• Introduction

The Turkish Competition Board (“Board”) recently published its reasoned decision, in which it granted unconditional approval to a proposed transaction regarding the establishment of a new joint venture exclusively dedicated to operating food and beverage areas at Antalya Airport by TAV Havalimanları Holding A.Ş. (“TAV”) and Fraport AG Frankfurt Airport Services Worldwide (“Fraport”). The transaction is based on the Shareholders’ Agreement to be executed between Fraport Turkey Havalimanı Yatırımları A.Ş., (“Fraport Turkey”, a wholly owned subsidiary of Fraport) and BTA Havalimanları Yiyecek ve İçecek Hizmetleri A.Ş. (“BTA”, a wholly owned subsidiary of TAV). Upon the Shareholders’ Agreement, following the consummation of the transaction, the joint venture will be jointly controlled by BTA and Fraport Turkey.

The Board reviewed the transaction within the framework of Act No. 4054 on the Protection of Competition (“Act No. 4054”) and Communiqué Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board (“Communiqué No. 2010/4”). In addition, the Board made assessments regarding an agreement dated 2008, concerning the transfer of the food and beverage areas at Antalya Airport, which had not been previously notified.

  • Procedural Background and Information on the Transaction

As an initial step, the Board examined the activities of transaction parties and determined relevant product and geographic markets. Accordingly, BTA is one of TAV’s subsidiaries established with the purpose of supplying products to food and beverage sections that TAV operates in Turkiye, while TAV is active in global airport operations. The other party to the joint venture, Fraport Turkey, is a special purpose vehicle established with the purpose of indirectly assisting Fraport’s operations in Antalya Airport, while Fraport is active in global airport operations. The joint venture to be established as a result of the transaction is planned to manage the operation of 28 new food and beverage points until 31.12.2026, and a total of 56 locations including newly opened areas after 01.01.2027.

While determining the relevant product market, the Board stated that the transaction was based on airport operation activities and considered Antalya Airport’s high passenger volume, intense international traffic, and global character, evaluating that the operation of food and beverage areas within the airport directly affects consumer preferences and that these areas are non-substitutable. Accordingly, the Board assessed that the “market for airport operations” and the “market for the operation of food and beverage areas in airports” could be defined as relevant product markets.

In terms of relevant geographic market, the Board stated that airports were controlled and highly secured areas where access was restricted. Considering both the traffic that can occur during entry to and exit from airports as well as the distance from city centres, the Board assessed that it would be irrational for a passenger to exit from an airport for its food and beverage needs. Therefore, by referring to its previous decisions, the Board limited the geographic market definition solely to Antalya Airport.

  • Assessment on the Agreement Signed between Fraport IC İçtaş and İçtur

Before delving into its substantive analysis on competitive concerns, the Board determined that the concession to operate Antalya Airport was held by FTA-1, which was jointly controlled by Fraport and TAV, while the food and beverage areas were operated by İçtur Yiyecek İçecek Hizmetleri Tur. San. ve Tic. A.Ş. (“İçtur”), under an agreement dated 2008 and made between İçtur and Fraport IC İçtaş Antalya Havalimanı Terminal Yatırım ve İşletmeciliği AŞ (“Fraport IC İçtaş”), having the concession of operating Antalya Airport before FTA-1. In this respect, the Board firstly assessed whether the said agreement could be considered as an acquisition.

Fraport IC İçtaş, which secured the concession of operation for Antalya Airport by winning the tender conducted by the General Directorate of State Airports Authority (“DHMI”) in 2007, was granted the direct right to operate various commercial areas within the airport. However, under a “Food and Beverage Areas Lease Agreement” signed on 25.06.2008 and renewed on 28.02.2014, the exclusive operation rights for the food and beverage sales points at Antalya Airport were transferred to İçtur.

Since the transaction covers the right to operate food and beverage areas, which constitute an important part of the airport operations to which turnover can be attributed, the Board assessed that the transaction could be considered within the scope of mergers and acquisitions. In addition, the Board also stated that in its previous decisions, similar transactions were examined within the scope of concentration control and such transactions were considered as acquisitions taking into account their capacity to generate turnover.

