Antitrust: Merger Control
Q: Could you provide an overview of the antitrust authority in your jurisdiction? What are its powers and scope of work in relation to merger control?
A: In the jurisdiction of Indonesia, the antitrust authority shall be under the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or “KPPU”), which established based on Presidential Decree No. 75 of 1999 on KPPU, as amended by the Presidential Regulation No. 80 of 2008 on Amendments of Presidential Decree No. 75 of 1999 on KPPU, with the main purpose of monitoring and supervising the implementation of Law No. 5 of 1999 on Prohibition of Monopolistic Practices and Unfair Business Competitionas amended by Law No. 6 of 2023 on the Stipulation of Government Regulation No. 2 of 2022 in Lieu of Job Creation Law to Become Law ("Competition Law”), the core regulation on antitrust in Indonesia.
KPPU’s powers in relation to merger control that may lead to Monopolistic Practices and/or Unfair Business Competition ("MPUBC") are mainly:
- Receiving reports from the public and/or business actors regarding allegations of MPUBC;
- conducting research regarding the possible existence of MPUBC
- conducting the investigation and/or examination of allegations in MPUBC cases
- invoking and presenting the witnesses within the provisions of the law;
- seeking the assistance of investigators in presenting the business sector, witnesses, expert witnesses, or any intended person who are not prepared in response to the Commission’s summons;
- requesting the government statement in the investigation of business actors who violate Competition Law;
- obtaining, examining, and assessing the documents or evidence for investigation purposes; • confirming the existence or non-existence of losses suffered by other business actors or the public;
- informing the business actors allegedly engaged or engaging in MPUBC; and
- imposing the administrative sanctions on business actors who violate Competition Law
(Article 36 of Competition Law)
KPPU’s scope of work covers:
- evaluating the agreements leading to MPUBC, including oligopoly, price fixing, dividing territories, boycott, cartel, trust, oligopsony, vertical integration, exclusive dealing, or agreements with foreign parties;
- conducting evaluations of business activities, actions, or business actions that can lead to monopoly, monopsony, market control, conspiracy;
- acting in accordance with KPPU’s powers/authorities;
- providing the advices and opinions regarding the government policies related to MPUBC;
- preparing the guidelines and/or publications related to the law; and
- submitting periodic reports on the results of KPPU’s work to the President and related legislative institutions.
(Article 35 of Competition Law)
Q: What is the threshold for a merger to come under scrutiny in your jurisdiction? Does this threshold depend on financial figures or other criteria?
A: Article 2 of Regulation of the Commission for the Supervision of Business Competition No. 3 of 2023 regarding the Assessment of Mergers, Acquisitions, or Consolidations resulting in Monopolistic Practices and/or Unfair Business Competition (“KPPU Regulation 3/2023”) stipulates that any Merger, Consolidation, or Acquisition meeting the provisions of mandatory Notification must be reported to KPPU.
It is obligatory for the parties to notify KPPU if their merger, consolidation, or acquisition:
- meets the threshold of assets and/or sales values;
- has a change of control in the company;
- is not a transaction between affiliated Business Actors; and
- is a transaction between Business Actors who own assets and/or shares in Indonesia.
(Article 3 (1) of KPPU Regulation 3/2023)
The business transaction through merger, acquisition, and/or consolidation must be notified to KPPU if the value of assets and/or sales caused by the transaction exceeds the appropriate limit.
Please note that in accordance with Article 5 of Government Regulation No 57 of 2010 on Merger or Consolidation of Business Entities and Acquisition of Shares of Companies that may result in Monopolistic Practices and Unfair Business Competition (“GR 57/2010”), any transaction that exceeds the limit must be informed to KPPU no later than 30 (thirty) days after the enactment of the transaction
Article 6 of KPPU Regulation 3/2023 stipulates that the amounts of assets or sales values that must be notified to KPPU are:
- the asset value exceeding IDR 2.5 trillion; or
- the sales value exceeding IDR 5 trillion.
Business Actors in the banking sector need to notify KPPU if the asset value is more than IDR 20 trillion.
