Competition Law Obstacles in Company Mergers

1. Introduction

Mergers and acquisitions are frequently used corporate strategies in the business world to create economies of scale, increase market share, and enhance competitiveness. However, such transactions can face significant scrutiny and obstacles, particularly from the perspective of competition law . In Turkey , Law No. 4054 on the Protection of Competition (RKHK) and related secondary legislation subject mergers and acquisitions to the supervision of the Competition Board

Barriers to competition law arise to prevent market monopolies, protect effective competition, and safeguard consumer welfare. This article will address both the legal framework and the problems encountered in practice.

2. Legal Framework

2.1. Basic Legislation

RKHK No. 4054
Communiqué Regarding Cases Requiring Permission from the Competition Board for the Legal Validity of Mergers and Acquisitions (Communiqué No. 2010/4)
Relevant EU legislation (in particular the EU Merger Regulation) is influential in terms of interpretation in Turkish practice.

2.2. Notification Obligation and Threshold Values

According to Circular No. 2010/4;

When the total turnover of the parties in Turkey and/or their worldwide turnover exceeds certain thresholds, notification to the Competition Board is mandatory.
With the 2022 amendments, these thresholds have been significantly increased.
Mergers/acquisitions carried out without notification illegal and may be subject to administrative fines.

2.3. The Competition Board's Authority to Investigate

The Board evaluates the transaction preliminaryand in-depth (Phase II) stages.
The criteria are:

Market definition (product and geographic market)
The risk of creating a dominant position or strengthening an existing dominant position
The possibility of significantly reducing effective competition

3. Obstacles in Competition Law

3.1. Creating a Dominant Position

If a merger results in a single undertaking a market share of 50% or more , or if the market becomes structurally susceptible to monopolization, the likelihood of the transaction being blocked increases.

3.2. Risk of Coordination in Oligopoly Markets

The Competition Board coordinated effects .
For example: the risk of price parity in sectors with a small number of players, such as telecommunications, airlines, and cement.

3.3. Market Closure in Vertical Mergers

Restricting access to competitors after a merger in producer-distributor or raw material supplier-manufacturer relationships.

3.4. Elimination of Potential Competition

Acquiring a company that is not currently in the market but is expected to enter it can be seen as preventing potential competition.

3.5. Data-Driven Market Power

In digital marketplaces (e.g., e-commerce, social media), data accumulation can create barriers to entry in the post-merger market.

4. Examples from Supreme Court and Competition Board Decisions

Competition Board, Case No. 2018/49-731 E., Decision No. 2018/1184 K. – Merger in the banking sector rejected due to concentration ratio.
Competition Board, Case No. 2020/50-700 E., Decision No. 2020/1360 K. – No permit granted due to risk of regional concentration in the cement sector.
EU Court of Justice – Airtours/First Choice (T-342/99) – Coordination effect considered an obstacle to merger.

5. Problems Encountered in Practice

Difficulties in determining turnover in notification threshold calculations
The requirement to obtain simultaneous approvals from different national authorities in multinational mergers
Time pressure and the investment schedule clashing with the Competition Board's review period
Parallel implementation of sectoral regulations and competition law oversight

6. Solutions and Strategic Approaches

Preliminary legal review (pre-notification) at an early stage
Predicting risks in advance through concentration analysis and market testing.
Behavioral commitments (price commitment, access commitment)
Structural commitments (disposal of specific assets)

7. Conclusion

Mergers and acquisitions offer significant opportunities for business growth, but they also carry legal risks due to competition law hurdles. Therefore, pre-transaction competition law compliance analysis, expert advice , and a strategic disclosure process are key to a successful merger.

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