Turkish Merger Control And Exemption Mechanism: How Does It Relate To Pharma Sector?

Any transaction (merger or acquisition or establishment of a joint venture) will be required to be notified to the Turkish Competition Board (the “Board“), if one of the following alternative turnover thresholds under Article 7(1) of the Communiqué No. 2010/4 is met:

  • EITHER the combined aggregate Turkish turnover of all the transaction parties exceeds TRY 750 million and the Turkish turnover of each of at least two of the transaction parties exceeds TRY 250 million
  • OR one of the below:
    • The Turkish turnover of the transferred assets or businesses in acquisitions exceeds TRY 250 million and the worldwide turnover of at least one of the other parties to the transaction exceeds TRY 3 billion
      or
    • The Turkish turnover of any of the parties in mergers exceeds TRY 250 million and the worldwide turnover of at least one of the other parties to the transaction exceeds TRY 3 billion.

The Amendment Communiqué in Türkiye entered into force as of May 4, 2022. It raised the jurisdictional turnover thresholds and introduced a new merger control regime for undertakings active in certain sectors. Amendment Communiqué introduced a new merger control regime for undertakings active in certain markets/sectors.

“TRY 250 million Turkish turnover thresholds” will not be sought for the acquired undertakings in the following cases:

  • IF the acquired undertaking is active in the following sectors in any part of the world:
    • digital platforms
    • software and gaming
    • financial technologies
    • biotechnology
    • pharmacology
    • agricultural chemicals
    • health technologies
  • AND IF the acquired undertaking
    • operates in the Turkish geographical market (does not have to be in the exempted sectors above and does not necessarily have to be in significant scope)OR
    • conduct research and development activities in the Turkish geographical marketOR
    • provide services to Turkish users (does not have to be in the exempted sectors above and does not necessarily have to be in significant scope)

How it is related to pharma sector?

The Amendments introduced, particularly targeting technology companies to address killer acquisitions, have reverberated within the pharmaceutical sector. Notably, the health technology and pharmacology industries fall within the scope of the new merger control regime.

Until now, there have been limited number of decisions by the Turkish Competition Board in the pharmaceutical sector, which are outlined below. Since May 2022, we have witnessed decisions with justifications published for merger and acquisition transactions. Therefore, it is presumed that the actual number of such decisions is higher, given that the publication of reasoned decisions can take 8 to 12 months, indicating that there are still unpublished reasoned decisions.

Acquisition of sole control over Amryt Pharma Plc (“Amryt“) by Chiesi Farmaceutici S.p.A. (Board’s decision dated 16.03.2023 and numbered 23-14/240-78):

  • Amryt is a global biopharmaceutical company focused on rare disease treatments.
  • It has a portfolio of four licensed medicines and ongoing R&D programs.
  • It has a limited presence and revenue in Türkiye, primarily from one licensed medicine.
  • It is classified as a “technology undertaking” in pharmacology and healthcare technology sectors.
  • Transaction falls under turnover exemption.

Acquisition of sole control over IDV Holdings, Inc. (“IDV“) by Werfen S.A. (Board’s decision dated 22.12.2022 and numbered 22-56/874-360):

  • IDV provides serology-based reagents, equipment and molecular products for healthcare.
  • Its focus is on patient-donor compatibility and pre-transfusion testing.
  • It is categorized as a “technology undertaking” in pharmacology and healthcare technology.
  • Transaction falls under turnover exemption.

Acquisition of Pharmalex Holding GmbH (“PharmaLex“) by AmerisourceBergen Corporation (Board’s decision dated 23.11.2022 and numbered 22-52/775-319):

  • Pharmalex offers technology-enabled services in the pharmaceutical and life sciences industries.

Its services include pharmacovigilance project management, system installation, and audits.

  • It has limited activities in Türkiye.
  • It is classified as a “technology undertaking” in the pharmacology sector.
  • Transaction falls under turnover exemption.

Acquisition of Covetrus Inc. (“Covetrus“) by Clayton Dubilier & Rice LLC and TPG Inc. (Board’s decision dated 07.07.2022 and numbered 22-32/512-209):

  • Covetrus provides animal health technology and services globally.
  • Its activities in Türkiye are limited to import sales.
  • It also operates in the wholesale of animal health consumables and offer private label products.
  • It is categorized as a “technology undertaking” in pharmacology and healthcare technology.
  • Transaction falls under turnover exemption.

Conclusion

Pharmaceutical companies are typically multinational corporations. In the context of these firms, research and development activities are of paramount importance, and such R&D endeavors demand cutting-edge technology utilization. In the case of an acquisition within the pharmaceutical sector, if the target has operations in Türkiye, it is highly likely that this acquisition will fall within the “turnover exemption” framework adopted by the Turkish Competition Authority, owing to the global technology utilization by the target. This implies that pharmaceutical companies should be well-prepared for numerous acquisition notifications and paperwork in Türkiye.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

 

First published by Mondaq on 24 October 2023

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