Turkey competition body changes M&A basis for approval

The Turkish Competition Authority has announced that companies' turnover figures will be considered instead of market share when requesting approval for merger or acquisitions.

Turkey competition body changes M&A basis for approval

World Bulletin / News Desk

The Turkish Competition Authority (RK) has announced that companies' turnover figures will be considered instead of market share when requesting approval for merger or acquisitions.

The Communiqué on Receiving Permission from the Turkish Competition Authority on Mergers and Acquisitions has been in effect since the start of the new year. According to the change in merger and acquisition (M&A) regulations, the RK will now take the turnover of applicant companies into consideration rather than the companies' market shares. The turnover system is also used in major EU countries.

According to Communiqué No. 2010/4, if the total turnover of the parties to a merger in Turkey exceeds TL 100 million and the respective turnover of at least two of the parties individually exceeds TL 30 million, or if the worldwide turnover of one of the parties exceeds TL 500 million, then the deal will be subject to the board's decision.

If there is no market or sector that will be affected by the merger or acquisition, companies do not have to seek approval from the RK when they fulfill the requirement of the turnover system. This means that if there is no horizontal or vertical relationship between the parties, the companies will be able to start their M&A process without first seeking the permission of the RK.

In the former Communiqué No. 1997/1, an M&A project was subject to the authorization and clearance of the RK when the total market share of the parties to a merger or acquisition exceeded 25 percent of the total market in the relevant sector and, even if it may not have exceeded this rate, if the parties' total turnover exceeded TL 25 million.

The head of the RK, Nurettin Kaldırımcı, reiterated that the former guideline regarding M&A approval was a 25 percent threshold in the relevant market. He said they would look to see if the applicant company to take over a company or merge with another would have a market share of more than 25 percent in that specific field. “We will also make any applications public. Previously we only announced the RK's decision regarding the approval of a merger or acquisition,” he explained.

The value of all M&As in Turkey in 2010 approached $29 billion, five times more than in 2009, while the number of M&A deals doubled last year, international accounting and consulting firm Deloitte's Turkey branch said in a report on Jan. 7.

After a quiet period in 2009, the privatizations of several state-owned energy companies and giant acquisitions in the finance sector boosted M&As in Turkey in the past year.

Last Mod: 09 Ocak 2011, 17:51
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