In merger and acquisition processes, the exchange of certain information is essential to assess the investment value and to understand the commercial potential of the target undertaking. However, such exchanges of information reaching levels that constitute “gun jumping” pose certain risks under competition law. The term “gun jumping” refers to the implementation of a transaction without notification or approval, including restrictive agreements, information exchanges, and unlawful coordination between parties before a concentration is finalized.[1] Such actions are considered violations within the context of competition law.
Recently, a decision dated 04.04.2024 and numbered 24-16/390-148, concerning the acquisition of sole control of Kartek Holding A.Ş. (“Kartek”) by Param Holding International Coöperatief U.A. (“Param”), was published on the website of the Turkish Competition Authority (“the TCA”). This decision stands as one of the few significant rulings of the Turkish Competition Board (“the Board”) on this subject.
The decision reveals that the transaction parties submitted an application to the TCA for approval, while the Board, in response to certain complaints, conducted on-site inspections at the premises of the relevant undertakings.Allegedly, Param had begun to manage Paycore in practice, used the Paycore brand in its advertisements, and publicly announced these activities without the Board’s approval. Paycore cited its financial difficulties as a reason for seeking transaction approval, while Param examined Masterpass data to gain an advantage. Additionally, Paycore allegedly raised prices by threatening customers with reduced service quality and demanded upfront payments.
Based on 49 findings obtained during the on-site inspection, the Board determined that:
The senior executive of Kartek was appointed by Param.
Param participated in meetings regarding the management of Kartek.
Param played a significant role in decisions about promotions, salary increases, selection of salary promotion banks, and acted as the final decision-maker, while joint actions were taken concerning employee transfers between the companies.
Joint marketing and sales activities were developed between Kartek and Param.
Param participated in Kartek’s customer meetings, acting as undertakings under the same economic entity.
Param was involved in the daily management activities of Kartek (e.g., invoices, purchases, social media accounts, payment plans for debts).
Param’s executives/employees had user accounts on Kartek’s systems.
Based on these evaluations, it was concluded that the Yılmaz Family, which controls Param, had acquired de facto control of Kartek without the Board’s approval.
As a result, the Board decided to impose an administrative fine on the Yılmaz Family, one of the transaction parties, equal to one-thousandth of their gross income generated in Turkey in 2022, as they carried out the transaction without obtaining the necessary approval.
This decision underscores the necessity for undertakings to take measures to ensure that pre-closing activities do not lead to de facto control transfer or anti-competitive coordination, securing its place among significant rulings of the Board.
[1] The Turkish Competition Authority, Competition Terms Dictionary