Clearance with Commitments in Mergers and Acquisitions and the Tofaş/Stellantis Decision

The Board’s Assessment Process Regarding Mergers and Acquisitions

The Board’s review process regarding mergers and acquisitions begins with the preparation of the notification form set out in the annex of Communiqué No. 2010/4 in relation to the transaction and its submission to the Turkish Competition Authority (“Authority”). First, it is examined whether the transaction leads to a permanent change in control within the scope of Communiqué No. 2010/4 and whether the turnover thresholds specified in the Communiqué are exceeded. If it is determined that the transaction is subject to the Board’s approval under Communiqué No. 2010/4, the Board then assesses the effects of the transaction on competition in the market. The Board conducts this review by assessing whether the transaction results in a significant impediment to effective competition especially by way of the creation of a dominant position or strengthening of an existing dominant position across the whole country or in a substantial part of it. In this context, the Board primarily examines the structure of the relevant market^[1] as well as the actual and potential competitive power of the undertakings operating within the country or abroad. The position of the undertakings concerned in the market, their economic and financial capacities and their ability to find alternative suppliers and customers are also evaluated. Access to sources of supply, barriers to market entry, and supply and demand trends are among the other main factors considered by the Board. Furthermore, the Board takes into account the potential impact of the transaction on consumer interests and efficiencies together with the possible consequences for the competitive structure.

As a result of this assessment, the Board grants unconditional clearance to transactions that it concludes do not give rise to any significant competition concerns. However, if the Board considers that the transaction may result in a significant impediment of effective competition across the whole country or in a part of it, particularly through the creation of a dominant position or the strengthening of an existing dominant position, it may subject the transaction to a Phase II review within the scope of Article 10 of Law No. 4054, which is an in-depth review process. 

In the Phase II review process, the Board examines the effects of the transaction on the market in terms of the risk of coordination. In particular, the actual and potential competitive conditions in the market, the economic power of the undertakings, the available alternatives for suppliers and customers, access to sources of supply, barriers to market entry and trends in supply and demand are comprehensively assessed. As a result of its assessment, the board may grant unconditional clearance for the transaction, approve it together with commitments, or prohibit it.

Authorization of the Transaction within the Framework of Commitments

Under Article 14 of Communiqué No. 2010/4, undertakings may propose commitments relating to merger or acquisition transactions with the aim of eliminating potential competition concerns that may arise within the scope of Article 7 of Law No. 4054. Such commitments must be of a nature that fully addresses the relevant competitive concerns.

In the Board’s practice, commitments are classified into two categories: structural commitments and behavioral commitments. Structural commitments involve permanent arrangements that directly change the market structure, such as the divestiture of a particular business, brand, asset, or production line. For example, the commitment to selling a subsidiary to lessen concentration in a market falls within this scope. Behavioral commitments, on the other hand, envisage that the parties refrain from certain behaviors following the transaction, provide access to competitors under certain conditions, or adopt specific pricing policies. For instance, examples of behavioral commitments include guaranteeing competitors’ access to a particular product or the obligation to remain independent for a certain period.

Behavioral and structural remedies must be proportional to the severity of the potential competition concerns and must effectively end them. When previously implemented behavioral remedies have not yielded sufficient results, one may apply structural remedies.

Tofaş/Stellantis Decision

The Board initiated a Phase II review with its decision dated 23.11.2023 and numbered 23-54/1029-M regarding the acquisition of Stellantis Otomotiv Pazarlama A.Ş., owned by Stellantis N.V. (“Stellantis”), by TOFAŞ Türk Otomobil A.Ş. (“Tofaş”), which is under joint control of Stellantis and Koç Holding A.Ş^[2]

In its decision numbered 24-43/1027-M, taken at the meeting dated 24.10.2024, the Board concluded that the commitments provided by the applicants in relation to the matter were insufficient for the approval of the transaction^[3]. Indeed, the Board assessed that the transaction may give rise to competitive concerns, particularly in the markets for spare parts supply, authorized service operations, and sales in certain automobile segments. During the review process, the risk of closing aftermarket channels and the potential difficulties faced by independent service providers in continuing their activities were also taken into consideration.

Within this framework, the parties decided to submit new commitments related to the transaction. The second commitment package submitted to the Board includes an investment plan as well as measures taken in distribution and sales channels and measures aimed at protecting local production. Under the investment plan, Tofaş commits to increasing its production and export capacity and strengthening domestic production, while this plan is also expected to have a positive impact on employment and the automotive supply industry. The commitments regarding distribution and sales channels aim to eliminate the risk of restricting consumer preferences and the distribution and sales activities of competing brands. Therefore, it is intended to prevent the risk of the transaction parties’ dealers becoming a “one-stop shop.” These commitments constitute the set of measures that form the basis for the Board’s approval and are anticipated to contribute to the Turkish economy and social welfare as a result of the transaction^[4]. 

The Board granted conditional approval to the transaction, finding the behavioral commitments submitted to be sufficient. Furthermore, the decision demonstrates that the Board may accept behavioral commitments to the extent that they are effective and enforceable.

Conclusion

Merger and acquisition transactions are processes that must be carefully scrutinized in terms of preserving competition in the market. When evaluating such transactions, the Board comprehensively examines the structure of the relevant market, the competitive conditions, and the potential effects of the transaction on consumer welfare. The commitment mechanism stands out as an important tool in addressing competitive concerns and is accepted by the Board to the extent that it is effective and monitorable. The Tofaş/Stellantis decision is noteworthy in reflecting the current approach to protecting competition in the automotive sector through behavioral commitments. This decision highlights that the enforcement practice related to mergers and acquisitions evolves with a dynamic understanding that considers social welfare.