Corporate M&A and Antitrust Regulations – Indonesia Legal Update

In Indonesia, antitrust regulations crucial for mergers and acquisitions include the following:

• Law No. 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition, as last amended by the Job Creation Law (Anti-Monopoly Law).

• Government Regulation No. 57 of 2010 regarding Mergers, Consolidations of Business Entities, and Company Share Acquisitions that could lead to monopolistic practices and/or unfair business competition.

• Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or KPPU) Regulation No. 3 of 2023 regarding the Assessment of Mergers, Consolidations, or Acquisitions of Shares and/or Assets that may result in monopolistic practices and/or unfair business competition (KPPU Regulation No. 3/2023).

The recently implemented KPPU Regulation No. 3/2023 introduced several changes to KPPU Regulation No. 3 of 2019 on the Assessment of Mergers or Consolidations of Business Entities or Acquisitions of Shares in Companies (KPPU Regulation No. 3/2019). These changes include the following.

Corporate Actions (Assessments of Mergers, Consolidations and Acquisitions of Shares and/or Assets Which May Result in Monopolistic and/or Unfair Business Competition Practices)

KPPU Regulation No. 3/2023 expanded the scope of criteria for corporate actions that must be notified to the KPPU, namely:

• meeting of the asset and/or sales value threshold;
• change of control;
• transactions that are not classified as transactions between affiliated actors;
• transactions between actors that own assets and/or make sales in Indonesia;
• asset acquisitions that increase the ability of business entities that acquire the assets to control certain markets; and
• asset acquisitions that are not classified as exempted asset acquisition transactions.

Submission of Notifications

Previously, under KPPU Regulation No. 3/2019, notifications were to be submitted to the KPPU using designated forms outlined in the regulation’s appendix, which were required to be filled out and submitted by mail. With the revised framework under KPPU Regulation No. 3/2023, notifications on corporate actions must be submitted electronically by business actors through the official notifications website of the KPPU.

The above regulations also establish that a post-merger filing obligation is mandatory for mergers, consolidations, or share acquisitions that meet certain criteria, known as the threshold test and control test. The head of the KPPU also provides specific guidelines under the Anti-Monopoly Law to prevent anti-competitive actions.

The threshold test mandates a post-merger filing if the transaction meets one of the following conditions:

• the combined asset value of the involved parties in Indonesia exceeds IDR2.5 trillion (about USD159 million); or
• the combined sales or turnover value of the parties in Indonesia exceeds IDR5 trillion (about USD318 million).

The control test specifies that a post-merger filing is necessary if the merged or surviving entity:

• holds more than 50% of shares or voting rights in the company; or
• holds 50% or less of shares or voting rights but has the capacity to influence the company’s management and/or policies.

Transactions between affiliated entities do not require a merger filing in Indonesia.

Excerpted from the Corporate M&A 2024 Chambers Global Practice Guide, published by Chambers and Partners.

Find Corporate M&A: Indonesia here.

Further reading:

Indonesia Competition Body Updates Online Notification System for Dual Nexus Assessment

This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user’s own risk. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.