Merger Control in Türkiye – 6/6: Remedy Regime

Merger Control in Türkiye – 6: Remedy Regime

Pursuant to Article 7 of the Law No. 4054 on the Protection of Competition (“Law No. 4054”)[2], concentrations that would result in significant lessening of effective competition in any goods or services market in whole or part of the country are unlawful and prohibited. Article 14 of the Communiqué No. 2010/4 on Mergers and Acquisitions Calling for the Authorization of the Competition Board (“Communiqué No. 2010/4”)[3] stipulates that parties to a merger or acquisition transaction may submit remedies regarding such merger or acquisition in order to eliminate any possible competition concerns.

This information note addresses the remedy regime under Turkish competition law in the context of mergers and acquisitions, together with two recent remedy decisions of the Turkish Competition Board (the “TCB” or the “Board”).

The document the parties should refer to in a concentration transaction that may potentially raise competitive concerns is the TCA’s Guidelines on Remedies that are Acceptable by the Turkish Competition Authority in Merger/Acquisition Transactions (the “Guidelines”)[4].

The Guidelines are critical for the parties to a concentration transaction to be able to propose appropriate solutions to address the competition problems that may arise from such transaction and to fully co-operate with the Board, and ultimately to successfully complete the process. In essence, the Guidelines set out the general principles regarding the remedies (i.e. the types of remedies that the Board may accept to eliminate competition problems) as well as the qualifications that the remedy proposals should have and the requirements and methods for the fulfilment of the remedies.

As known, if the Board determines that there are serious competitive concerns which may lead to an infringement within the context of Article 7 of Law No. 4054, it notifies the parties to the transaction of relevant concerns. The parties to the transaction may submit legal and economic defences that may eliminate those concerns, or they may choose to make changes in the concentration transaction or propose solutions/remedies to eliminate those concerns. Remedies can be proposed at the preliminary examination (Phase I in the EU) and final examination (Phase II in the EU) stages.

The Board examines the remedies proposed by the parties based on the competitive concerns in the file, but it cannot unilaterally change the parties’ solution/remedy proposals. As a matter of fact, if the Board considers that the proposed solutions/remedies are not sufficient, it will give the parties the opportunity to revise their remedies. If the Board accepts the proposed remedies, it decides to authorize/clear the transaction conditionally, subject to fulfilment of the remedies.

The remedies that the parties undertake to fulfil should be based on legal and economic principles specific to the relevant transaction. Indeed, effective remedies should aim to preserve as much as possible the efficiencies resulting from concentration while maintaining the competitive structure of the market, and should be clear and applicable. The Board will only accept the remedies/solution proposals that it deems sufficient to eliminate the significant lessening of competition upon its assessment.

Types of remedies: Remedies are mainly divided into two as structural remedies and behavioural remedies. Structural remedies usually involve the divestment of a specific business unit, while behavioural remedies involve the regulation of the parties’ future market behaviour. The main purpose of the remedy/solution proposals is to preserve the competitive structure that existed in the market prior to the transaction. From the TCA’s perspective, structural remedies provide more sustainable results in addressing competitive concerns and do not require periodic auditing after implementation, whereas behavioural remedies may be accepted if they are capable of achieving the same effectiveness as structural remedies and if an equally effective structural remedy cannot be found.

Based on the Board’s recent decisions, the remedies presented in a structural remedy case and a behavioural remedy case and accepted by the Board are provided below.

Example of structural (and behavioural) remedy: Petrol Ofisi/BP Decision (24-37/885-379; 12.09.2024)[5]

As to this transaction regarding the acquisition of all shares of BP Petrolleri AŞ and BP Turkey Refining Ltd. Şti by Petrol Ofisi AŞ, the TCB evaluated in detail all potential impacts of the transaction on all stages of the fuel sector such as fuel supply, distribution, storage and retail sales and, as a result, granted conditional authorisation to the transaction by accepting the structural and behavioural remedies proposed to address the competitive concerns that the TCB found in the transaction. Accordingly, Petrol Ofisi AŞ committed that it;

