LEGAL FRAMEWORK FOR FOREIGN INVESTMENT IN TURKEY

1. MERGERS AND ACQUISITIONS IN TURKEY: COMPETITION LAW ASPECTSEce GürsoyOne Fleet Place Levent Cad. Alt Zeren Sokak London EC4M 7WS No 7/1 34330 Levent Istanbul T: +44 (0) 20 7242 1212 T: + 90 212 284 6091F: +44 (0) 20 7246 7777 F: +90 212 284 6096E: ece.gursoy@dentonwildesapte.com

2. LEGAL FRAMEWORK FOR FOREIGN INVESTMENT IN TURKEY Investor friendly Foreign Direct Investment Law • A new FDI climate with reduced red tape • No FDI-related screening for investment approval, share transfer and no minimum capital requirements • A policy shift from ex-ante control to ex-post monitoring to improve the investor-friendly climate

3. RECENT REFORMS - REGULATORY AUTHORITIES • Energy Market Regulatory Authority • Capital Markets Board • Telecommunications Authority • Tobacco, Tobacco Products and Alcoholic Beverages Market Regulation Authority • Sugar Authority • Competition Authority

4. TURKISH MERGER REGULATION

5. TURKISH MERGER REGULATION • It is modelled on EC Merger Regulation • It requires mandatory pre-notification prior to completion • Fines and invalidation of the transaction for failing to notify or implementing deal without clearance • Needs to be considered at the outset because waste of time/resources if deal will be blocked

6. STATISTICS • In 2006,186 mergers or acquisitions were filed with the Turkish Competition Board • 51 were considered out of scope • 110 were cleared, 61 of which were foreign-to-foreign • 25 were granted conditional clearance • None rejected

7. TURKISH MERGER REGULATION • Applies to: • merger of two or more previously independent undertakings; • wherever there is a change of control, therefore it applies to acquisition of sole control, significant minority holdings e.g. share purchases – not just 100% but any shareholding that gives decisive influence; and • joint ventures.

8. JURISDICTIONALTHRESHOLDS Merger control issues arise if: • the combined turnovers of the undertakings concerned exceed TRY25 million (~ £10.5 million) in a given relevant product market; OR • the combined market shares of the undertakings involved in the merger or acquisition exceeds 25% of the relevant product market. • No substantive overlap is required.

9. FOREIGN-TO-FOREIGN MERGERS • Foreign-to-foreign mergers fall within the scope of the Turkish merger control regime provided that they affect the relevant markets within Turkey. • Merely sales into Turkey may trigger notification necessity.

10. SUBSTANTIVE TEST • The ‘Dominance Test’: when a merger creates or strengthen a dominant position and significantly impedes effective competition in a relevant product market within the whole or part of Turkey. • Extent of competition, legal or financial barriers to entry, market power of the parties and their competitors, relative strengths of suppliers and customers in relevant market informs decision to block/clear.

11. TIMETABLE

12. PENALTIES • The completion or implementation of any merger without the Board’s approval shall not be legally valid or binding • Turnover based monetary fines • Fines up to 10% of turnover generated in the preceding financial year – which cannot be less than TRY6,864 (~ £2.825) • Fixed monetary fines • Fines for failing to notify: TRY1,716 (~ £707) • Fines on board members: 10% of the fixed monetary fines

13. APPLICATION LOGISTICS • No filing fees. • ‘Form 2’ is filing document – similar to Form CO of the EC. • Form 2 should be prepared in Turkish. • Significant amount of legal and financial/market information to be provided. • Turkish translation of the executed agreement should be attached to the Form 2.

14. JUDICIAL REVIEW • Final decisions of the Competition Board can be submitted to judicial review before the Council of State by filing an appeal case within 60 days upon receipt by the parties of the justified decision.

15. COOPERATION WITH THE EUROPEAN COMMISSION • No direct effect of EC competition law provisions • The Turkish competition law is deeply influenced by EC competition provisions • The Board where applicable generally refers to European Commission’s practices and decisions.

16. TURKISH MERGER REGULATION IN A NUTSHELL • Concentrations that create or strengthen a dominant position as a result of which the competition will be significantly impeded are prohibited • Notification thresholds are either TRY25 million (~ £10.5 million) or 25% market share • Concentration test based on change of control • 30-days review period. Any request for additional information or document stops the clock • Notification should be made with Form 2 • Turkish translation of the executed agreement should be attached • Foreign-to-foreign mergers are also under the jurisdiction of the Competition Board if the parties have business activities in Turkey • Most merger transactions are cleared by a Phase I decision with or without remedies.

17. MERGERS AND ACQUISITIONS IN TURKEY: COMPETITION LAW ASPECTSLONDON CHAMBER OF COMMERCE AND INDUSTRY – 16.10.2007Ece GürsoyOne Fleet Place Levent Cad. Alt Zeren Sokak London EC4M 7WS No 7/1 34330 Levent Istanbul T: +44 (0) 20 7242 1212 T: + 90 212 284 6091F: +44 (0) 20 7246 7777 F: +90 212 284 6096E: info@dentonwildesapte.com