Peraturan KPPU No. 3 Tahun 2023 The New Revamped Merger Control Regulation in Indonesia

Table of Contents

1. General Overview
2. The Applicable Threshold and Calculation of the Asset Value and Sales Value
3. Foreign to Foreign Merger Transaction
4. The Exemption of Notification to KPPU
5. The Notification System and the Delay of Notification by Business Actors
6. The Notification System and the Delay of Notification by Business Actors

General Overview

The Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha – "KPPU") issued KPPU Regulation No. 3 of 2023 on 30 March 2023 concerning the Evaluation of Merger, Consolidation, or Acquisition of Shares and/or Assets which May Result in Monopolistic Practices and/or Unfair Competition ("KPPU Reg 3/2023"), and shall be effective from 31 March 2023.

In this ARMA Update, we outlined the key changes of merger control regulation based on KPPU Reg 3/2023, including (i) threshold and calculation of asset and sales values, (ii) foreign-to-foreign merger transaction, (iii) the exemption of notification to KPPU, (iv) and the notification system itself.

The Applicable Threshold and Calculation of the Asset Value and Sales Value

The obligation of KPPU notification only applies for: ¹ a) business actors that receiving the merger; b) consolidated business actors; c) business actors that conducting share acquisition; or d) business actors conducting asset acquisition. Such notification is obligated to be deliver no later than 30 (thirty) days from when the Merger, Consolidation, or Acquisition of shares and/or assets is legally effective. ²

It is to be noted that the obligation to notify KPPU for business actors that conduct mergers, consolidations, or acquisitions shall be measured by the specific threshold and calculation of asset value and sales value, as explained below: ³

1. Threshold asset value The limit on the assets value of a business actor resulting from the merger, consolidation, or acquisition of shares and/or assets exceeds Rp2,500,000.000,000 (two trillion five hundred billion Rupiah). The value of the assets is the value of the assets in the territory of the Republic of Indonesia in the last year before the transaction date.

2. Threshold sales value The limit on the sales value of business actors resulting from the merger, consolidation, or acquisition of shares and/or assets exceeds Rp5,000,000.000 (five trillion Rupiah).

3. Threshold asset value and/or sales value for business actors running banking business The limit on the value of assets and/or sales value in the case of transactions carried out by business actors engaged in the banking sector if the value of business actors' assets resulting from the merger, consolidation, or acquisition of shares and/or assets exceeds Rp20,000,000,000,000 (twenty trillion Rupiah).

Foreign to Foreign Merger Transaction

The notification obligations to KPPU also applies to the foreign-to-foreign merger transaction, which both of such foreign entities have/own the assets and/or generate sales in Indonesia. Therefore, both parties to the merger must have assets and/or generate sales/turnover in Indonesia. If only one of the entity that owns the assets and/or generates sales in Indonesia, it is not required to be notified KPPU. ⁴

The Exemption of Notification to KPPU

Below is a specific exemption of notification by business actors to KPPU:

- Transaction of an Affiliated Business Actors

If a merger, consolidation, or acquisition of shares and/or assets is carried out between affiliated business actors, the business actor is not required to submit a notification to the KPPU. The relationship between affiliated business actors can be in the form of the following: ⁵

1. relationship between business actors, either directly or indirectly controlling or being controlled;
2. relationship between 2 (two) companies controlled either directly or indirectly by the same party; or
3. relationship between the company and the main shareholder.

- Meets certain Conditions of Asset Acquisition Transactions

The asset acquisition transactions that are exempt include: ⁶

1. the transaction value of less than Rp250,000,000,000 (two hundred and fifty billion Rupiah);
2. the transaction value is less than Rp2,500,000,000,000 (two trillion five hundred billion Rupiah) if the business actor is engaged in the banking sector;
3. transactions carried out in the context of routine transactions; or
4. assets that do not correlate with the business activities of business actors taking over assets.

The Notification System and the Delay of Notification by Business Actors

Business actors are required to submit notifications through the notification system through the KPPU website: notification.kppu.go.id. ⁷

The delay of notification will lead to an investigation by KPPU that has the authority to investigate allegations of such notification delays in the case of: ⁸

1. Business actors do not submit notifications, and it has passed 30 (thirty) days from the legally effective date; or
2. Business actors submit notifications, but it has passed 30 (thirty) days from the legally effective date.

In general, the sanction of notification delay to the business actor is in the form of fines, which fines will differ for each business actors, depending on the result of an investigation of allegation conducted by KPPU.

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1. Article 13 of KPPU Reg 13/2023↩

2. Article 2(2) of KPPU Reg 3/2023↩

3. Article 6 of KPPU Reg 3/2023↩

4. Article 3(1)(d) of KPPU Reg 3/3023↩

5. Article 10 of KPPU Reg 3/2023↩

6. Article 12 of KPPU Reg 3/2023↩

7. Article 13 KPPU Reg 3/2023↩

8. Article 46 of KPPU Reg 3/2023↩

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Disclaimer:
This client update is the property of ARMA Law and intended for providing general information and should not be treated as legal advice, nor shall it be relied upon by any party for any circumstance. ARMA Law has no intention to provide a specific legal advice with regard to this client update.

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