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In the business world, business actors often engage in mergers, consolidations, and the acquisition of shares and/or assets. These are some strategies that business actors use to increase market share, achieve growth/expand their business more quickly and effectively, strengthen their business, and reduce the risk of bankruptcy by utilizing the assets and/or resources they possess.
In Indonesia, business actors that engage in mergers, consolidations, or acquisitions are required to notify or submit a written notification of such transactions to the Indonesian Competition Commission (“KPPU”). Business actors must submit this notification to KPPU no later than 30 days from the date the merger, consolidation, or acquisition of shares and/or assets legally takes effect.
This obligation is imposed to prevent monopolistic practices and/or the creation of unfair competition, particularly within the business sector in Indonesia.
So, what are the rules regarding the notification obligation to KPPU that business actors involved in mergers, consolidations, or acquisitions need to be aware of?
Here is the explanation.
Legal Basis
- Regulation of the Business Competition Supervisory Commission Number 3 of 2023 on Assessment of Mergers, Consolidations or Acquisition of Shares and/or Assets Which May Result in Monopolistic Practices and/or unfair Business Competition (“KPPU Regulation 3/2023”); and
- Government Regulation Number 57 of 2010 on Merger or Consolidation of Business Entities and Acquisition of Company Shares Which May Result in Monopolistic Practices and Unfair Business Competition (“GR 57/2010”).
A. GENERAL PROVISIONS
| General Provisions | Explanation | Legal Basis |
| Provisions on Mandatory Notification | a. Meet the threshold for asset value and/or sales value; b. There is a change of control; c. Not a transaction between affiliated business actors; and d. Transaction between business actors which own assets and/or sales in Indonesia. Business Actors are required to submit notifications to KPPU in the event of the acquisition of assets: a. Result in an increase in the ability to dominate a certain market by business actors conducting acquisition of assets; and b. Excluding exempted acquisition of assets transactions. | Article 3 of KPPU Regulation 3/2023 |
| Juridical Effective Dates | a. Limited Liability Company: 1) The date of approval of the Minister of Law and Human Rights (“Minister”) on the amendment to the articles of association in the event of merger; 2) The date of notification received by the Minister on the amendment to the articles of association in the event of acquisition; 3) The date of ratification of the Minister on the deed of establishment of the company in the event of consolidation. b. A Public Company toward a Public Company or a Closed Company toward a Public Company, or vice versa: 1) The date of the information disclosure letter on the implementation of the transaction is submitted to OJK in the event of merger, consolidation or acquisition of shares and/or assets; 2) The last date of payment of shares and/or other equity securities in the implementation of the pre-emptive rights in the event that the merger, consolidation or acquisition of shares and/or assets. c. Business Actors that are not in the form of limited liability companies: – The date of signing of the agreement by the parties in the event of merger or consolidation. In the event that a transaction has more than 1 (one) juridical effective date, the dated used for the notification assessment shall refer to the most recent date. | Article 4 of KPPU Regulation 3/2023 |
B. LIMITATIONS ON THE NOTIFICATION OBLIGATION
| Limitation on the Obligation | Explanation | Legal Basis |
| Limitations of the Obligation | a. The asset value of business actors resulting from the merger, consolidation or acquisition of shares and/or assets exceeds IDR2,500,000,000,000 (two trillion five hundred billion rupiah); b. The sale value of business actors resulting from the merger, consolidation or acquisition of shares and/or assets exceeds IDR5,000,000,000,000 (five trillion rupiah). c. Limitation on the value of assets and/or sales value in the event that transactions are conducted by business actors operating in the banking sector if the value of the assets of business actors resulting from the merger, consolidation or acquisition of shares and/or assets exceeds IDR20,000,000,000,000 (twenty trillion rupiah). | Article 6 of KPPU Regulation 3/2023 |
| Asset Value and/or Sales Value Calculation | Calculated based on the sum of: a. The asset/sales value of each business actors who conduct a merger, consolidation or acquisition of shares and/or assets; and b. Asset/sales values of all business actors that directly or indirectly control or are controlled by business actors who conduct a merger, consolidation or acquisition of shares and/or assets. The calculated asset/sales value shall be asset/sales value located within the territory of the Republic of Indonesia in the last year prior to the transaction date. | Article 7 of KPPU Regulation 3/2023 |
| Exempted Acquisition of Assets Transactions | Business actors are not required to make a notification if the asset acquisition transaction: a. transaction value is less than IDR250,000,000.00 (two hundred and fifty billion rupiah); b. transaction value of less than IDR2,500,000,000.00 (two trillion five hundred billion rupiah) in the event that Business Actors are engaged in the banking sector; c. transactions conducted in relation to routine transactions; or d. assets that are unrelated to the business activities of Business Actors who acquire Assets. | Article 12 of KPPU Regulation 3/2023 |
C. REQUIREMENTS FOR THE NOTIFICATION OBLIGATION
| Obligation Requirements | Explanation | Legal Basis |
