Merger Control rules in Turkey

The Turkish Competition Authority (the “TCA”) is an autonomous regulatory body having a public legal personality, dedicated to fostering and safeguarding competition in markets for the benefit of both consumers and businesses. It operates in association with the Ministry of Trade of the Republic of Türkiye. According to Article 20 of the Law on Protection of Competition (Law No. 4054) (the “Law”), the TCA must exercise its functions independently, and no entity, authority, agency or person can influence its decisions through orders or instructions.

The TCA’s organizational structure comprises of the Competition Board (the “Board”), the Office of the Chairperson, Main Service Units, Auxiliary Service Units and Advisory Units. The Competition Board, which consists of seven members including the Chairperson and Vice Chairperson, are appointed by the President of the Republic of Türkiye.

As regards merger control, the TCA is responsible for reviewing and issuing decisions on merger and acquisition notifications. Therefore, it holds the authority to either approve or block transactions, which exceed a specific threshold or meet certain criteria, on the basis of Article 7(1) of the Law prohibiting one or more undertakings from merging, or an undertaking or a person from acquiring – 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 lessening of effective competition in 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. It should also be noted that approvals issued by the TCA may take the form of either positive or negative clearance, both of which have the same legal effects.

As per Article 7 of the Communiqué on Mergers and Acquisitions Requiring Approval of the Competition Board (Communiqué No. 2010/4) (the “Communiqué”), as issued by the TCA under the Law, M&A transactions are notifiable in Türkiye if:

• The combined Turkish turnover of all the transaction parties exceeds TRY 750 million (approx. USD 31.6 million)[1] in total, and the Turkish turnover of each of at least two of the transaction parties exceeds TRY 250 million (approx. USD 10.5 million); or
• The Turkish turnover of the transferred assets or businesses exceeds TRY 250 million (approx. USD 10.5 million), and the worldwide turnover of at least one of the other parties to the transaction exceeds TRY 3 billion (approx. USD 126.4 million).

 However, the Communiqué provides for an exception applicable to undertakings active in certain markets / sectors. Accordingly, the “TRY 250 million Turkish turnover thresholds” mentioned above will not be sought for target businesses active in the fields of digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agricultural chemicals and health technologies or assets related to these fields, as long as they (i) operate in the Turkish geographical market or (ii) conduct R&D activities in the Turkish geographical market or (iii) provide services to Turkish users.

On a related note, creeping transactions conducted within a three-year period will be treated as a single transaction for the purpose of turnover calculation under the Turkish merger control regime. Additionally, turnover needs to be calculated based on net sales generated by the end of the fiscal year preceding the notification date, and if any such calculation is impossible to be made for the relevant period, then turnover at the end of the fiscal year closest to the notification date will be taken into account. It should, however, be noted that turnover generated from intra-group sales will be neglected in these calculations.

A merger or acquisition transaction resulting in a permanent change of control, as characterized by: 

• Merger of two or more undertakings; or
• 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 any other means,

may trigger notification requirements in Türkiye.

Having said that, as per Article 6 of the Communiqué, the following transactions do not fall within the scope of Article 7 of the Law and are therefore exempt from the Board approval:

• Intra-group transactions and other transactions which do not result in a change of control;
• In cases where undertakings, ordinary operations of which involve transactions with securities on their own behalf or on behalf of others, temporarily hold securities purchased for resale purposes, provided that the voting rights from those securities are not exercised to influence the competitive policies of the undertaking which has issued the securities in question;
• Acquisition of control by a public institution or organization by operation of law, due to divestment, dissolution, insolvency, suspension of payment, bankruptcy, privatization or a similar reason; and
• Transactions resulting from inheritance.

As noted above in our response to Question 3, the essential criterion for identifying transactions as mergers and acquisitions is a permanent change in the control of the undertaking. Control can be constituted through rights, agreements or other instruments that grant the capability to exercise either de facto or de jure decisive influence over an undertaking.

Typically, control is obtained through the acquisition of shares or assets. However, control can be established via specific agreements that confer a level of long-term control over the target undertaking comparable to that achieved through share or asset acquisitions and include provisions preventing early termination by the granting party.

Beyond direct ownership or contractual rights, control can also be established through other mechanisms. For instance, de facto control may arise from economic dependency, where an undertaking relies heavily on long-term supply agreements, or when financial arrangements such as credits provided by suppliers or customers are combined with structural relationships like shareholding or managerial positions. Notably, control may be deemed to have been acquired even in the absence of an explicit intention by the parties, provided that the capacity to exert decisive influence is effectively established.

