Turkey has changed merger control requirements for mergers and acquisitions. Changes introduce new circumstances when parties can notify the Competition Board (“Board”) after a transaction has realized. Certain transactions within a three-year period will now be viewed as a single transaction for purposes of turnover threshold calculations. The Competition Board’s obligation to re-set turnover thresholds every two years has also been repealed.
The Communiqué Amending the Communique on the Amendments Made to the Communiqué Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board (“Amendment Communique”) was published in Official Gazette number 29989 on 24 February 2017, entering into force on the same date.
Notable changes under the Amendment Communiqué include:
– The Board can now be notified after a transaction is realized in certain circumstances if control of the related undertaking is obtained via security purchases made by different sellers through serial transactions in the stock exchange (Article 10). Accordingly, such post-transaction notification can occur if:
– The transaction is notified to the Board without delay; and
– Voting rights attached to the securities are not exercised or such rights are exercised according to an exception recognized by the Board in order to ensure the full value of the investments are maintained
– Calculation methods for determining each transaction party’s turnovers have changed (Article 8). Accordingly, two or more transactions by the same persons, parties, or undertaking, within the same related product market, within a three-year period will now considered to be a single transaction in terms of party turnovers under Article 7.
– The Competition Board’s obligation to re-establish the thresholds for mergers and acquisition transactions every two years has been repealed (Article 7(2)).
Please see this link for the full text of the Amendment Communiqué (only available in Turkish).
Turkey’s Capital Markets Board has decreased the ratio for leverage procedures from 100:1 to 10:1 and also increased the minimum initial margin requirement for FX transactions from 20,000 Turkish Lira to 50,000 Turkish Lira (or equal foreign currency), in order to begin conducting such transactions.
The Communiqué Amending Communiqué No. III-37.1 on Investment Services and Activities and Secondary Services Principles (“Communique”), was published in Official Gazette number 29975 on 10 February 2017.
A 45-day transition period is imposed for the leverage ratios, applicable to open positions before the intermediary firms. After the transition period, positions which fail to comply with new rule will be shut down by intermediary firms.
Please see this link for the full text of the Communiqué (only available in Turkish).
Turkey’s Energy Markets Regulatory Authority (“Authority”) has determined procedures and principles for investments necessary to deliver natural gas to areas with populations over 20,000 which do not fall within licenses holders’ current geographic license scopes. BOTAŞ, the state-owned transmission pipeline company, has been tasked with leading the process and will make the necessary investments either on its own, or jointly with local distribution companies.
The Authority’s Decree number 6867-6 (“Decree”), dated 19 January 2017, was published in Official Gazette number 29955 on 21 January 2017, entering into effect on the same date. The Decree relates to Council of Ministers’ Resolution number 2016/9382 dated 17 October 2016.
Key aspects of the process include:
– To determine the qualifying districts, BOTAŞ will request a list of districts with populations over 20,000 from the General Directorate of Civil Registration and Citizenship Affairs.
– BOTAŞ will then apply to the Authority to determine whether these districts fall within natural gas distribution areas.
– BOTAŞ will submit its technical and economic evaluations to the Ministry of Energy and Natural Resources for approval.
– On receiving approval, BOTAŞ will notify the Authority about which districts qualify.
– The Authority will determine who will carry out natural gas distribution in the qualifying districts, as per the Law on Natural Gas Market numbered 4646 and other relevant legislation.
– To expedite the necessary investments, BOTAŞ will:
– Jointly invest with the local distribution company in districts with less than 30 km distance between the city’s main circuit connection and the transmission lines.
– Fully cover investment for districts with 30 km or more between the city’s main circuit connection and the transmission lines.
– If a distribution company asks and the Authority approves, the necessary investment can be made solely by the distribution company, or natural gas can be provided directly from the distribution network.
– BOTAŞ and distribution companies are free to determine the terms for joint investments, within the Decree’s framework.
– Licenses holders which will carry out the investment must present information to the Authority at least three months commencing the project. Information should include:
– Investment commencement date.
– Investment completion date.
– Preparations for natural gas supply.
– Date of first natural gas supply.
Please see this link for full text of the Decree (only available in Turkish).
Turkey’s Energy Market Regulatory Authority has introduced principles for natural gas distribution license holders to determine tariffs, identify investments deemed to be network building expenditures, as well as upper limits for these investments. The principles are intended to increase competition and economic, which will in turn improve efficiency, quality and reliability, while reducing supply costs.
Decision number 6914 was issued on 9 February 2017, with the Principles and Procedures on Natural Gas Distribution Investments (“Principles and Procedures”) published in Official Gazette number 29983 on 18 February 2017, entering into effect on the same date.
Notable points of the Principles and Procedures include:
– Network investment expenditures include:
– Pipeline investments.
– Network valve investments.
– Station investments.
– Urban feed line investments.
– Urban line investments.
– Individual line investments.
– Meter Investments.
– CNG and LNG plant investments.
– Other investments deemed to be investment expenditures.
– Investments for CNG and LNG facilities are included in “Other Investments” and deemed to be an Investment Expenditure item.
– Investment expenditures by natural gas distribution companies must be recorded in accordance with the account plan and calculated separately from taxation, foreign exchange rate, interest expense, financing costs and VAT.
