Necessity of a Broader Market Definition in the Analysis of Syndicated Loans Markets

European Competition Law Review. Vol. 40, Issue 11, pp. 547-55

Posted: 5 May 2019 Last revised: 9 Dec 2019

See all articles by Emin Köksal

Emin Köksal

Bahcesehir University

Sahin Ardiyok

BASEAK Attorney Partnership

Date Written: 2019


Market definition is the indispensable part of a competition analysis since it draws the boundaries of the market on two axes; product and geography. As it is accepted in the antitrust economics literature, from a methodological perspective the market definition is an instrument to properly reduce the complexity of market interaction. While a narrow market definition may ignore the products and the geographic areas that may exercise competitive constraints; a broad market definition may fail to discover anticompetitive behaviors properly. The main purpose of this study is to emphasize a proper market definition to assess the multilateral loans, including syndicated and club loans.

In the study, to assess the relevant market definition for the multilateral loans, demand-side and supply-side substitutability are used as the main tools which are also mentioned in the guidelines of competition authorities. Based on the relevant economics and finance literature, we put the following findings:

• Both on the demand-side and on the supply-side there are financial products that may exercise competitive constraints on corporate multilateral loans. For the borrowers, which might be financial institutions as well as large companies, syndicated loans and corporate bonds are two direct substitutes. Especially, for large companies, availability of substitutes increases through sophisticated debt instruments, such as medium term notes. On the supply-side, bilateral lending seems to be the closest substitute of multilateral lending.

• Corporate multilateral loans have significant international characteristics and they cannot be isolated in any national border. While the companies and the financial institutions may borrow from domestic and foreign banks, banks may syndicate a loan to borrowers in any country. As the financial markets, have become more integrated geographically, the share of foreign banks in multilateral deals has increased gradually. Especially for emerging countries, like Turkey, the international multilateral loans have gained a critical importance to finance the domestic investments.
Based on the above findings, to assess the investigated case, two main remarks appear that emphasize the necessity of a broader market definition for corporate multilateral loans:

• Multilateral loans that includes the syndicated and club loans cannot be defined as a separate market independent from other substitute debt instruments, such as corporate bonds and medium term notes.

• Such loans cannot be isolated from foreign markets and foreign lenders. The effective geographic market definition should be at the international level.

Keywords: market definition, syndicated loan, competition law, antitrust, corporate finance

JEL Classification: L40, G30

Suggested Citation

Köksal, Emin and Ardiyok, Sahin, Necessity of a Broader Market Definition in the Analysis of Syndicated Loans Markets (2019). European Competition Law Review. Vol. 40, Issue 11, pp. 547-55, Available at SSRN: or

Emin Köksal (Contact Author)

Bahcesehir University ( email )

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Istanbul, 34353
2123810000 (Phone)

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Sahin Ardiyok

BASEAK Attorney Partnership ( email )

Büyükdere Caddesi Bahar Sokak No.13
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Istanbul, 34394
+90 212 329 30 85 (Phone)

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