This report is prepared by the Aktay Law Firm examines the competition law development that took place in Turkey in 2022. The report will provide a numerical summary of the activities carried out by the Competition Authority (“TCA“) throughout 2022, as well as the legislative amendments in 2022.
The decision statistics report for 2022 and the Merger and Acquisition Report for 2022, published by the Competition Authority on its official website, contain very important data on competition violations, exemption/ negative determination examinations, the course of merger/acquisition examinations in order to understand the current approach of the Competition Board regarding all these issues to observe the current situation of the Turkish economy.
Noteworthy Numbers in the Reports
Regarding the violation of competition investigations conducted under Articles 4 and 6 of the Law No. 4054 on the Protection of Competition (“Law“), which entered into force with the Official Gazette dated 13/12/1994 and numbered 22140, the total number of decisions increased by 4 compared to 2021 and reached 78. While the majority of these decisions regarding competition violations fall within the scope of Article 4, 24 of these decisions were taken at the end of the preliminary investigation process, whereas 54 of these decisions were taken at the end of the investigation process. According to the report, the number of ongoing investigations according to the data for the end of 2022 is 45.
Of these 45 ongoing investigations, 6 were related to investigations carried over from 2021 and the remaining 39 were related to investigations initiated in 2022. In 2022, the total administrative fines imposed was 1,857,426,810.16 TL.
If all of the conditions listed in Article 5 of the Law No. 4054 on the Protection of Competition are met, the Competition Board (“Board“) is authorized to exempt ‘agreements, concerted practices and decisions of associations of undertakings’ from the application of Article 4. However, due to the absence of the liability/obligation to report, the exemption assessment should be made primarily by undertakings and associations of undertakings. In the exemption assessment, it should not be overlooked that, in addition to the conditions listed in Article 5 of the Law, it is of great importance to take into account the ‘group exemption communiqués’ issued by the Board, the guidelines explaining these communiqués and past Board decisions.
The number of exemption/negative determination applications, which was 22 in 2021, decreased to 19 in 2022. While 15 of these were exemption applications, the remaining 4 were negative determination applications. While all four of the negative assessment applications resulted in the issuance of a negative assessment certificate, the data on exemption applications are as follows: 3 applications were concluded within the scope of ‘block exemption’, 5 applications were concluded within the scope of ‘individual exemption’ and 2 applications were concluded by evaluating ‘individual and block exemption’ together. In addition, 4 applications were granted conditional exemption and 1 application resulted in the revocation of the exemption certificate.
Article 7 of the Law prohibits mergers and/or acquisitions that would result in a significant lessening of effective competition in any goods or services market by creating a dominant position or strengthening an existing dominant position. Under Article 7, in order for such mergers or acquisitions to be legally valid, they must be notified to the Board in advance and permission must be obtained; and the issues to be considered in this regard are regulated in detail in the Communiqué No. 2010/4 on Mergers and Acquisitions Requiring the Authorization of the Competition Board, which was issued by the Board and entered into force after being published in the Official Gazette dated 07.10.2010 and numbered 27722. In addition to this communiqué, it should be noted that the guidelines published by the Board at regular intervals will also provide guidance.
According to the Mergers and Acquisitions Report for 2022 published by the Authority, a total of 245 M&A transactions were concluded in 2022, including 160 acquisitions, 76 joint ventures, 2 mergers and 7 privatizations. Although there is a decrease compared to 2021, when a total of 309 M&A transactions were concluded, it should be noted that the number of M&A transactions in 2022 is higher than 219, which is the average number of M&A transactions between 2013 and 2022.
In 39 of 245 transactions, all parties were Turkish undertakings, in 34 transactions at least one of the parties was Turkish and foreign, and in 145 transactions all parties were foreign undertakings. Regarding the results of M&A transactions in 2022, 2 transactions were conditionally authorized, while 34 transactions were out of scope, i.e. not subject to authorization.
According to the Merger and Acquisition Transactions Report, which includes information on the number of merger and acquisition transactions and the value of these transactions, the total transaction value of merger/acquisition transactions in which all parties are Turkish increased from 15 billion 919 million TL in 2021 to 25 billion 73 million TL. While the total value of transactions where all parties were foreign companies was 5 trillion 654 billion TL in 2021, this figure was realized as 5 trillion 580 billion TL.
