OECD kpcdb

1. Scope

 

Article 28 prohibits a business from conducting mergers, dissolving companies or acquiring shares of other enterprises if the conduct can cause monopolistic practices and/or unfair business competition.

2. Notification

Indonesia has adopted a unique combination of a voluntary pre-merger notification (consultation), and a compulsory post-merger notification. Thus mergers, consolidations and acquisition can be voluntarily notified pre-completion and must be notified post-completion to the KPPU.

 

The Government Regulation No. 57 of 2010 about Merger and Acquisition sets forth thresholds for notification: the combined value of the assets exceeds IDR 2.5 trillion (or IDR 20 trillion for banks); and/or the combined value of the sales turnover exceeds IDR 5 trillion.

 

This Regulation also sets out that a notifiable transaction is one which constitutes a change of control, meaning ownership of shares or voting rights above 50% in a business entity, ownership or control of shares or voting rights with the ability to influence or determine management strategies or management of a business entity.

 

Notification obligation does not apply to mergers between affiliated business actors, which is defined as mergers between companies with direct or indirect control under Article 7 of the Regulation. However, mergers carried out by companies owned by SOEs are not treated as mergers between affiliated business actors.

 

The formation of a new joint venture is not subject to notification, unless it is structured through an existing company.

3. Procedural rules

Under Article 29 of the Competition Law, merging parties should notify the KPPU within 30 working days after the merger has legally taken effect.

Review of the merger notification is made by the KPPU within 90 working days from the date of receipt of complete form and documents.

4. Assessment

In reviewing a merger and whether it will lead to a risk of monopolistic practices or unfair business competition, the KPPU looks into five aspects, namely changes in the level of concentration, barriers to entry, potential for anti-competitive behaviour, efficiency, and the failing firm defence.

 

The first step is to determine the level of concentration; the KPPU uses the Herfindahl-Hirschman Index (HHI). Depending on the market concentration, two spectrums are used: HHI under 1800 (Spectrum I) for less concentrated markets; HHI more than 1800 (Spectrum II) for a highly concentrated market. The KPPU considers that a merger may raise competition concerns when the changes in HHI reach more than 150 in a concentrated market.

 

Government Regulation No. 57 of 2010 and Commission Regulation No. 2 Year 2013 provide guidance on how the merger assessment is conducted.

The KPPU has not as of yet blocked any proposed mergers.

5. Remedies and sanctions

Where the KPPU determines that a merger may lead to monopolistic practices and or unfair competition, the parties are asked to submit proposals for remedies. The KPPU Merger Guidelines provide a procedure for remedies.

Remedies may include divestiture of certain affiliated businesses or behavioural commitments from the merging parties.

 

Under Article 47(2), administrative sanctions may be imposed, such as fines (see Section I.4), annulment of a merger, cease and desist orders and compensation for losses caused.

 

Under Article 48, violations of Article 28 are subject to a criminal fine between IDR 25 billion and IDR 100 billion, or imprisonment up to 6 months.

 

Failure to notify: The failure to notify or late filing may be subject to fines. This is further regulated by Article 6 of Government Regulation Number 57 Year 2010, which states that the enterprise that did not notify their transaction shall be subject to a sanction in the form of administrative penalty in the amount of IDR 1 billion for each day of delay, provided that the maximum amount of administrative penalty shall be in the amount of IDR 25 billion.

 

 

* This information is based on Competition Law in Asia-Pacific: A Guide to Selected Jurisdictions (2018).