Competition Law Aspects of Mergers and Acquisitions in the EU and Turkish Law

424 Pages·2007·4.5 MB·English

MARMARA UNIVERSITY
EUROPEAN COMMUNITY INSTITUTE
DEPARTMENT OF EU LAW

COMPETITION LAW ASPECTS OF MERGERS AND ACQUISITIONS
IN THE EU AND TURKISH LAW
Does Turkey Call for a Merger Reform? The Answer and a Policy Proposal

PhD Thesis

M. Fevzi TOKSOY

SUPERVISOR: ASSOCIATE PROF. DR MURAT ÇOKGEZEN

İstanbul, 2007

i
Once upon a midnight dreary, while I pondered weak and weary,
Over many a quaint and curious volume of forgotten lore,
While I nodded, nearly napping, suddenly there came a tapping,
As of some one gently rapping, rapping at my chamber door.
`'Tis some visitor,' I muttered, `tapping at my chamber door -
Only this, and nothing more.'

Edgar Allan Poe
ii

ABSTRACT

The purpose of this thesis is to set out whether or not the rules governing
concentrations between undertakings in EU competition law that are reshaped subsequent
to a reform in 2004 must be reflected in a possible legislative amendment in Turkey.

In order to determine the dynamics of Turkey, as an empirical study, Competition
Board decisions on mergers and acquisitions containing reasoning for dissenting votes
rendered until the end of 2006 are examined to observe whether they make direct or
indirect reference to matters involved in the EU reform process. This study is baptised as
“Dissenting Vote Analysis”. The dissenting votes are classified under jurisdictional,
substantial and procedural matters. In the next stage, sub-classification were made under
each of these three main categories in accordance with subject of each dissenting vote,
where the frequency of these classifications were made subject to process of examining
relevant final decisions according to dissenting member and time parameters.

The study also sets out whether regulations, presently proposed and announced by
Competition Authority in 2005 as legislative amendment on merger and acquisition
transactions will meet the needs mentioned in the outcome of the Dissenting Vote
Analysis. Finally, arrangements that should be introduced within the Turkish legislation
that are contained neither in the Dissenting Vote Analysis nor in the Competition Authority
proposal but stemming from the EU legislation are also presented within the context of a
comprehensive recipe.
iii

ÖZET

Bu Tezin amacı, Avrupa Birliği Rekabet Hukuku kapsamında teşebbüsler arası
yoğunlaşma işlemlerinin 2004 yılında gerçekleşen reform süreci akabinde tabi olduğu
kuralların Türkiye’deki olası bir mevzuat değişikliğinde ne şekilde yansıması gerektiğinin
ortaya konmasıdır.

Türkiye’nin dinamiklerini belirlemek üzere bir ampirik çalışma ile Rekabet
Kurulu’nun 2006 yılı sonuna kadar almış olduğu “karşı oy gerekçesi içeren” tüm birleşme
ve devralma kararları sınıflandırılarak bu karşı oyların AB reform sürecindeki herhangi bir
hususa doğrudan veya dolaylı bir biçimde gönderme yapıp yapmadığı incelenmiştir.
Çalışma “Karşı Oy Analizi” olarak adlandırılmıştır. Karşı oylar yetki, değerlendirme kriteri
ve usul başlıkları altında üç ana grupta tasnif edilmiştir. Bir sonraki aşamada ise bu üç ana
kategori altında her bir karşı oyun konusuna göre alt-tasnifi yapılmıştır ve bu tasniflerin
frekansları karşı oy kullanan üye ve zaman parametreleri çerçevesinde ilgili nihai
kararların incelenmesi sürecine tabi edilmiştir.

Tez ayrıca Rekabet Kurumu tarafından 2005 yılında önerilen ve duyurulan kanun
değişikliği taslağı kapsamında birleşme ve devralma işlemlerine yönelik düzenlemelerin
Karşı Oy Analizi’nin sonuçlarında değinilen ihtiyaçlara cevap verip vermeyeceğini ortaya
koymaktadır. Son olarak ayrıca, ne Karşı Oy Analizi’nde ne de Rekabet Kurumu
önerisinde değinilmiş olan ancak mevcut çalışma esnasında edinilen tecrübeyle şekillenen
ve Avrupa Birliği mevzuatı dikkate alındığında Türk mevzuatına aktarılması gerektiği
düşünülen düzenlemelere de ayrıca yer verilerek kapsamlı bir reçete önerisi yapılmaktadır.
iv

ABBREVIATIONS

CFI Court of First Instance
DG COMP Directorate General for Competition
DOJ Department of Justice (USA)
EC European Community
ECJ European Court of Justice
ECSC European Coal and Steel Community
ECMR European Community Merger Regulation
EEA European Economic Area
EEC European Economic Community
EFTA European Free Trade Area
EU European Union
Fn. Footnote
FTC Federal Trade Commission (USA)
HHI Hirschman-Herfindahl-Index
MD Market dominance
MTF Merger Task Force
SLC Substantial Lessening of Competition
UK United Kingdom
USA United States of America
v

