the “significant hindrance to effective competition” test when evaluating mergers and acquisitions. This test examines whether the transaction creates or strengthens a dominant position in the relevant market, and whether this significantly hinders effective competition. The Board considers the following factors in its assessment:

* The structure and dynamics of the relevant market
* Market entry barriers
* Market power of consumers and competitors
* Technological developments and impacts on innovation
* Efficiency increases and synergies created by the transaction
* Potential impacts on consumer welfare

These criteria require a comprehensive analysis to determine the transaction’s net impact on competition. It is crucial for companies operating in Antalya to thoroughly analyze their position and competitors, particularly in the local markets, at this stage.

Conditional Approvals and Commitments

If the Competition Authority determines that a merger or acquisition has the potential to significantly impede effective competition, it may approve the transaction, subject to specific conditions or commitments, rather than rejecting it outright. These conditions can typically be structural (e.g., divestiture of specific assets or business lines) or behavioral (e.g., avoidance of certain agreements, transparency obligations) designed to mitigate the transaction’s adverse effects on competition. A critical step in approving the transaction is for the parties to provide reasonable and enforceable commitments that address the Board’s concerns.

Merger and Acquisition Transactions Specifically in Antalya

Antalya is one of Türkiye’s most dynamic and rapidly growing cities. With significant potential in the tourism, agriculture, real estate, construction, and service sectors, Antalya is also seeing a steady increase in mergers and acquisitions. Local and international investors are capitalizing on Antalya’s strategic location and economic opportunities and engaging in M&A activities in the region.

In mergers and acquisitions in Antalya, the specific dynamics of the relevant sectors must be taken into account, in addition to general Competition Law rules. For example, hotel chain mergers in the tourism sector or large-scale integrations in the agricultural sector may require special scrutiny regarding the effects of concentration and competition in the relevant markets. For companies in Antalya, seeking support from expert legal counsel with both general knowledge of competition law and local market dynamics is crucial for the smooth progress of the transaction and the achievement of a successful outcome with the Competition Authority.

The Importance of Legal Consultancy in the Competition Board Approval Process

The complex nature of mergers and acquisitions, particularly the Competition Authority approval process, makes managing them without expert legal advice quite risky. The importance of legal advice is evident at every stage of the process:

* Determining the Notification Obligation: Accurately calculating turnover thresholds and determining whether a transaction must be reported to the Competition Authority requires expertise. An incorrect or incomplete assessment can lead to heavy administrative fines.
* Application Form Preparation: A detailed and complete Form M application is critical to ensuring a smooth and swift application process. Legal advisors will gather and analyze the necessary information and prepare an application package that meets the Agency’s expectations.
* Risk Analysis and Strategy Determination: Pre-analyzing the potential effects of the transaction on competition and developing strategies against possible risks are among the basic duties of legal advisors.
* Communication and Negotiations with the Authority: In meetings with the Competition Authority and possible commitment negotiations, legal advisors represent their clients and help find the most appropriate solutions.
* Compliance and Follow-up: In the post-approval process, legal support is essential to ensure compliance with any conditions and commitments and to maintain the legal validity of the transaction.

For companies undertaking mergers and acquisitions in Antalya, seeking support from an experienced law firm throughout the Competition Authority approval process will not only minimize legal risks but also play a key role in achieving the transaction’s commercial objectives. A successful M&A transaction not only generates financial returns but also ensures long-term sustainability through complete legal compliance.