Merger Control Filing Strategies and Their Impact on the Deal Momentum

The determination of the purchase price in a merger and acquisition (“M&A”) transaction and the methodology to be used to either fix or adjust it is a fundamental part of the commercial negotiations. There are basically two approaches: the locked-box or the completion accounts. Both systems have their own benefits and shortcomings.

The locked-box approach definitely entails price certainty and eliminates post-completion negotiations and saves time and money by bypassing drafting, negotiating, organizing, and implementing adjustment mechanisms. Since the exact pricing is agreed upon as of the locked-box date (corresponding to a pre-completion date) based on a set of pre-completion accounts, the purchaser cannot adjust the pricing unless there has been a “leakage”. Hence, this approach, on the one hand, rules out the risk of having to find additional funds after the transaction for post-completion payments, but on the other hand may fail to capture the actual value of the shares as of the completion.

Completion accounts approach enables the pricing to be adjusted up or down towards the real value in the completion accounts as of the completion date. The price is measured against an agreed measurement system (i.e. an agreed amount of working capital or net debt) based on a set of completion accounts to test if the target’s financial position, as at the completion date, is consistent with the value in the share purchase agreement.

Normally, the completion accounts methodology is deemed more pro-purchaser and the locked-box approach is perceived more seller-friendly. However, depending on how long the “interim period” may last between the signing and the closing of the M&A deal, especially in a high-inflation economy with the effects of foreign currency exposure, the longer the interim period, the higher the sensitivities from both parties to a back-dated valuation pinpoint. At this stage, the importance comes into play of the measures to shorten the interim period and to expedite the conditions-precedent (“CP”) collection process. Lengthy, heavily drafted leakage clauses would also provide both parties with an incentive for an expedited CP completion process. The most fundamental CP element that cannot be legally or contractually excluded from the CP list is the antitrust filing. Since the antitrust filings mark the length of the interim period, the strategies to expedite this process are also a primary area to focus on in the lifecycle of an M&A deal.

M&A transactions triggering change of control among the participants reaching the turnover thresholds as set under Article 7 of the Law numbered 4054 on the Protection of Competition (“Law No. 4054”) [i] are subject to the approval of the Turkish Competition Board (“Board”). The rules setting the conditions for the merger control filing requirement before the Turkish Competition Authority (“TCA”) are set forth under Communiqué No. 2010/4 on Mergers and Acquisitions Requiring the Approval of the Competition Board (“Communiqué No. 2010/4”). [ii]

In principle, two cumulative conditions must be met for a transaction to be subject to the Board’s approval: (i) a permanent change of control, and (ii) the turnover thresholds stipulated under Article 7 of Communiqué No. 2010/4 being exceeded. In the case of greenfield joint ventures, the additional requirement of “full-functionality” is assessed.

Pursuant to Article 10 of Law No. 4054, the Board must issue its decision within 30 days following the notification. However, under Article 11 of Communiqué No. 2010/4, where the information provided in the notification form is incomplete, the filing is deemed to have been made only upon submission of the missing or corrected information. Accordingly, if the TCA requests additional information deemed necessary for its competition law assessment, the 30-day review period stops and restarts upon the submission of the requested data. As a result, in practice, the 30-day review period may be prolonged even for transactions raising no substantive competition law concerns.

Although the Board’s review period varies depending on its workload at the time of notification and the scope of information required for the substantive competition assessment of the transaction, the legal strategy underlying the filing plays a critical role in reducing the overall approval timeline. Competition lawyers handling merger control filings before the TCA must possess a thorough command of the M&A process, maintain up-to-date knowledge of the notified transaction’s dynamics, understand the commercial interests and strategies of the parties, and be familiar with the TCA’s decisional practice in analogous cases. In other words, the notification form should not be treated as a mere questionnaire; rather, it should be tailored to the specific characteristics of the transaction and the commercial priorities of the client, thereby ensuring a smoother clearance process and an expedited CP satisfaction.

