Guidelines Projects On Commitments And Conditional Authorization – II

March 2011

In our last monthly Newsletter, the first part of the Guidelines Project on Remedies Acceptable by the Competition Authority in Merger / Acquisition Operations[1] (“the Guidelines Project”) which was submitted for public comment by being published in the official website of the Competition Authority on February 7, 2011, was examined. Within this scope, the characteristics of commitments and the different types of commitments, as well as their submission to the Competition Board (“Board”) and the sanctions in case of breach were examined.[2]

In our Newsletter this month, the different types of commitments stated in the Guidelines Project, their implementation, and their monitoring are analyzed in detail.

Types of Commitments

The Guidelines Project, like the Commission Notice on remedies acceptable under Council Regulation[3] (“the Notice”), mentions three types of commitments. However, parties are not limited by these commitments. As a matter of fact, they may also submit other commitments which may completely eliminate the competition concerns in the relevant market arising out of a concentration operation.[4]

The kinds of commitments set forth in the Guidelines Project are as follows:
Divestiture of a Business. The Guidelines Project states that

  • the whole divestiture of a viable stand-alone business in a market or
  • the grouping of various assets and/or the taking out of certain of these assets (“carve-out”) from an existing viable stand-alone business in a market

represent the most effective commitment to eliminate the competition concerns arising out of a concentration operation. For that reason, this kind of commitment is regulated in detail within the Guidelines Project.

The commitment related to the divestiture of a business may be acceptable if the business to be divested can continue to exist by competing effectively with the merged entity on a lasting basis and if it can be independent of the parties of the concentration, which means without needing any cooperation from them. For that reason, the financial resources of a potential purchaser are not taken into consideration in examining the commitment.

The following elements will be included in the commitment in order that the Board may appreciate the commitment:

Scope of the Business to be Divested.The Guidelines Project states that the content of the business to be divested must be well-defined and detailed. Within this scope, the content of the divestiture will include, with regards to the characteristics of each transaction, the tangible assets related to production, distribution or sale and also to the personnel or the current agreements on goods or services in order to ensure competitiveness of the business. In addition to these assets, intangible assets may also be included. The most important point concerning intangible assets is that the divesting parties must waive all their rights concerning these assets and that these assets will, once transferred to a suitable purchaser, immediately acquire a competitive and viable aspect. Indeed, as also mentioned above, what is important is that the business is a business capable of existing alone, which means a business which competes effectively with the merging parties and operates independently of them.

Non-reacquisition Condition. The Guidelines Project sets forth that in order to maintain the structural effect of the commitment the commitments have to foresee that the parties of the operation of the concentration cannot subsequently acquire influence over the whole or parts of the divested business.

Suitable Purchaser.A suitable purchaser is the key aspect of divestiture since the divested business may only maintain effective competition through a suitable purchaser. Therefore, the suitable purchaser should be independent of the parties and should have the financial resources, information, and eagerness necessary in order to compete with the parties and other competitors within the market sector of the business which is taken over. In addition, the suitable purchaser should not cause any delay on the realization of commitments and cause new competition issues. These conditions set forth concerning the suitable purchaser are, without any doubt, general conditions, and other conditions that the suitable purchaser should fulfill may be required with regards to the characteristics of each transaction.

Removal ofLinks with Competitors.The Guidelines Project sets forth that the commitment to remove any links between the Parties or competitors may be used in cases where these links contribute to competition concerns.

The Guidelines Project, as stated in the Notice, regulates the removal of links between the Parties by means of exemplification. Within this framework, it enumerates the transfer of minority shares, the elimination of cross-directing structures, or the termination of agreements concluded between competitors.

Other Non-Divestiture Remedies. The Guidelines Project, similarly to the Notice, sets forth three commitments other than the divestiture commitment:

Behavioral Commitments.The Guidelines Project sets forth that the behavioral commitments may only be accepted if it is impossible to implement a structural commitment. However, as is analyzed in our Newsletter of February 2011, behavioral commitments can be as effective as structural commitments. Therefore, the implementation of behavioral commitments cannot be conditioned on the non-availability of the structural commitment.

Granting of Access. The Guidelines Project sets forth that if the competition problems that occur as a result of a concentration operation cause foreclosure, the Parties may grant access to the key information such as infrastructure, networks, know-how, patents, or other intellectual property rights which will have the same effect as a structural commitment. Additionally, the Guidelines Project underlines that the commitments should include monitoring methods and devices, so that these commitments can be easily monitored.