1. Shall divest 115 fuel stations after the authorization of the transaction by the TCB, with a large majority of the transactions to be completed within two years,
2. Shall not terminate any existing rental agreements signed with third parties, with the exception of those cases where Petrol Ofisi AŞ cannot be reasonably expected to maintain the agreements at those fuel storage facilities in which it will have a share; for a period of three years, shall not exceed an annual storage capacity of  288.707 m3  at the ATAŞ Anadolu Tasfiyehanesi AŞ and an annual storage capacity of 21.104,93 m3 at the Antalya Terminal owned by Çekisan Depolama Hizmetleri Ltd. Şti., corresponding to 50% and 52%, respectively, of the total capacity of the facilities, both of which are active in the fuel storage services market; shall use its voting rights not to relaunch operations in the future for the currently inactive Tasfiye Halinde Ambarlı Depolama Hizmetleri Ltd. Şti. and the Çekmece Terminal owned by Çekisan Depolama Hizmetleri Ltd. Şti.,
3. Shall not exceed 606 tons of sales volume in gas oil distribution for a period of three years,
4. Shall submit a report detailing the implementation results of the commitments to the TCB every six months following the authorization of the transaction by the TCB.

Example of behavioural remedy: DP World/Evyap Port Decision (23-54/1075-379; 23.11.2023)[6]

1. The currently applicable 2023 Standard Port Services Tariff, which has been established by the port operator and includes all service items, will not be modified to an extent exceeding the increase by percentage in the US Consumer Price Index in the relevant period for customers who currently receive services at DP World or Evyap Port as well as potential customers for a period of 36 calendar months as of the closing date of the Evyap Port Share Transfer Agreement (except in legally justifiable circumstances such as customs instructions or any binding provisions in existing customer contracts).
2. The terminals will be managed and operated on a common-user basis; in other words, they will be open to all shipping lines, importers, exporters, shippers, consignees and customers, and any unjust or discriminatory practice against any user or potential user (including shipping lines and feeder operators) will be avoided.
3. As of the date of the Evyap Port Share Transfer Agreement, the parties will not intentionally terminate the contracts of their existing customers, unless any customer violates any of their contractual obligations in a manner that constitutes a default. For a period of 36 calendar months as of the closing date of the Evyap Port Share Transfer Agreement, the parties will inform the TCB about the customers whose contracts are terminated as well as the grounds for such termination.

[1] You can access the first five articles of the information notes series below:

‘Merger Control in Türkiye – 1/6: Merger Control in Türkiye – 1: What is the applicable legislation and who is the enforcer?’

‘Merger Control in Türkiye – 2/6: Which transactions are subject to mandatory merger control filing in Türkiye?’

‘Merger Control in Türkiye – 3/6: Public announcements throughout the notification process’

‘Merger Control in Türkiye – 4/6: Possible consequences of failure to notify and/or realizing a transaction in the absence of an approval decision’

‘Merger Control in Türkiye – 5/6: Technology undertakings exception’

[2] The English translation of the full text of the Law No. 4054 is available on the Turkish Competition Authority’s (“TCA”) website: https://www.rekabet.gov.tr/en/Sayfa/Legislation/act-no-4054.

[3] The English translation of the full text of the Communique No. 2010/4 is available on the TCA’s website: https://www.rekabet.gov.tr/Dosya/2010-4-sayili-teblig-20231107142912073.pdf

[4] The English translation of the full text of the Guidelines is available on the TCA’s website: https://www.rekabet.gov.tr/Dosya/guidelines/6-pdf.

[5] The TCA’s short form announcement regarding the case can be accessed through the following link: https://www.rekabet.gov.tr/en/Guncel/acquisition-of-all-shares-of-bp-petrolle-72c5d2836776ef1193cf0050568585c9

[6] The TCB’s reasoned decision regarding the case (in Turkish) can be accessed through the following link: https://www.rekabet.gov.tr/Karar?kararId=64d7adc8-45db-4040-9db8-b3fb0efedf61