| There is a Change of Control | a. In acquisition of shares, controlling business actors are: 1) Business actors who own shares or control the votes of more than 50% (fifty percent); 2) Business actors who own shares or control the votes are less than or equal to 50% (fifty percent) but may influence and determine the management policies and/or management of business entities. b. The change of control in the acquisition shall be a change of control over the transferred assets, not a change of control over the business actors whose assets are acquired. | Article 9 of KPPU Regulation 3/2023 |
D. NOTIFICATION SERVICES
| Notification Services | Explanation | Legal Basis |
| Business Actor Who are Required to Submit Notifications | a. Business actors accepting the merger; b. Business actors resulting from the consolidation; c. Business actors who conduct the acquisition of shares; or d. Business actors who conduct the acquisition of assets. | Article 13 Paragraph (1) KPPU Regulation 3/2023 |
| Notification System | a. Business actors submit the notification through http://notifikasi.kppu.go.id b. The submission of notifications is conducted under the following provisions: 1) Register an account using an active e-mail address; 2) 1 (one) account shall be used for 1 (one) transaction in the merger, consolidation or acquisition of shares and/or assets of companies; 3) Notifications are delivered daily through the notification system during the notification service hours starting at 09.00 WIB – 14.00 WIB; and 4) All information and documents submitted in the notification system shall use the Indonesian language. | Article 13 Paragraph (3) and (4) of KPPU Regulation 3/2023 |
| Responsibility for the Accuracy of Information and Documents | a. The accuracy of all information and documents shall be fully the responsibility of the business actors who conducted the notification; b. If there are errors in the information or documents provided in the notification, KPPU may cancel the notification registration and/or the assessment results. c. An investigation will be conducted regarding the cancellation of registration that causes a delay in notification. | Article 15 of KPPU Regulation 3/2023 |
| Examination of Completeness of Documents | a. The examination is conducted no later than 3 days after the notification is submitted. b. The examination results will determine whether the notification is complete or incomplete. c. If declared complete, KPPU will issue a certificate that must include the notification registration number and a statement on whether the notification is required or not. d. If the notification documents are declared incomplete, KPPU will provide a note on the deficiencies through the Notification System and send an email to the registered business for completion. e. The date the certificate is issued through the Notification System is considered the notification registration date and serves as valid proof of notification. | Article 16 of KPPU Regulation 3/2023 |
| Assessment | a. Initial assessment is conducted to: 1) Determine the relevant market for each business actor conducting transactions; 2) Determine whether or not the change in market concentration is significant before and after the transaction; and 3) determine whether or not there is any alleged delay in the submission of Notifications by business actors. b. Thorough assessment is conducted to assess the impact of transaction of: 1) In potential in resulting monopolistic practices and/or unfair business competition; or 2) No potential in resulting monopolistic practices and/or unfair business competition. The assessment is conducted within a maximum period of 90 days through the Notification System. | Article 19 Paragraph (1) & Article 22 Paragraph (1) of KPPU Regulation 3/2023 |
E. CONSULTATION
| Consultation | Explanation | Legal Basis |
| Written and Oral | a. Written consultations are conducted through the notification system, mutatis mutandis, with the notification procedures. The results of this consultation may be used in the notification process as long as there are no changes to supporting documents, for up to 1 year after the issuance of the certificate or KPPU’s decision. b. Oral consultations are carried out by business actors to obtain preliminary information from the KPPU regarding plans for mergers, acquisitions, or the acquisition of shares and/or assets. | Article 44 of KPPU Regulation 3/2023 |
F. INITIATIVE ASSESSMENT
| Initiative Assessment | Explanation | Legal Basis |
| KPPU Initiative or Proposal from the Head of the Work Unit | The assessment of the initiative is carried out if the business actor does not submit a notification. The assessment is based on: a. previous related notifications; b. information from the public; c. news from the media; d. official letters from government agencies; and/or e. other sources approved in a commission meeting. | Article 45 of KPPU Regulation 3/2023 |
G. INVESTIGATION OF SUSPECTED NOTIFICATION DELAYS
| Investigation of Suspected Notification Delays | Explanation | Legal Basis |
| KPPU is Authorized to Conduct Investigations | If the business: a. Submits a notification and 30 (thirty) working days have passed since the effective date; or b. Submits a notification but 30 (thirty) working days have passed since the effective date. | Article 46 of KPPU Regulation 3/2023 |
H. SANCTIONS
| Sanction | Explanation | Legal Basis |
| Sanctions Against Business Actors | Business actors who fail to submit notifications will be subject to an administrative fine of IDR 1,000,000,000.00 (one billion rupiahs) per day, with the total administrative fine not exceeding IDR 25,000,000,000.00 (twenty-five billion rupiahs). | Article 6 of GR 57/2010 |
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