The change of control above refers to any change of the controlling Business Actor from:
- the one conducting the Merger to the one receiving the Merger;
- the one conducting the Consolidation to the one becoming the controlling Business Actor due to the Consolidation;
- the one whose Shares are acquired to the one conducting the Acquisition of Shares;or
- the one whose Assets are acquired to the one conducting the Acquisition of Assets.
(Article 9 (1) of KPPU Regulation 3/2023)
Q: What kind of transactions are subject to merger control in your jurisdiction? Are there any types of transactions that are excluded?
A: Subjects to merger control in Indonesia include three types of transactions that may lead to MPUBC:
- acquisition; and
For further elaboration please refer to the above.
(Article 28 of Competition Law)
Below are the types of transactions that excluded from the merger control subjects:
- any transaction with a value of less than IDR 250 billion;
- any transaction with a value of less than IDR 2.5 trillion if the Business Actors are engaged in the banking sector;
- any routine transaction; or
- assets that are unrelated to the activities of Business Actors who acquire them.
(Article 12 of KPPU Regulation 3/2023)
Q: How is "control" defined in your jurisdiction in relation to merger control? What criteria does the regulatory authority use to determine whether a party has control in a transaction?
A: The Indonesian Competition Law is silent in defining “control” in relation to merger control. However, Article 9 (2) of KPPU Regulation 3/2023 refers to a controlling Business Actor as:
- a Business Actor who owns more than 50% Shares or controls more than 50% Votes in the Business Entity; or
- a Business Actor who owns the Shares or controls the Votes of less than or equals to 50%, but influences and determines the policies and/or management of the Business Entity.
Q: How long does the merger review process typically take in your jurisdiction? Are there any mandatory waiting periods?
A: Usually, KPPU will review the merger after the transfer of shares and/or assets of the company is juridically complete and allegedly resulting in MPUBC.
Please note that the review process will be carried out within a maximum period of 90 days, and will consist of initial and/or thorough assessments.
(Article 18 (2) of KPPU Regulation 3/2023)
at such, there are no mandatory waiting periods for the merger review process. KPPU will examine the completeness of the notification submitted by the Business Actors in no later than three days before the commencement of the merger review process.
(Article 16 (3) of KPPU Regulation 3/2023)
Q: What are the possible outcomes of the merger review process? What can firms expect if their merger is approved, conditionally approved, or rejected?
A: The outcomes of KPPU’s merger review process shall be in the form of a certificate stating
- there are no allegations of monopolistic and/or unfair business activities caused by the transfer of assets and/or sales; or
- the existence of alleged monopolistic practices or unfair business activities due to the transfer of assets and/or sales
(Article 20 (4) of KPPU Regulation 3/2023)
If the initial assessment certifies the existence of alleged MPUBC, KPPU shall proceed to the next stage of conducting the thorough assessment.
(Article 20 (5) of KPPU Regulation 3/2023)
If the outcome of the initial assessment is an alleged delay in the submission of Notification by the related Business Actor, KPPU would recommend an investigation into the alleged late Notification submission.
(Article 20 (7) of KPPU Regulation 3/2023)
Q: What penalties can be imposed if a merger that should have been notified to the antitrust authority was not? And in case of gun jumping?
A: A Business Actor who does not comply with Article 6 GR 57/2010 by failing to meet their obligation to notify KPPU on the assets/sales that exceed the appropriate limits may be subject to a fine of IDR 1 billion for each day of notification delay, with the provision of an administrative fine of up to IDR 25 billion.
Since Indonesia uses the post-merger notification, Indonesia does not have any specific regulation for a matter of gun-jumping. However, any activity of a Business Actor allegedly causing MPUBC can be observed by KPPU.
Q: How to negotiate remedies and merger consent decree with the authority?
A: Prior to the amendments of KPPU regulations, there were no specific regulations regarding remedies and merger consents in Indonesia. However, Article 30 of KPPU regulation 3/2023 stipulates actions that can be taken by business actors for such remedies and merger consents, including:
- approving KPPU’s decision;
- entirely rejecting the decision;
- A Business Actor rejecting the decision must submit the legal, economic, and/or technical considerations regarding the rejection; or • partially rejecting the decision.
The article above was prepared by Marshall S. Situmorang (Partner) and Audria Putri (Senior Associate).