• Introduction

The Turkish Competition Board (“Board”) recently published its reasoned decision, in which it granted unconditional approval to a proposed transaction regarding the acquisition of the trademark and license rights related to 15 products owned by the Sanofi Group companies, which are Sanofi Sağlık Ürünleri Ltd. Şti., Opella Healthcare Tüketici Sağlığı A.Ş., and Sanofi İlaç Sanayi ve Ticaret A.Ş. by Avixa İlaç Sanayi ve Ticaret A.Ş. (“Avixa”).

The transaction is based on the Asset Purchase Agreement signed between Avixa and the Sanofi Group. Since the transfer of assets results in a permanent change in control structure, the transaction is considered as an acquisition pursuant to Article 5 of the Communiqué Concerning the Mergers and Acquisitions Calling for the Authorization of the Competition Board (“Communiqué 2010/4”). Furthermore, the Board detected that the assets subject to acquisition were related to pharmacology and could be qualified as a technology undertaking. Under art. 7 of the Communiqué No. 2010/4, since the “250 million Turkish liras” turnover thresholds provided for in the same article would not apply to the target undertaking in transactions regarding the acquisition of technology undertakings, the proposed transaction is subject to the Board’s approval.

Before delving into the potential competitive effects of the transaction, the Board examined the parties’ activities. Avixa operates in the development, manufacture, sales and marketing of generic (equivalent) pharmaceuticals, while the target being the trademark and license rights for the 15 products owned by Sanofi Group.

  • Affected Markets of the Proposed Transaction

Within the scope of the information at hand, the Board determined that there was a vertical relationship between the free pharmacy market and pharmaceutical storage markets in which Avixa operated and the products subject to acquisition. In addition, the Board found that there was also a horizontal overlap in the market for ectoparasiticides containing scabicides that both parties had products. More specifically, the Board determined that Sanofi’s “Anti Bit Shampoo 4% 150 ML” and Avixa’s “Anti-Skab 5% Cream” and “Anti-Skab 5% Lotion” products belong to the same product market. After determining the affected markets, the Board assessed whether the proposed transaction would create any anti-competitive effect in the relevant product markets.

  • Assessment of Markets with Horizontal Overlap

In terms of the horizontally overlapped market, the Board noted that Sanofi Group operated in this market with its product “Anti Bit Shampoo 4% 150 ML,” whereas Avixa offered “Anti-Skab 5% Cream” and “Anti-Skab 10% Lotion” products.

Although Sanofi Group’s product is not currently manufactured or sold, the Board analysed the potential anti-competitive effect of the proposed transaction based on the market structure and concentration levels of parties. It noted that Avixa’s products and Sanofi’s shampoo fell under the same ATC-3 (P03A) and ATC-4 (P03AC) classifications. The sales values of the relevant products as well as the market shares of competitors and the overall market size are examined and as a result, the Board determined that Sanofi’s shampoo was not sold, distributed or marketed since November 2021 and thus the proposed transaction could have only a limited impact on the market. Furthermore, the Board noted that two major players, Ali Raif and Bikar İlaç, hold the highest market shares in this market. Given their strong presence and the prolonged absence of Sanofi Group’s product in the market, even in a scenario where the shampoo is reintroduced into the market, the Board assessed that the proposed transaction was not expected to raise significant competitive concerns or change concentration levels in the market.

  • Assessment of Markets with Vertical Relationship

Based on the information submitted, the Board determined that there was a vertical overlap between the pharmaceutical storage and free pharmacy markets in which the acquirer operated the acquired products. The acquired products constituted the upstream market, while the pharmaceutical storage and free pharmacy markets constituted the downstream markets. Considering the low market shares of the parties, the presence of numerous players in both upstream and downstream markets, and the competitive nature of the markets, the Board concluded that the proposed transaction could not lead to any input or customer foreclosure and thus would not create any anti-competitive effect.

  • Conclusion

Following its assessments, the Board concluded that the proposed transaction was subject to its approval pursuant to Article 7 of Law No. 4054 and the Communiqué No. 2010/4. Since the transaction does not result in a significant impediment of effective competition, the Board granted its unconditional approval to the proposed transaction.

The Board’s decision is of importance as it analyses both the horizontal and vertical overlaps between the transaction parties and includes assessments made within the scope of technology undertakings.