Turkish Competition Board’s Param/Kartek Decision: What Not to Do During the Interim Period

Param/Kartek Decision: Chronology and Findings on De Facto Control in the Pre-Clearance Phase

The merger transaction involving the acquisition of sole control over Kartek by Param through a share transfer was notified to the Turkish Competition Authority (the “TCA” or the “Authority”) on 29 August 2023. While the Authority’s review was ongoing, confidential complaints were submitted on 15 and 19 February 2024. These complaints alleged that Param had already begun exercising de facto control over Kartek prior to receiving Board approval. Specific claims included the replacement of Kartek’s management, Param’s interference in Kartek’s customer relations, the unauthorized use of the “Paycore” brand by Param, and Param’s access to competitively sensitive information, including data from Masterpass.

Following these complaints, the TCB decided at its meeting dated 27 February 2024 (decision number 24-11/171-M) to conduct an on-site inspection at Param, Kartek, and their affiliated undertakings. The inspections carried out on 29 February 2024 uncovered extensive evidence indicating that de facto control had indeed been exercised prior to receiving approval.

According to the reasoned decision, among a total of 49 findings, 8 pertained to actions that occurred before the transaction was even notified to the Authority. This revealed that the parties had engaged in conduct aimed at establishing control even before the TCB’s review process had formally commenced.

Param’s intervention in Kartek’s human resources processes was evidenced through various documents. For instance, an email dated 21 August 2023 indicated that a salary adjustment initiative for Kartek employees was undertaken at the direction of Param managers. The email showed that salary increase rates were prepared according to Param’s instructions and then submitted for approval.

Similarly, it was found that Param was directly involved in employee position assessments at Kartek. Correspondence dated 10–11 September 2023 demonstrated that a report prepared by Kartek’s HR department regarding employee positions was shared with Param managers, who subsequently provided guidance on promotions, title changes, and organizational restructuring. These activities, undertaken without awaiting Board clearance, were seen as clear indicators of de facto control.

Furthermore, annual performance evaluations were also conducted based on Param’s criteria. Communications dated 3 November 2023 showed that Kartek’s HR officials agreed with Param’s HR department to assess employees using performance benchmarks set by Param. The complete reliance on Param-determined criteria was considered further proof of control being exercised.

Regarding customer relations, Param’s active involvement was also documented. An email dated 3 August 2023 revealed that the Paycore Pipeline file, containing detailed information about current and prospective customers, was shared with Param and E-Çözüm executives. This file was intended to facilitate cooperation on managing business opportunities with these customers.

Additionally, strategy meetings for Paycore products were organized with Param’s participation. In a meeting held on 4 August 2023, discussions on product roadmaps and sales strategies took place, with Param executives actively involved. This level of participation demonstrated a significant degree of integration between the parties before formal clearance.

Financial processes were similarly influenced by Param. Correspondence dated 19 August 2023 revealed that payment plans for Kartek’s customers were drafted and revised under Param’s direct guidance.

De facto control in the field of information technology was also evident. During September 2023, Param employees were granted SSL VPN access to Kartek’s IT systems, received direct server access, and oversaw changes to information security practices—all documented during the inspections.

The overall assessment concluded that:

(i) Param managers directly intervened in employee promotion and salary processes;

(ii) Employee performance evaluations were conducted based on Param’s criteria;

(iii) Business development and bid processes for Kartek customers were managed jointly with Param;

(iv) The Paycore brand was used under Param’s direction;

(v) Customer payment plans were prepared according to Param’s instructions;

(vi) Param employees accessed Kartek’s IT systems;

(vii) Kartek employees received direct instructions from Param;

(viii) Kartek’s IT processes were supervised by Param;

(ix) Kartek’s overall operations were directed by Param managers.

These findings confirmed that a de facto transfer of control had been implemented without prior Board approval, constituting a violation of Articles 7 and 16 of Law No. 4054 on the protection of competition. Consequently, the Yılmaz Family was fined an administrative penalty amounting to one-thousandth of their 2022 gross revenues in Türkiye.

