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MERGER REMEDIES UNDER TURKISH COMPETITION LAW MERGER REMEDIES UNDER TURKISH COMPETITION LAW AND MODERNIZED EC NOTICEAND MODERNIZED EC NOTICE : : MINOR ISSUES OF BIG IMPORTANCEMINOR ISSUES OF BIG IMPORTANCE

Hanna StakheyevaHanna StakheyevaUniversity of Amsterdam, LLMUniversity of Amsterdam, LLM

June 17, 2009, IstanbulJune 17, 2009, Istanbul


““ Remedies are very important in merger Remedies are very important in merger control control

as they may clear the way for companies to as they may clear the way for companies to merge, merge,

while at the same time ensuring that effective while at the same time ensuring that effective competition is maintained.competition is maintained. ” ”

(( CommissionerCommissioner Neelie Kroes Neelie Kroes ))


““ Just as a correct prescription is as Just as a correct prescription is as imporant as an accurate diagnosis in imporant as an accurate diagnosis in medicine [...], in antitrust medicine [...], in antitrust imposing the right remedy is just as imposing the right remedy is just as important as correctly analyzing the important as correctly analyzing the

transaction...transaction... ”” (( D.A. ValentineD.A. Valentine ))


Effective merger remedy depends on a number Effective merger remedy depends on a number of smallof small , but essential issues: , but essential issues:

- Substantive test Substantive test - PPrriinciplenciple of proportionality of proportionality - Role of third partiesRole of third parties- Interaction between parties and antitrust authorityInteraction between parties and antitrust authority- - Confidentiality Confidentiality issues issues and information asymmetriesand information asymmetries - - Choice between structural or behavioural remediesChoice between structural or behavioural remedies - - Cooperation of the antitrust authorities at the Cooperation of the antitrust authorities at the remedy stageremedy stage


LegalLegal FFramework for ramework for MMerger erger RRemediesemedies

EU Turkey

General: General:

EC Merger Regulation 139/2004 (ECMR) Communiqué 1997/1

Specific: Specific:

Modernized EC Notice on Merger Remedies (October 2008)

N/A

Bilateral cooperation – Article 36, 39, 43 of the Customs Union Decision.


Major Novelties/clarifications under new EC Major Novelties/clarifications under new EC Notice:Notice:

- - Form RMForm RM

- R- Role of the Trustee in the structural remediesole of the Trustee in the structural remedies

- D- Divesture and access remedies in more detailivesture and access remedies in more detail -““ Requisite degree of certaintyRequisite degree of certainty ,,” proportionality,” proportionality, SIEC test,SIEC test,- Withdrawal of unnecessary commitments+ Withdrawal of unnecessary commitments+ increased interactionincreased interaction


Compatibility Test: SIEC Rather Than DominanceCompatibility Test: SIEC Rather Than Dominance

EC EC - - SIEC test – ECMR + PSIEC test – ECMR + Point oint 4 of the new EC Notice:4 of the new EC Notice: - - broader than the “dominance” testbroader than the “dominance” test, , fills in an fills in an enforcement gap; enforcement gap; - however, more complicated and less clear.- however, more complicated and less clear.

Turkey Turkey - - “Dominance test” - “Dominance test” - Article 7 of the Turkish Article 7 of the Turkish Law on Protection of CompetitionLaw on Protection of Competition – clarity of – clarity of interpretation and applicationinterpretation and applicationReconsideration needed?Reconsideration needed?--İmpact on merger assessment and cooperation between EC and İmpact on merger assessment and cooperation between EC and TCATCA


Proposing CommitmentsProposing Commitments

““ The development of any remedies package is an The development of any remedies package is an interactive process.”interactive process.” (( Cook C.J.Cook C.J. ))

EU EU - responsibility and right of parties to - responsibility and right of parties to transaction – ptransaction – pointoint 6 of the new EC Notice 6 of the new EC Notice - Commission -- Commission - only identification of only identification of competition concern competition concern - Parties are better placed- Parties are better placedTurkey Turkey - not so clear cut - Article 6 of the Communiqué - not so clear cut - Article 6 of the Communiqué 1997/1: Sole priority of the TCA or negotiation 1997/1: Sole priority of the TCA or negotiation possiblepossible ??Arif Esin – no negotiation possible; Zümrüt Esin – in practice it is Arif Esin – no negotiation possible; Zümrüt Esin – in practice it is possible.possible. Absence of express provision – uncertaintiesAbsence of express provision – uncertainties..