In 2022, the Netherlands and the United Arab Emirates had the highest number of transactions with five deals each, followed by the United Kingdom with four deals. In 2022, the total amount invested by foreign investors in M&A transactions involving Turkish enterprises amounted to approximately 43 billion TL, almost double the 22 billion TL target for 2021.
Finally, an analysis of the number and value of mergers and acquisitions by economic activity in Turkey in 2022 shows that ‘electric power generation, transmission and distribution’ is the economic activity with the highest number of mergers/acquisitions and the highest transaction value.
With the Communiqué numbered 2023/1 “Communiqué on the Increase of the Lower Limit of the Administrative Fine Stipulated in the First Paragraph of Article 16 of the Law No. 4054 on the Protection of Competition” published in the Official Gazette dated 27.12.2022 and numbered 32056, the lower limit of the administrative fine stipulated in the first paragraph of Article 16 of the Law has been increased by 105,688 TL to be valid until 31/12/2023. The lower limit of the administrative fine stipulated in the first paragraph of Article 16 of the Law has been determined as 105.688 TL to be valid from January 1, 2023 to December 31, 2023, based on the revaluation rate determined as 122,93% for the year 2022.
With the “Communiqué No. 2022/2 Amending the Communiqué No. 2010/4 on Mergers and Acquisitions Requiring Authorization from the Competition Board” published in the Official Gazette dated 04.03.2022 and numbered 31768, certain changes were made in the turnover thresholds of mergers/acquisitions that require authorization from the Board in order to be legally valid. The turnover thresholds amended by Article 2 of the Communiqué are as follows: In the event that the total turnover of the transaction parties in Turkey exceeds 750 million TL and the turnover of at least two of the transaction parties in Turkey exceeds 250 million TL individually, it is obligatory to obtain authorization from the Board. At the same time, in cases where the turnover of at least one of the transaction parties exceeds 250 million TL in Turkey and the global turnover of at least one of the other transaction parties exceeds 3 billion TL in merger transactions, the Board’s authorization will be required for such transactions to be legally valid. According to the exemption introduced in the second paragraph of the same article of the Communiqué, the above-mentioned turnover thresholds of 250 million TL will not be required for the acquisition of technology enterprises operating in the Turkish geographic market or engaged in R&D activities or providing services to users in Turkey.
Another legislative amendment in 2022 was the Regulation Amending the Regulation on the Settlement Procedure to be Applied in Investigations on Agreements, Concerted Practices and Decisions Restricting Competition and Abuse of Dominant Position published in the Official Gazette dated 15.07.2021 and numbered 31542 (OG: 15.07.2021 /31542) and the repeal of the third paragraph of Article 9 of the 2021 regulation published in the Official Gazette dated 18.03.2022 and numbered 31782. Thus, the paragraph of the Regulation dated 2021 stating that “In cases where the investigation is ongoing for at least one undertaking or association of undertakings, the final settlement decision with reasons cannot be communicated to the settlement party before the final decision to be taken at the end of the investigation.” has been abolished.
5.1. Toypa (Toyzz Shop) Decision
(Competition Board decision dated May 18, 2022 and numbered 22-23/364-154)
“Within the scope of the preliminary investigation, the allegation that Toypa Mağazacılık Ticaret A.Ş. (TOYPA, trademark Toyzz Shop) violated Article 6 of Law No. 4054 by charging predatory prices was examined. Within the scope of the file, the relevant product market was defined as the “retail toy sales market”; however, a precise geographical market definition was not made since it would not affect the evaluation. Subsequently, as a result of the evaluations made to determine whether the relevant enterprise is in a dominant position, it has been determined that there are many enterprises operating in the retail toy sales market through different channels and that the probability of any enterprise, including TOYPA, being in a dominant position in this market is extremely low due to its structure. Furthermore, when the situation of TOYPA in terms of retail sales of HASBRO, LEGO, MATTEL and GP branded toys, in which TOYPA allegedly engaged in predatory pricing, was examined, it was determined that the concentration level of the market was low, there were many financially strong competitors in the market that could create competitive pressure against TOYPA, consumers had alternative sources of supply for the relevant branded products; therefore, TOYPA was not in a dominant position in any alternative market that could be identified.