The “Short Form” Strategy

While the Turkish merger control regime is modelled after the EU merger control rules, Turkish law does not provide for a simplified or short-form notification procedure in theory. That said, the standard notification form annexed to Communiqué No. 2010/4 indicates that certain sections need only be filled if specific conditions are met. In particular, where there is no horizontal or vertical overlap between the parties’ activities, and the transaction does not give rise to any affected markets in Türkiye, a shorter version of the notification form may suffice for the purposes of seeking the TCA’s approval.

In such cases, a “short form strategy” may be adopted by anticipating the TCA’s potential information requests, supplying non-standard data upfront based on practical experience, and thereby facilitating a more expedient review. Similarly, where affected markets exist but the transaction’s competitive effects are clearly negligible, certain information not strictly required under the short form may nonetheless be provided voluntarily to mitigate the risk of subsequent information requests. Moreover, a careful demand- and supply-side substitutability analysis may demonstrate that no affected markets arise in the first place. Although such preparatory steps may slow down the drafting phase, they often expedite the overall clearance process.

The shorter form is generally preferred by commercial teams and financial advisors managing the transaction, as it requires less market information. Nonetheless, it is not invariably the most effective option. The Board’s decisional practice in the relevant sectors, the level of detail previously required in its competition assessments, and the potential for competition concerns under alternative product or geographic market definitions must all be considered in determining the scope of the filing. Otherwise, time saved during the drafting phase may ultimately be lost in responding to the TCA’s follow-up information requests.

It is therefore essential that arguments advanced in a short form filing rest on robust analytical foundations. For example, where overlaps between the parties’ activities are dismissed on the basis of product market definition, a weak or unsupported economic assessment may prompt the Board to conduct a more detailed review. Similarly, clear and well-structured presentation of the parties’ global and Turkish activities, as well as their pre- and post-transaction control structures, is particularly important in short form structures.

The “Long Form” Strategy

Where the parties’ activities are interrelated in Türkiye, or where potential overlaps could be identified under a flexible interpretation, a “long form” strategy may be preferable. Even where a short form filing might suffice from a strictly legal perspective, providing comprehensive information upfront (particularly economic data addressing potential overlap scenarios) can be an effective way to pre-empt follow-up requests and facilitate timely clearance.

For instance, even if no direct supply-purchase, input-output or complementary relationship exists between the parties, overlaps within the same ecosystem may trigger additional scrutiny. In such cases, supplying detailed information regarding potential overlap analyses and affected markets at the outset can shorten the review process. Moreover, supplementing the Board’s precedents with independent market studies, consumer surveys, and technical documentation regarding the production process or product portfolio may help frame the competitive assessment more effectively.

These strategic considerations also shape the contractual framework of M&A transactions, particularly with respect to CPs and the allocation of rights and obligations among the parties. For instance, if a private equity fund aims to divest a portfolio company swiftly to finance a new acquisition, timing considerations must be balanced against the legal risks associated with merger control approval and the duty to provide accurate information to the TCA. Diverging interests among the parties may create conflicts, and the design of the notification strategy may be decisive in resolving them.

Indeed, where clearance cannot be obtained within the contractual timeframe, issues such as termination rights or purchase price adjustments may arise. Hence, a proactive and well-structured competition law analysis is essential for drafting accurate contractual provisions. Similarly , the contractual consequences of a potential intervention by the Board should be addressed in consultation with competition law experts to ensure that the legal effects of the Board’s decisions are appropriately reflected in the transaction documents.

Merger notifications before the Authority should not be regarded merely as procedural regulatory filings but as strategic milestones capable of shaping the overall momentum of an M&A transaction. Competition lawyers’ role in this process extends well beyond template-based assessments; rather, a forward-looking, transaction-specific strategy integrating both legal and commercial perspectives is indispensable for ensuring that M&A transactions are completed smoothly and in a timely manner.

[i] Published in the Official Gazette dated 13 December 1994 and numbered 22140.

[ii] Published in the Official Gazette dated 7 October 2010 and numbered 27722.