Doing Business in Türkiye: Competition law

Prohibited actions and exemptions

Prohibited actions

Persons engaging in business in Türkiye may not enter into any agreement, take any decision or act in concert with others if such action prevents, distorts or restricts fair competition in the market. The intent is irrelevant for the purposes of this rule. Actions considered to be against fair competition include, among other things:

• Price-fixing, or fixing any other conditions of a purchase or sale;
• Partitioning markets, or sharing or controlling any kinds of market resources or elements;
• Controlling supply or demand;
• Obstructing competitor activities or challenging competitor operations in a market through boycotts or other actions or blocking new entries into the market;
• Discriminating among equals; or
• Compelling a business party to purchase goods or services in conjunction with other goods or services not related to the main transaction, so called “product tying”.

Exemptions

If the relevant market seems likely to benefit more from an action which normally would have a negative effect, the Competition Board may grant an exemption from these requirements. An action is deemed to bring benefit to the market if it:

• Procures new economic developments or improvements;
• Benefits the consumer;
• Does not abolish fair competition in a significant part of the market; and
• Does not limit fair competition more than necessary to achieve the goals set forth in the first two points above.

The Competition Board grants each exemption for a specific term which may be renewed. The Competition Board may grant an exemption with conditions or issue a communiqué in relation to block exemptions for specific subject matters. Failure to continue to satisfy the conditions or use of misleading information during an application for the exemption may result in revocation of said exemption and possible monetary fines. 

Abuse of a dominant position

A dominant position exists when one or more market participant has the power to influence certain economic parameters such as price, production or supply volumes and distribution channels in a market. Abuse occurs when a dominant market player uses this power to manipulate the market for its own interest. The Competition Law considers the following actions, among others, as examples of abusing a dominant position:

• Blocking new entries into the market, or obstructing competitors’ activities;
• Discriminating among equals;
• Compelling a business party to purchase goods or services in conjunction with other goods or services which are not related to the transaction so called “product tying”;
• Exploiting financial, technological or commercial advantages to distort competition in another market; or
• Restricting production, marketing or technical development to the prejudice of consumers.

The Competition Board has the power to invalidate any transaction or impose monetary fines if the rules applicable to dominant position are violated. 

Merger and acquisition transactions; prior approvals

Merger and acquisition transactions

Transactions subject to competition review include mergers between two or more entities, direct or indirect acquisitions of shares or assets, any transaction resulting in a change of “control” of an entity and the formation of a joint venture. For the purposes of the Competition Law, “control” means the power to exercise decisive influence over a business. Change of control may occur in many ways, such as acquiring shares, ownership rights, operating rights or through commercial contracts.

A merger or acquisition transaction requires prior approval of the Competition Board if it results in a change of control and one of the following turnover thresholds are met:

• The Parties’ aggregate Turkish turnover exceeds ₺750m and the Turkish turnovers of at least two of the transacting parties each exceeds ₺250m; or
• The Turkish turnover of the transferred assets or businesses in an acquisition exceeds ₺250m and at least one of the other Parties’ worldwide turnover exceeds ₺3bn; or
• The Turkish turnover of any of the Parties in a merger exceeds ₺250m and the worldwide turnover of at least one of the other Parties exceeds ₺3bn.

In addition to the above, mergers or acquisitions relating to technology firms which (i) are active or have R&D activities in the geographical market of Türkiye; or (ii) provide services to users in Türkiye must in all cases, regardless of the above mentioned turnover thresholds, be approved by the Competition Board. A technology firm is defined as an undertaking conducting activities in the areas of digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agrochemicals and health technologies or assets related to these types of undertakings.

Turnover is calculated as total cash intake of all businesses under the control of the same ultimate beneficial owners of each party to the transaction. For purposes of competition law, ultimate beneficial ownership means (i) owning or holding more than 50 percent of the capital or commercial assets, (ii) holding the power to exercise more than half of the voting rights, (iii) holding the power to appoint more than half of the members of the board of supervisors, board of directors or any other body authorized to represent, undertake or hold the power to manage operations. 

The Competition Board may grant either unconditional approval of a transaction or, upon the satisfaction of certain terms, conditional approval. One common example of conditional approval is requiring that one of the parties spin-off a certain business or product line to avoid risks relating to the abuse of dominant market position. Parties may also propose structural or behavioral remedies with a view to eliminating any competition problems anticipated by the transaction. The Competition Board has the power to invalidate any transaction or impose monetary fines if the rules applicable to mergers and acquisitions are violated.

Although there is no specific deadline for notifying the Competition Board, a merger or acquisition transaction meeting the relevant criteria must be notified to, and a clearance permission be obtained from, the Competition Board prior to completion or closing of the transaction. Until a decision is taken by the Competition Board, the transaction is not considered legally valid. If the Competition Board does not respond within 30 days of an application, the transaction is deemed approved. If the Competition Board disapproves the transaction, the parties may appeal the decision before the Turkish administrative courts in Ankara within 60 days. 

Clearances

Parties may apply to the Competition Authority to request an exemption or negative clearance opinion relating to whether a proposed transaction, action or activity is compliant. The Competition Board may issue conditional clearances which are similar to the prior approvals for transactions or exemptions to transactions. Failure to continue to satisfy the conditions or use of misleading information during application for an exemption or negative clearance may result in the revocation of the clearance and/or the imposition of monetary fines. 

Investigations and complaints

The Competition Board may start an investigation at any time based on its discretion or upon a complaint. The Competition Board notifies the relevant parties within 15 days of deciding to commence an investigation. An investigation may take place in, on or relating to everything owned by the parties to the transaction or action. Parties under investigation must cooperate with Competition Board officials at all times and in any manner possible. Investigations must be concluded within six months but, when deemed necessary, this time period may be extended by the Competition Board on a one-time only basis for an additional six months.

The Parties have the right to respond to allegations included in the report on the investigation’s findings and they may also request a hearing. The Competition Board issues a reasoned decision at the end of these proceedings. Parties may appeal the Competition Board’s decisions before the Turkish administrative courts in Ankara within 60 days. It is important to note, however, that filing an administrative appeal does not automatically stay the execution of the Competition Board decision.

The mechanism of reconciliation is also available for investigation processes. The Competition Board may commence the reconciliation process and decide to end the investigation either with the request of the interested parties or on its own motion, by taking into consideration the procedural benefits of expeditious finalization of the investigation process and the existence or scope of the breach. Within the scope of the reconciliation process, the Board may decide to end the investigation with respect to the concerned parties and make a deduction in the administrative fine between 10 percent to 25 percent upon the submission by the concerned parties of a reconciliation text accepting the existence and scope of the breach and other related issues. The concerned parties cannot initiate a lawsuit against the administrative fine and the matters under the reconciliation text upon the finalization of the investigation with reconciliation.