In addition, within the scope of the preliminary investigation, it was also examined whether TOYPA engaged in predatory pricing behavior with respect to HASBRO, LEGO, MATTEL and GP branded toys, and within this scope, it was examined whether the pricing behavior of the enterprise created an anti-competitive market-closing effect. As a result of the examination, while it could be expected that TOYPA’s pricing behavior in the shopping malls where TOYPA operates together with its competitor ARMAĞAN would push ARMAĞAN out of the market on a shopping mall basis, on the contrary, the number of shopping malls where ARMAĞAN operates together with TOYPA increased. In addition, there was no loss of market share in the sales of HASBRO, LEGO, MATTEL and GP branded toys, indicating that ARMAĞAN’s operations became more difficult, and it was also determined that the revenue generated from the sales of these four branded products increased its share in total revenues. Therefore, it has been determined that TOYPA’s pricing behavior did not result in an anti-competitive market closure against its competitor. As a result, it has been decided that TOYPA did not violate Article 6 of Law No. 4054 with its pricing behavior during the period under review.”
5.2. Decision on Private Health Institutions
(Competition Board decision dated 28.10.2021 and numbered 22-10/152-62 published on February 24, 2022)
“Upon various complaints received by the Competition Authority that private hospitals in Samsun province jointly determined the operating room service fees they demanded from freelance physicians and prevented the transfer of personnel through a gentleman’s agreement between them, the Competition Board initiated a preliminary investigation on the aforementioned allegations with its decision dated 28.07.2020 and numbered 20- 36/501-M.
As a result of the preliminary investigation, the Board found the findings sufficient and, with its decision dated 15.10.2020 and numbered 20-46/624-M, opened an investigation against Medicana Hastane İşletmeciliği AŞ and MLP Sağlık Hizm. AŞ, which are the parent enterprises of the enterprises named Medicana Samsun Özel Sağlık Hizmetleri AŞ and Samsun Medikal Grup Özel Sağlık Hizmetleri AŞ. During the investigation process, upon obtaining various documents that create suspicion that the allegations examined within the scope of the file also took place in Bursa and Balıkesir provinces, it was decided to open a preliminary investigation with the Board decision dated 26.11.2020 and numbered 20-51/711-M. As a result of the aforementioned preliminary investigation, it was decided with the Board decision dated 07.01.2021 and numbered 21- 01/20-M to open an investigation against 19 private health institutions operating in Bursa and two associations, namely Bursa Private Health Institutions Association and Private Hospitals Platform Association, and to merge the investigation with the investigation opened on the allegations in Samsun.
Although it is stated within the scope of the file that the relevant product markets can be defined as “the market for operating room services offered to freelance physicians”, “the market for labor supply/labor force in healthcare services”, “the market for complementary health insurance”, a precise definition of the relevant product market and the relevant geographical market has not been made since it would not change the conclusion to be reached within the scope of the allegations.
5.3. Mineral Water Investigation Decision
(Board decisions dated 14.04.2022 and numbered 22-17/283-128 and dated 18.05.2022 and numbered 22-23/379- 158)
“Within the scope of the investigation, it was examined whether Beypazarı İçecek Pazarlama Dağıtım Ambalaj Turizm Petrol İnşaat Sanayi ve Ticaret AŞ (Beypazarı) and Kınık Maden Suları AŞ (Kınık) violated Article 4 of Law No. 4054 in the natural mineralized water market. During the investigation process, active cooperation applications made by both parties were accepted by the Board and as a result of the evaluation made within the scope of the “Regulation on Active Cooperation for the Purpose of Uncovering Cartels” (Leniency Regulation), it was decided to apply a reduction in the administrative fines to be assessed as a result of the investigation for both enterprises. However, during the investigation process, a settlement request was made by both parties to the investigation. As a result of the reconciliation process carried out upon the acceptance of the reconciliation requests by the Board, the investigation was concluded with a settlement for both enterprises. In this framework, it was ruled that the aforementioned enterprises violated Article 4 of Law No. 4054 by exchanging information on current and future price information, price change dates and increased prices with the rival enterprise, thus establishing a cartel, and administrative fines were imposed on the aforementioned enterprises.”
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