InformationInformation.. Confidentiality v Transparency Confidentiality v Transparency

1.1.““ […] a remedy that in theory solves a certain problem might not […] a remedy that in theory solves a certain problem might not be effective in practicebe effective in practice […][…] because there are because there are information information asymmetriesasymmetries among the merger parties, third parties and the among the merger parties, third parties and the Competition authorities”Competition authorities” (( Motta Massimo )Motta Massimo )

2.2. Basis for decisions and expectations of parties Basis for decisions and expectations of parties

3. 3. Object for manipulations and abusesObject for manipulations and abuses

TTransparency v confidentialityransparency v confidentiality– finding balancing point is – finding balancing point is crucial.crucial.Non-disclosure of business secrets: Article 18 of the ECNon-disclosure of business secrets: Article 18 of the EC IImplementing mplementing RRegulation; Art.53 of the Turkish Law of Protection of egulation; Art.53 of the Turkish Law of Protection of Competition. Competition. EC – parties determine what is confidential; EC – parties determine what is confidential; Turkey – discretion of the TCA?Turkey – discretion of the TCA? Togan+ Eryükli (Paksoy) – yes, it is. Togan+ Eryükli (Paksoy) – yes, it is.Legal uncertaintyLegal uncertainty


How much information contained in the How much information contained in the confidential versions of the decision should be confidential versions of the decision should be

available to the publicavailable to the public ??

e.g. divesture commitments: decision making e.g. divesture commitments: decision making depends on the informationdepends on the information

Possible abuses/manipulationsPossible abuses/manipulations ::

a) a) - - of right to of right to confidentialityconfidentiality by the seller – by the seller – restriction of information to purchaser - weaker restriction of information to purchaser - weaker competitorcompetitor - limit competition in the future - limit competition in the future

b) b) - - of of transparency requirementtransparency requirement by potential by potential purchasers - awareness about timetable for purchasers - awareness about timetable for divesture, number of potential buyers or nature of an divesture, number of potential buyers or nature of an alternative remedy - bargaining strategiesalternative remedy - bargaining strategies


Ways of dealing with information asymmetriesWays of dealing with information asymmetries

- - Form RM + Form RM + non-confidential summary of non-confidential summary of commitments offered.commitments offered.

- - Parties’ discretion to specify what they consider to Parties’ discretion to specify what they consider to be be

confidential + proper explanation to the authority.confidential + proper explanation to the authority.

- R- Role of the Trustee - verify that the potential ole of the Trustee - verify that the potential purchasers receive adequate information about the purchasers receive adequate information about the business to be divested.business to be divested.


CONCLUDING REMARKSCONCLUDING REMARKS Harmonization - beneficial - makes cooperation Harmonization - beneficial - makes cooperation

between Commission and the TCA easier.between Commission and the TCA easier.

Careful examination of novelties under new EC Careful examination of novelties under new EC Notice may contribute to the prospective Notice may contribute to the prospective adoption of the specific ruadoption of the specific rulles on merger es on merger remedies in Turkey and the improvement of the remedies in Turkey and the improvement of the current practice of the TCA in this sphere.current practice of the TCA in this sphere.

Turkey’s integration to the EU + Turkey’s integration to the EU + increase increase transparency + certainty of business partiestransparency + certainty of business parties


CONCLUDING REMARKS 2CONCLUDING REMARKS 2

The SIEC rather than ‘dominance’ testThe SIEC rather than ‘dominance’ test ??

TThe partieshe parties to theto the transactiontransaction should propose should propose commıtmentscommıtments..

Parties concerned identify what information Parties concerned identify what information they, rather than they, rather than thethe competition authority, competition authority, consider to be confidentialconsider to be confidential

Remedies acceptable when Remedies acceptable when there is enoughthere is enough certainty in their full implementation. Otherwise, certainty in their full implementation. Otherwise, ‘up-front,’ ‘fix-it-first’ or ‘crown jewel’ ‘up-front,’ ‘fix-it-first’ or ‘crown jewel’ optionsoptions, , safeguard thesafeguard the principle of principle of proportionalityproportionality..


CONCLUDING REMARKS 3CONCLUDING REMARKS 3

Rights of third parties have to be carefully Rights of third parties have to be carefully considered - impact considered - impact on the implementation –on the implementation – where remedies involvewhere remedies involve obligations / obligations / assets over assets over which parties do not exercise sole controlwhich parties do not exercise sole control ..

Type of remedy - case-by-case assessmentType of remedy - case-by-case assessment . . Advantages and Advantages and disadvantages are common to disadvantages are common to both types of the remediesboth types of the remedies ..


Hanna StakheyevaHanna StakheyevaUniversity of Amsterdam, LLMUniversity of Amsterdam, LLM

Thank You for your attention ! … Thank You for your attention ! …

Göstermiş olduğunuz ilgi ve katılım için Göstermiş olduğunuz ilgi ve katılım için

Teşekkür Ederim ! … Teşekkür Ederim ! …

Education

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