– If meters are removed from the system, the new meter costs will be excluded from consideration in determining the tariff rates. Meter removals due to technical malfunctions or natural gas leaks are excluded from this provision.
– Distribution companies must submit proposals for investment upper limits for each tariff period. The Authority provides written notice to the distribution company and sets a deadline for such proposals.
– CNG and LNG plant investments can only be made in distribution areas where legislation deems such facilities suitable.
Please see this link for the full text of the Procedures and Principles (only available in Turkish).
Turkey has updated its regulatory regime for food labelling and nutrition information, to become in line with the European Union’s approach. The new regulations outline responsibilities, mandatory label information, as well as certain limits on nutrition claims.
Two pieces of regulation were published in Official Gazette number 29960 on 26 January 2017:
– The Turkish Food Codex Labelling and Informing Consumers Regulation.
– Turkish Food Codex Nourishment and Health Declaration Regulation.
Key points under the regulations include:
– Food managers who supply food to the market under his/her name are responsible for ensuring the items contain the mandatory information, whereas importers are responsible for such information with regard to imported products.
– With limited exceptions, the following information must be included:
– Food name.
– Ingredient list.
– Allergy or intolerance producing materials or products.
– Amounts of certain components and component groups.
– Net amount of the food.
– Recommended expire date or sell-by-date.
– Name or business name of the food manager and their address.
– Business registration ID or identification marks (for example, trademark).
– Country of origin.
– User manual for food when it is not possible to consume the food properly without such information.
– Alcoholic strength for beverages with more than 1.2% volumetric alcohol.
– Nutrition notice.
– A label containing the mandatory information must be appended or attached to the packaging in a way which ensures it does not separate from the package itself.
– Information should be:
– Clearly readable.
– Not be able to be deleted.
– In Turkish.
– Nutrition and health claims must not be:
– Vague, wrong, or deceptive.
– Done in a way which throws suspicion on the item’s nutritional value, credibility, or promotes overconsumption.
– Alcoholic beverages with more than 1.2% volumetric alcohol must not carry any health claims.
Please see these links for the full text of the relevant regulations (only available in Turkish):
Turkey’s Public Oversight, Accounting and Auditing Standards Authority (“Authority”) has softened restrictions for individuals working as independent auditors. The new rules clarify the prohibition on individual auditors which prevents them from working for or being a shareholder, manager or auditor for other audit companies, or acting as an auditor on their own behalf for a certain period after for 12 months after leaving their own business. The Authority also announced the details of exceptions to the general prohibition.
The Authority’s decision was published in Official Gazette number 29981 on 16 February 2017.
The decision clarifies Article 13/1-I of the Independent Audit Regulation, which states that auditors, shareholders or key employees of authorized audit companies must not:
– Be a shareholder, manager or auditor in another company which performs audit activities.
– Work on his or her own behalf.
In practice, the prohibition on performing audit activities imposed a one year stand-down period on auditors. The Authority has announced that the restriction will not apply if:
– The auditor has executed audit agreements on their own behalf and notified them to the Authority before authorization to perform auditing business.
– The auditor undertakes to refrain from:
– Performing any audit business except as provided under the audit agreements.
– Signing any other audit agreements.
– The audit company undertakes not to assign the individual until he or she completes any auditing business performed on their own behalf
Please see this link for the full text of the Decision (only available in Turkish).
The Turkish Competition Authority recently published a short-form decision from the Competition Board (“Board”) concluding that Mey İçki San. ve Tic. A.Ş. (“Mey İçki”) abused its dominant position in the Raki market (alcohol), violating Article 6 of the Law on Protection of Competition Number 4054 (“Competition Law”). The Board fined Mey İçki 155,782,969 Turkish Lira (≈€39.5 million; US $41.9 million), with a long-form decision to follow, outlining the Board’s full reasoning. The scale of the fine reflects the infringement’s duration and Mey İçki’s recidivism. The Board also considered and applied mitigating factors.
The Board also ordered Mey İçki to:
– Cease its practice of paying the whole discount amount under the sales contracts to sale points at the beginning of the discount period. The Board held that paying the full amount up front restricts competition by limiting sales points from wishing to work with other companies.
– Cease discounts in the form of retroactive bulk payments.
– For advance payments to sales points under the investment support agreement, the agreement must clearly state the investment’s nature and purpose. These agreements will be treated as separate from the purchase agreements.
– For traditional sales channels:
– Cease financial benefits related to rack and product layouts.
– Provide a layout recommendation for only about 70% of visible Raki racks and only apply to Mey İçki products.
– Remove a provision from its purchase agreements with sales points which requires sales points to display Mey İçki’s promotional material in alcoholic drink areas.
The full text of the Board’s short-form decision (dated 16 February 2017) is available at this link (only available in Turkish).
The Turkish Competition Board recently published a short-form decision concluding that Luxottica Gözlük Endüstri ve Ticaret A.Ş. abused its dominant position in the sunglasses market, violating Article 6 of the Law on Protection of Competition Number 4054. The Board fined the company 1,672,647 Turkish Lira (≈€425,000; US $450,000), representing 0.75% of its turnover in the 2015 financial year.
A long-form version of the Board’s decision is expected to follow, outlining further details of the violation and the Board’s reasoning.
The full text of the Board’s short-form decision, dated 23 February 2017, is available at this link (only available in Turkish).