Pursuant to Article 2 of the Communiqué No. 1997/1  Concerning The Mergers And Acquisitions Calling For The Authorization Of The Competition Board (“Communiqué No. 1997/1”) and the relevant guidelines, the transfer of assets of undertakings or portions of their operating concessions that have the potential to generate turnover is deemed as acquisitions to the extent that it brings about a change of control, and such transactions are obliged to be notified to the Board. In this framework, the Board stated that the agreement regarding the operation of the food and beverage areas at Antalya Airport was of a similar nature, as İçtur not only had the right to operate these areas but was also obliged to pay rent based on a share of the gross sales generated from these areas, while all new areas, including the new terminals, would be leased exclusively to İçtur. Therefore, as a result of the transaction, the Board assessed that İçtur gained the ability to exert decisive influence in both de facto and de jure terms over the relevant operational areas, that a change of control thus occurred, and that this constituted an acquisition within the scope of Article 2 of Communiqué No. 1997/1. As a result, the Board indicated that parties failed to notify the transaction, which would lead to imposing administrative monetary fines.

While the transaction in question was subject to approval within the scope of Communiqué No. 1997/1, taking into account the eight-year statute of limitations period starting from the date of the transaction, the period for misdemeanour arising from the failure to notify the transaction expired within the framework of Article 20 of the Misdemeanours Law No. 5326. Accordingly, the Board determined that no administrative fine could be imposed on the parties for failing to notify the transaction to the Board.

  • Assessment of the Joint Venture

Following its assessment of the failure to notify, the Board examined the criteria of establishing a joint venture. In this respect, the Board examined whether the joint venture would be under the joint control of transaction parties and would be fully-functional. Based on the information and documents provided by the parties, the Board determined that TAV and Fraport would jointly control the joint venture by referring to the quorum of decision required for taking key strategic decisions. The Board then evaluated whether the joint venture would have sufficient resources to operate independently and would be dependent on parent undertakings for sales and after-sales operations. Accordingly, the Board determined that the joint venture would not have its own management dealing with daily affairs, many daily operations would be conducted by parent undertakings and corporate resource planning, auditing and IT systems of parent undertakings would be used. Moreover, the Board indicated that the sales operations would be mainly conducted by parent undertakings. Therefore, the Board concluded that the joint venture would not be fully-functional.

Under paragraph 18 of the Guidelines on Undertakings Concerned, Turnover and Ancillary Restraints in Mergers and Acquisitions, in case the joint venture is used as a means in an acquisition by the parent companies, for instance, if the joint venture is established only for the acquisition, is not full-functioning and does not start operating yet, the parent companies are considered as the undertakings concerned, not the joint venture. In this respect, the Board assessed that the undertakings concerned for the transaction in question would be TAV and Fraport, and not the joint venture.

  • Competitive Effects of the Transaction

Following its assessment on the criteria of joint venture, the Board examined the competitive effects of the transaction. The Board assessed that there was no horizontal overlap between parties’ activities in Turkiye, while it indicated that a potential vertical relationship could emerge. On the other hand, the Board assessed that as the operation of food and beverage areas would be conducted by undertakings other than the undertakings operating the airport, and these areas were operated by various globally well-known brands through the franchise system, the transaction would not lead to a dominant position or strengthen an existing dominant position in the market.

  • Conclusion

Following its assessments, the Board reached the following conclusions:

  • The Food and Beverage Areas Lease Agreement was considered an acquisition under Communiqué No. 1997/1. However, since the period for failure to notify the transaction had expired, no administrative fine was imposed.
  • The transaction concerning the acquisition of the operation of food and beverage areas at Antalya Airport by TAV and Fraport constitutes an acquisition under Communiqué No. 2010/4 and is subject to the Board’s approval.
  • Since the joint venture would not result in the creation or strengthening of a dominant position or the significant restriction of effective competition in any product or services market, the Board decided to grant unconditional approval for the transaction.

The Board’s decision is of importance as it both examines a transaction for failure to notify and analyses the criteria for being qualified as a joint venture.