On 27 December 2024, the TCB conditionally approved Param’s acquisition of Kartek based on commitments offered by Param. These commitments included: (i) Maintaining Kartek and Param group companies as separate legal entities with distinct boards of directors; (ii) Implementing legal and technical safeguards to prevent Param or its employees from accessing Kartek’s strategic customer information; and (iii) Establishing specific conditions for entering into and maintaining customer contracts[3].

Prohibited Conduct Prior to Merger Clearance

Transaction parties must strictly observe their obligations prior to obtaining merger clearance. As highlighted in the Param/Kartek decision, non-compliance can result in significant administrative sanctions.

The TCB expects the parties to continue operating as independent undertakings until formal clearance is granted. No legal or de facto transfer of control should occur before such clearance.

According to Article 5(2) of Communiqué No. 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board, control may arise not only from legal entitlements but also through the exercise of decisive influence, even in the absence of formal rights.
Thus, any actions that could establish de facto control must be strictly avoided.

The following behaviours have been identified by the TCB as potential indicators of prohibited conduct before clearance:

• Conditioning the target undertaking’s key business decisions on the written or verbal instructions or approvals of the acquiring undertaking, including leaving the management and operational control to the acquiring party in such a way as to cover decisions regarding offers and discounts to customers, as well as personnel-related matters (e.g., active involvement in the recruitment, promotion, and salary adjustment decisions of the target’s employees). Also, reviewing, revising, and approving contracts to be concluded with customers by the acquiring undertaking.
• Intervening in the daily operations of the target undertaking (e.g., selecting the target’s telephone service providers and media subscriptions, determining employees’ meeting schedules). Preparing shared customer lists, conducting joint projects, and sharing production resources between the parties (Please see TCB’s Ajans Press/PR Net decision[4]);
• Exchanging sensitive commercial information, including prices, contract terms, and discount conditions;
• Having the acquiring party play a role in appointing senior management (e.g. president, CEO, vice-president), merging sales teams or transferring employees;
• Suspending or influencing the R&D activities of the target at the acquiring party’s direction;
• Using or benefiting from the target’s assets;
• Moving the target’s offices into the acquiring party’s premises (Please see TCB’s Ajans Press/PR Net decision referred above);
• Publicly announcing the transaction before obtaining clearance or making statements implying its finalization. Engaging in advertising that could mislead the public into believing the transaction has been completed. Informing customers that the parties are already acting jointly.

Conclusion

The Param/Kartek decision serves as a critical precedent in Turkish competition law, clearly delineating the boundaries of the gun jumping prohibition. It underscores the necessity for transaction parties to ensure strict operational independence until formal clearance is granted. Any premature managerial intervention may be deemed a serious violation, resulting in significant administrative fines. Accordingly, strict adherence to both formal notification requirements and practical independence throughout the pre-clearance phase is imperative.

[1] Attorney Gülce Korkmaz is the external competition law consultant of Baş | Kaymaz Law Firm. After completing her master’s degree at Bilkent University, she is currently pursuing her doctoral studies in the field of competition law at the Faculty of Law of Lüneburg Leuphana University (Germany) as a PhD researcher with the scholarship of the Joachim Herz Foundation.

[2] TCB Decision dated 4 April 2024 and numbered 24-16/390-148. For the Board’s reasoned decision on the case, please see here (only available in Turkish).

[3] Turkish Competition Authority, Competition News “The TCB Conditionally Approved Param’s Acquisition of Kartek Based on Commitments Offered by Param” (Rekabet Haber, “Kartek’in Kontrolünün Param’a Devrine Taahhütler Kapsamında Koşullu İzin Verilmiştir”), 10.01.2025. Please see (only available in Turkish): https://haber.rekabet.gov.tr/haber/kartekin-kontrolunun-parama-devrine-taahhutler-kapsaminda-kosullu-izin-verilmistir

[4] TCB Decision dated 21 October 2010 and numbered 10-66/1402-523. For the Board’s reasoned decision on the case, please see here (only available in Turkish).