Termination of Long-term Exclusive Agreements. Concentrations can cause existing contractual arrangements to be inimical to effective competition. This is in particularly true for exclusive long-term agreements. Therefore, the Guidelines Project regulates that the parties to the transaction may present the termination of these agreements as a commitment to the Board.[5] The Guidelines Project also obliges the parties to represent that the foreclosure effect is de facto removed.

Conditions that the Implementation of Commitments are Subject to. The Guidelines Project brings detailed dispositions on the implementation of commitment pertaining to the divestiture of business, and general dispositions on the implementation of the other commitments.

The relevant dispositions are as follows:
The Implementation of a Commitment Regarding Divestiture of a Business.The implementation of this commitment contains several phases.

Determination of a Suitable Purchaser. This phase contains two phases: the phase of the conclusion of a final agreement and the phase of finalization of divestiture.

The first phase, which is the conclusion of the final agreement, also contains two sub-phases. The first sub-phase entitled as “the period while the parties look for a suitable purchaser” should be completed within six months. If the parties do not succeed, the second sub-phase begins. In this period, a divestiture trustee obtains the mandate to divest the business at no minimum price and should find a suitable purchaser within three months.

Approval of the Purchaser and Purchase Agreement. The Board approves the purchaser and the purchase agreement.

The Board, while assessing the purchaser, considers the reasoned proposal of parties and the divestiture trustee and also the business plan of the proposed purchaser. Within this framework, the Board takes into consideration whether the purchaser has the necessary financial resources and can obtain all necessary approvals from the relevant regulatory authorities.

The Board assesses also the purchase agreement and all other agreements concluded between parties and purchaser. In this framework, the Board assesses whether these agreements comply with the commitments or not.
The Obligations of the Parties in the Interim Period. Certain obligations regarding an “interim period” are set forth by the Guidelines Project for the parties. This interim period is the phase between the conditional clearance decision and the divestiture of a business to a suitable purchaser. The obligations are as follows:

  • Steps for a Carve-Out. Divestiture of a business needs to be carved-out from the remaining businesses because the divested business has to stand alone in the market. In this framework, it is necessary to allocate the assets and the personnel to the divested business. The Guidelines Project also regulates that a divestiture trustee has to monitor this period and inform the Board in writing.
  • Interim Preservation of the Divested Business. It is the parties’ responsibility in the interim period to preserve the competitive potential of the business to be divested. In this regard, the parties are obliged to preserve all values regarding the divested business by acting wisely and by avoiding any kind of act which may result in a negative effect on the divested business.
  • Specific Obligations of the Parties. The Guidelines Project stipulates that the commitments should foresee that potential purchasers can carry out a due diligence exercise. It also stipulates that the parties and the divestiture trustee must inform the Board periodically and that the divestiture trustee must submit a final report to the Competition Board at the time of closing.

Divestiture Trustee. The divestiture trustee oversees the procedure on behalf of the Board. Because of this, the trustee is appointed by the parties and submitted for the approval of the Board within the shortest possible time following the conditional clearance decision of the Board. This time cannot be more than thirty days unless there is just cause for lateness. The parties will bear all the costs of the divestiture trustee regarding the processes of the divestiture.

The divestiture trustee will oversee the independent preservation of the business in the interim period and its transfer to a suitable purchaser under the conditions stated in the commitment.

The role of the divestiture trustee is terminated upon the submission of the document approving the closing of the divestiture procedure after the commitment is completely and correctly implemented.

Implementation of Commitments other than Divestiture. The Guidelines Project stipulates that the dispositions regarding divestiture commitment are to be taken into consideration for other commitments, if applicable.

The Guidelines Project, being in conformity with the Communication, stipulates also the grounds for arbitration, which will ensure implementation of the commitments by the market actors themselves and allow for the settlement of disputes between the parties and third persons in the phases of appointment of a trustee to oversee implementation of the behavioral commitments and implementation of the commitments.


The Guidelines Project enables ex post protection of competition instead of ex ante protection. Due to this fact, it must include all possible cases in practice and regulate in details the control of the commitments.


[1] To reach the Guidelines Project, see:
[2] To reach our last month Newsletter, see:
[3] Official Journal of the European Union, 2008/C – 267/01.
[4] The term “concentration” is used in the Guidelines Project instead of “mergers and acquisitions” and it is stated that the term “concentration” includes mergers and acquisitions and full-functional joint-ventures.
[5] Even the Guidelines Project stipulates annulment of exclusive agreements for a long time, the title of the section is “Remedies Including Modification of Exclusive Agreements for Long Time”.