LIST OF TABLES

1 Breakdown of Referrals 81
2 Operators’ Market Shares in Austrian Mobile Phone Market 133
3 Decisions Taken Under the ECMR 151
4 Number of merger and acquisitions files concluded (1999-2005) 171
5 Results of Mergers and acquisitions resolved (1999-2005) 171
6 Distribution of Mergers / Acquisitions by Their Origin (1999 -2004) 172
7 Distribution of Mergers/Acquisitions by Sectors (1999 -2004) 173
8 Article 7-Control of Concentration Transactions 175
9 Dissenting Votes by Members 185
10 Dissenting Votes by Types 186
11 Types of Dissenting Votes by Members 187
12 Frequency of Dissenting Votes Board Members 188
13 Dissenting Votes by Years 190
14 Sub-Categories of Dissenting Votes 192
15 Sub-Categories of Dissenting Votes by Years 193
16 Market Shares in Pharmacia & Upjohn/Fresenius 242
17 Structure of the Policy Proposal 311
18 Decisions Number by Satisfied Thresholds 331
19 Turnover Thresholds and Test Used in Selected Countries 332
20 Evolution of Thresholds in Turkey 333
21 “At Least Two Parties” in Selected Countries 334
22 Consolidated Table of Policy Proposal 366
vi

TABLE OF CONTENTS

ABSTRACT ii

ÖZET iii

ABBREVIATIONS iv

LIST OF TABLES v

1. INTRODUCTION 1

2. ECONOMICS OF MERGERS AND ACQUISITIONS 10

2.1. The Economic Rationale of Mergers 10
2.2. Types of Mergers 13
2.2.1. Horizontal Mergers 13
2.2.2. Vertical Mergers 15
2.2.3. Conglomerate Mergers 17
2.3. Measuring Concentrations 18
2.3.1. Concentration Ratio 19
2.3.2. Herfindahl-Hirschman Index 20
2.3.3. Entropy Index 21

3. EC MERGER CONTROL REGIME 23
3.1. Historical Development of Merger Control in EC 24
3.1.1. The Genesis of EC Merger Control Regime 24
3.1.1.1. An Introduction to Merger Control through Articles 81 and 82 27
3.1.1.2. Attempts for a Separate Merger Control Regulation 30
3.1.2. The Modernization of EC Merger Control Regime 32
3.1.2.1. Airtours/First Choice Case 40
3.1.2.2. Schneider/Legrand Case 43
vii
3.1.2.3. Tetra Laval/ Sidel Case 45
3.1.2.4. The Triggering Effect of the CFI Decisions 47
3.2. Jurisdictional Issues 50
3.2.1. The Concept of Concentration 50
3.2.1.1. The Question of Change of Control 52
3.2.1.2. Determination of Undertakings Concerned 56
3.2.2. The Community Dimension 62
3.2.2.1. The Concept of Community Dimension 62
3.2.2.2. Definition of Relevant Markets 64
3.2.2.2.1. The Relevant Product Market 65
3.2.2.2.2. The Relevant Geographic Market 69
3.2.2.3. Thresholds 70
3.2.3. Referral Mechanism 74
3.2.3.1. Post-Notification Referrals 75
3.2.3.2. Pre-Notification Referrals 77
3.3. Substantive Issues 82
3.3.1. The Issue of Dominance 82
3.3.2. Collective Dominance 88
3.3.3. Welcoming the new Assessment Technique: The SLC Test 97
3.3.4. The Contemporary Assessment of Concentrations 101
3.3.4.1. Horizontal Mergers 103
3.3.4.1.1. Market Shares and Concentration Levels 105
3.3.4.1.2. Possible Anti-Competitive Effects 106
3.3.4.1.3. Buyer Power and New Entries 108
3.3.4.1.4. Efficiencies 110
3.3.4.1.5. Failing Firm Defense 112
3.3.4.2. Non-Horizontal Mergers 113
3.3.4.2.1. Vertical Mergers 114
3.3.4.2.2. Conglomerate Mergers 118
3.3.4.3. Joint-Ventures 120
3.3.4.4. Ancillary Restrictions 126
3.3.4.4.1. Non-compete Obligations 129
3.3.4.4.2. Non-Solicitation and Confidentiality Clauses 130
3.3.4.4.3. License Agreements 130
viii
3.3.4.4.4. Purchase and Supply Obligations 131
3.3.4.4.5. Service and Distribution Agreements 131
3.3.5. The Newly Born Baby of the SLC Test: The Tele.ring Case 132
3.3.5.1. The Parties and Market Characteristics 132
3.3.5.2. Non-Coordinated Effects 134
3.3.5.3. Efficiency Claims Overruled 142
3.3.5.4. Commitments attached to the Decision 143
3.4. Institutional and Procedural Issues 146
3.4.1. Commission’s Organization 146
3.4.2. Notification of a Concentration 147
3.4.3. Review of a Concentration 148
3.4.3.1. Phase I Investigations 148
3.4.3.2. Phase II Investigations 149
3.4.4. Commitments 152
3.4.5. Judicial Review 152

4. MERGERS AND ACQUISITIONS IN TURKEY 154

4.1. Economic and Legal Background of Competition Law in Turkey 154
4.2. Genesis of the Turkish Merger Control Regime 159
4.2.1. EC-Turkey Association and the Competition Law Concerns 159
4.2.2. Competition Law Rules of the EC-Turkey Customs Union 161
4.2.3. Enactment of the Competition Law 159
4.2.4. The Establishment of the Competition Authority 164
4.2.5. Judicial Review of the Competition Authority Decisions 165
4.3. Legislation Governing Mergers in Turkey 169
4.3.1. Application of the Mergers and Acquisitions Regime in Turkey 170
4.3.2. The Future of the Turkish Merger Legislation 174

5. DISSENTING VOTE ANALYSIS 178

5.1. The Rationale behind the Dissenting Vote Analysis 178
5.2. The Methodology of the Dissenting Vote Analysis 182
5.2.1. Dissenting Votes by Members 184