Technology Undertaking Spotlight: TCA’s Post-Amendment Regulatory Landscape

Introduction

Digital markets have been shaping competition law and merger control, in particular, in various jurisdictions, including Türkiye. The “technology undertakings” exception to the merger control thresholds was introduced in Türkiye in 2022. The rationale for the exception concerning technology undertakings is to enable the Turkish Competition Authority (“TCA”) to assess the mergers and acquisitions by undertakings holding substantial market influence in the sectors such as digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agrochemicals, and health technologies—sectors capable of triggering disruptive innovation waves, even if a particular undertaking does not (currently) generate considerable turnover. If an undertaking is classified as a technology undertaking, the TCA stipulates that the concerned merger is subject to notification requirement, regardless of the Türkiye-related turnover thresholds that are normally evaluated. In that regard, the TCA requires all undertakings classified as technology undertaking to notify, without assessing their potential to trigger disruptive innovation waves.

Unlike the German and Austrian merger control frameworks, which have incorporated transaction value thresholds alongside turnover thresholds to pursue comparable objectives concerning the technology undertaking exception, the TCA has opted for this more distinct amendment. It has introduced an amendment that focuses solely on the nature of the undertaking as a technology undertaking, without considering its Türkiye-related turnover thresholds.

After the amendment, there were many published decisions regarding technology undertakings in 2023 and 2024. In fact, there has been an increase in the number of merger/acquisition decisions regarding undertakings operating in the technology sector. For example, as seen in the Decision Statistics of the TCA, the number of merger/acquisition decisions in the information technologies and platform services and telecommunications sectors increased from 31 in 2022 to 50 in 2023. Notably, during the first six months of 2024, this number has already reached 31, indicating a continuation of this trend. In that regard, numerous precedents have emerged within the designated categories, offering insight into how the TCA interprets and applies merger control thresholds in the realm of technology undertakings. This article provides an overview of the 2023 and 2024 case law for a better understanding the main sectors that are considered as technology undertaking related.

Sectors in Which an Undertaking Must Operate to be Considered as a Technology Undertaking Under TCA Case Law

According to Article 4/c of the Communique No.2010/4, a “technology undertaking” is defined as the undertakings or their related assets which are operating in the fields of digital platforms, software and gaming software, financial technologies, biotechnology, pharmacology, agrochemicals, and health technologies. Under this broad definition, it is clearly seen that regulating such various dynamic sectors, where technological innovations and market forces evolve rapidly, poses inherent complexities. This amendment also shows the proactive stance of the TCA in addressing the evolving needs of technology-related industries. The following merger clearance or rejection decisions of the TCA confirm that each of the undertakings operating in the mentioned sectors fall within the scope of the definition of a “technology undertaking”:

a. In 2023 and 2024, it is observed that most decisions by the TCA were made in connection with companies operating in the software sector within the scope of technology initiatives. In this context, the following were considered as being in the scope of technology undertakings by the TCA:

• providing integrated PDF productivity and e-signature tools to the customers through a desktop-based software suite (NITRO case),
• providing software services in areas such as multi-channel sales management, business partner management, mobile team management, warehouse and production management, collecting data from the field, supplying management for different needs of the sector (UNIVERA case),
• programming software development, developing simulation code and digital twin and related R&D activities (SIMULARGE case),
• operating in the field of fleet management services by providing services on safe and efficient driving and driver behaviour analysis (IUGO case),
• operating in the field of software by providing computer and network security solutions for businesses (CYBEREASON case),
• providing fixed wireless network hardware and related accessories to expand the network coverage area of such fixed wireless access solutions through wireless technology by connecting to the wired network, and developing a special application for the installation of a special management software and devices (MIMOSA case),
• operating in the field of software by providing cyber security solutions (BEAM case),
• verification and calibration of software, continuous monitoring of software (ELLAB case),
• providing solutions as an end-to-end cloud-based service that enable companies to manage and improve the overall customer experience by providing a view of their customers’ interactions with them (such as support lines, sales emails and social media interactions) (QUALTRICS case),
• providing enterprise software and infrastructure software that allows customers to seamlessly route and integrate data flow within the scope of their operations (SOFTWARE AG case),
• conducting research and development activities on robotics and artificial intelligence/machine learning in the field of non-destructive testing, providing services with non-destructive testing solutions and systems in a wide range of industrial sectors such as power plants, storage facilities, energy production sectors, petroleum/fuel, natural gas through the Robotic Studies Business Line (AIS YAZILIM case),
• producing 2D animation and storyboarding software (TOOM BOOM case),
• providing endpoint security software (TRAPMINE VARLIKLARI case),
• helping companies with large-scale OT networks realize the benefits of Internet of Things technology in the industrial field by reducing cyber risks and mitigating operational threats, specializing in cyber-physical security solutions in the software domain for OT and industrial control system products in various industries (SCADA case),
• operating in data labelling market for artificial intelligence companies (CO-ONE case),
• providing software services for warehouse operations (HAMUR-LABS case),
• providing software solutions to the travel industry (IBS case),
• providing security services and products such as DDoS mitigation, network security and SOC/SIEM services (LUMEN case),
• computing, cloud programming, industrial internet networking, 5G broadband, digital platform development, information systems operation and maintenance, data storage, artificial intelligence solutions and information security solutions (H3C case),
• operating in the field of software solutions for advanced scheduling, capacity planning, supply chain planning, optimisation solutions and workforce planning (ICRON case),
• operating in the supply of information technology operations management software and in the health and performance analytics segment, and to offer health and performance analytics solutions through a cloud-based software platform (NEW RELIC case),
• being an enterprise architecture management (EAM) software provider (LEAN IX case),
• operating in online learning software activities (KAHOOT case),
• developing digital accessibility solutions for undertakings to streamline and automate the process of creating and delivering an accessible online user experience for people with disabilities (NEOGAMES case),
• operating in the production market of software for use with agricultural equipment (including software that helps to plan, process, track and record all field operations so that farming data can be managed) and intelligent spraying systems (TRIMBLE SOLUTIONS case),
• providing solutions to help corporate users monitor the performance and security of their digital systems (SPLUNK case),
• providing information technology support to insurance companies, health institutions, pharmacies and bank funds, as well as providing labour leasing services to insurance companies for operational activities such as provisioning, compensation and contracted institution service management (COMPUGROUP MEDICAL case),
• operating in e-commerce integration software service activities (PROPARS case),
• operating in the fields of integrated energy management and software services and battery and battery technology production (INAVITAS case), and
• providing tools for system application development and re-platforming of mainframe and other legacy IT technologies with a focus on modernization support (AMC case).

b. In the game software sector the TCA decided that the following areas are to be captured within the definition of “technology undertaking”:

• game development and publishing, game distribution, sale of licensed products, online display advertising,
• operating in the mobile games market, console games market and computer games market,
• creation, development, and broadcasting of mobile games, and
• providing content and technological solutions for the online gaming industry.

c. The TCA assessed the following companies operating in the digital platform sector as being within the scope of the definition of “technology undertaking”:

• social networking, online advertising and data licensing services, developing mobile-first game and publishing,
• providing online platform services for real estate sales/rental activities,
• operating in the market of online HSH tools, which are online educational resources made available to users via a mobile application or a desktop/mobile browser,
• being a cryptocurrency exchange platform,
• being a digital platform that helps health professionals such as doctors, veterinarians, dentists, physiotherapists, psychologists and dieticians to meet online with users anywhere in the world,
• being an entertainment platform and media service provider providing services with real-time data streaming and subscription-based on-demand viewing model,
• acquisition, development, maintenance and leasing of data centre facilities,
• being an e-commerce platform that lists and sells products of different brands in the categories of clothing, shoes, bags and accessories on its website,
• being a real estate information and marketing platform, and
• operating in the field of travel agency services, ticket reservation procedures and ticket sales for air, sea, land, railway transportation, wholesale or retail sales of travel, tour, transportation and accommodation services.

d. Also, with respect to the financial technology sector, the TCA determined that the following activities would be captured as “technology undertakings”:

• developing a digital finance application for international money transfers, and
• serving as an interface provider within the scope of contracts to be concluded with banks, electronic money and payment services companies and organisations providing retail investment services, operating mainly in the fields of banking, crypto and financial investment services and insurance services as the designer and developer of relevant applications.

e. When the decisions in the health technologies sector are reviewed, the following are all considered to be in the scope of the definition of a “technology undertaking”:

• being a medical device company focused on developing, manufacturing, selling and providing procedural solutions for spine surgery, providing spine surgery solutions, including surgical access instruments, spinal implants, fixation systems, biologics and enabling technologies, as well as imaging, navigation and intraoperative products,
• developing drug-eluting balloon catheters and non-drug-eluting balloon catheters for patients with coronary and peripheral artery disease,
• making direct and indirect sales and after-sales services of products in Türkiye in the pharmaceutical, food, beverage and chemical sectors as well as filter and filtration technologies (medical device sector),
• being a contract research and commercialization company which serves pharmaceutical and biotechnology companies,
• being a business line consisting of assets related to health technologies, and
• being a healthcare company providing respiratory care services for personal and professional use, providing healthcare technology services by producing software and hardware solutions for respiratory diseases.

f. In the biotechnology sector, in 2023 and 2024, decisions confirmed that the following were considered “technology undertakings”: selling diagnostic products (especially chemistry/haematology equipment and reagents), producing bioplastics and developing biochemical and bioproducts from renewable resources, and operating in the field of oncology medicines. Additionally, providing medical diagnostic services and specialised diagnostic services for the human pharmaceuticals sector is regarded as operating in the biotechnology and health technologies sectors.

g. In addition, in the pharmacology sector, the provision of generic and biosimilar medicines through business-to-business licensing and product supply agreements was considered to a “technology undertaking”. Relatedly, operating in the production of pigments, dyes, optical brighteners, industrial nitrocellulose, solvents and organic main products was classified as a “technology undertaking” under the pharmacology and agrochemicals sector.

h. Moreover, it is possible for the companies to operate across multiple sectors. For instance, one company was operating through a set of portfolio companies, which were active in areas such as automotive, welding technology, laser and photonic solutions, the purchase, processing, blending, and packaging of nuts and similar products, communication systems, software, and construction. That company was considered to be operating in software, digital platforms, biotechnology, pharmacology and health technologies sectors as it operated through its portfolio companies.

i. Although the information technologies sector is not explicitly referenced in the Article 4/c of the Communique No. 2010/4, certain decisions of the TCA have categorized the following within this sector and considered them as technology undertakings:

• providing media intelligence and social analytics services through online news, social media, print, broadcast and podcasts on a global scale, analysing online documents and enabling public relations, communications and marketing professionals to make informed strategic decisions and
• providing technologies for public meetings, events and hospitality services.

Conclusion

The amendments made in Communique No.2010/4 in 2022, specifically concerning technology undertakings, mark a significant shift in the TCA’s approach towards regulating concentrations. By exempting technology undertakings from certain traditional turnover thresholds, the TCA aims to address the unique challenges posed by the rapidly evolving industries.

Throughout 2023 and 2024, numerous decisions were adopted within various technology sectors, shedding light on the TCA’s interpretation and application of this regulation. Sectors such as software, game development, digital platforms, financial technology, health technologies, biotechnology, and pharmacology were all subject to examination under this framework. The TCA remains vigilant, closely following technological market developments globally. However, the definition of a technology undertaking still warrants further elaboration, requiring careful evaluation. It is important to note that even though the Turkish turnover of a target considered as a technology undertaking is negligible, the acquirer will be obliged to notify the transaction without considering whether there is a market share threshold or affected market presence. In this respect, if mergers and acquisitions subject to authorization are executed without obtaining the authorization of the TCA, administrative fines will be imposed on the undertakings.

Notably, the TCA’s proactive interventions demonstrate a commitment to fostering competition and innovation while ensuring market stability in dynamic technological landscapes. The decisions rendered in 2023 and 2024 provide valuable insights for businesses operating within these sectors, emphasizing the importance of compliance and strategic considerations in navigating merger and acquisition activities in Türkiye’s technology markets.