Moreover, the manner in which control is exercised can be distinguished. Sole control occurs when an undertaking has the power to unilaterally exert decisive influence over another undertaking, through the acquisition of a majority of voting rights or the acquisition of veto rights solely that would result in negative sole control. This grants the controlling undertaking the authority to make or veto strategic commercial decisions on behalf of the controlled entity. In contrast, joint control arises when two or more undertakings have the ability to exert decisive influence over another undertaking. The hallmark of joint control is the potential for veto, and unlike sole control, where strategic decision-making rests with a single shareholder, joint control requires collaboration and agreement among the controlling parties to shape the strategic direction and commercial behavior of the undertaking.

The Board conducts a preliminary review within fifteen days from the date of notification of the merger or acquisition agreements to the Board. Upon the preliminary review, the Board resolves to either approve or to conduct a further inquiry into the transaction.

If the Board neither responds to the application nor takes any action within thirty days from the date of the notification (i.e., Phase I), the transaction will be automatically deemed approved and take legal effect per se thirty days after the date of notification.

The TCA may issue information requests to the parties involved, any related parties, or third parties such as competitors, customers or suppliers. Such requests for missing information will suspend the review period, which will recommence for another thirty days from the receipt date of the responses. It should be further noted that the TCA will issue a clearance decision on a standard filing with no substantive issues within 50 to 70 days as of the initial filing date.

If a notification leads to an investigation, it transitions into a full-fledged investigation (i.e., Phase II), during which the transaction will be subject to more detailed scrutiny and further investigated. Under Turkish law, this investigation period typically takes about six months. If necessary, this period may be extended once by the Board for up to an additional period of six months.

• Unconditional Approval: The Board may grant unconditional approval, implicitly or explicitly, for transactions, as subject to restraints that are directly related to and necessary for the implementation of the transaction.
• Conditional Approval: Parties to an M&A transaction may provide commitments, addressing to potential competition concerns under Article 7 of the Law, during Phase I or Phase II. The Board may then specify conditions and obligations aimed at ensuring that such commitments are fulfilled.
• Rejection: If the transaction is considered likely to lessen effective competition in all or a part of Türkiye, the Board may terminate the merger or acquisition and eliminate or ban all actions that have been or planned to be carried out in violation of the Law and the Communiqué. In this regard, the Board may order the return of any shares to their former owners, or if this is not possible, their assignment and transfer to third parties.

The Board may also stipulate that the transferees cannot participate in the management of the acquired undertakings in any manner until their transfer to the former owners or third parties, and take other necessary measures.

In cases where the Board (whether implicitly or explicitly) approves (whether conditionally or unconditionally), or rejects a transaction, any person with a direct or indirect interest may challenge the respective decision of the Board by filing a lawsuit within sixty days before administrative courts in Ankara.

If a mandatory notification is not made, the Board will initiate a review once it becomes aware of the transaction. The possible outcomes are:

• If, as a result of the scrutiny, the transaction is not considered to lessen effective competition, it will be approved; however, the acquirer will be fined for failure to notify. The administrative monetary fine is calculated at 0.1% of the turnover from the preceding financial year, with a minimum fine of TRY 167,473 (USD 4,928[1]) for 2024; or
• If the transaction violates Article 7(1) of the Law, an administrative monetary fine of up to 10% of the latest annual turnover generated by the acquirer may be imposed on it, and executives of employees having a decisive influence on such violation may also be fined up to 5% of the administrative monetary fine imposed on the relevant undertaking / association of undertakings. In such a case the transaction must be terminated, and any acquired shares or assets must be returned or transferred. The acquirers cannot manage the acquired undertakings until this is completed, and behavioral, structural and other necessary measures may be taken by the Board.

 There is no specific deadline for filing, but transactions must be notified and cleared by the Board before completion. Gun jumping or closing a transaction before clearance, can lead to administrative monetary fines specified above depending on whether the transaction in review impedes competition or not.

Under the Turkish merger control regime, either party to the transaction can submit the filing individually or jointly. If one party files, it should inform the other party of the notification. Notably, there is no filing fee for Turkish merger control proceedings.

During the preliminary review (i.e., Phase I) or detailed investigation (i.e., Phase II) of a merger or acquisition, parties involved may propose commitments to dismiss possible competition concerns. In practice, the TCA tends to be more open to discussions about the commitments offered during Phase II compared to Phase I. These remedies must fully resolve the identified issues, be clearly defined and enforceable. If the TCA is satisfied, it will issue a conditional approval on the proposed transaction. Such decision of the TCA will outline the required actions, implementation timelines and ongoing reporting obligations.