INDONESIA

Get in contact or get a price estimation from our partner in Indonesia Get in contact
Content last updated: 04-10-2019

Choose the type of information you seek

  • Merger Control Regime
  • Merger Screening
  • Merger Filing

1. Overall description of merger control regime

1.1 Supranationality

1.1.1 Is the jurisdiction a member of/party to a supranational jurisdiction?

No.

1.1.2 Is the jurisdiction itself a supranational jurisdiction?

No.

1.1.3 If the answer to Section 1.1.1 and/or 1.1.2 above is in the affirmative, what are the implications hereof?

Not applicable.

2. Nature of merger control regime

2.1 Mandatory or voluntary

2.1.1 Is filing mandatory or voluntary?

Filing (post-merger) is mandatory, while pre-merger consultation is voluntary, if the criteria described in Section 1.1.1 in the Merger Screening Schedule below are met.

2.2 Suspensory effect

2.2.1 Must completion of the transaction await clearance by the relevant authorities?

Indonesia currently applies a post-closing mandatory merger filing regime: notifiable transactions need to be reported to the Indonesian Business Competition Supervisory Board within 30 working days of the effective date of closing.

Since the current merger control regulation follows a post-transaction regime, there is no obligation to suspend the transaction pending the outcome of the notification, consultation or investigation.

However, the Indonesian Business Competition Supervisory Board may unwind or apply remedies to any transaction if in its opinion the transaction has an adverse impact on competition in Indonesia.

Post-closing notification is mandatory, but a pre-closing “consultation” is voluntary. The submission of a pre-closing consultation does not remove the post-closing notification obligation.

1. What type of transactions are caught by the merger control regime?

1.1 Concentrations

1.1.1 Type of transactions that are caught by the merger control rules?

Transactions that need to be reported to the Indonesian Business Competition Supervisory Board are share acquisitions (not asset acquisitions), mergers, or consolidations (merger) which:

a) meet the asset and/or revenue threshold referred to in Section 2.3.1 below;

b) are between non-affiliated parties - “affiliated” means (i) the parties are under common control, or (ii) one party controls the other;

c) results in a change of control (see the definition of “Control” in Section 1.3.1 below); and

d) specifically for foreign-to-foreign mergers, satisfy the local effect test.

Under the current Indonesian merger control regime, pure asset acquisitions and greenfield JV establishment are not reportable to the Indonesian Business Competition Supervisory Board.

Notwithstanding the above, the Indonesian Business Competition Supervisory Board may unwind or apply remedies to any transaction if in its opinion, the transaction has an adverse impact on competition in Indonesia.

1.2 Joint ventures

1.2.1 What types of joint ventures are caught by the merger control rules?

The Indonesian Business Competition Supervisory Board does not recognize a difference between “full function” and “non-full function” JVs. Currently, the creation of a greenfield JV involving no share acquisition and change of control is not reportable to the Indonesian Business Competition Supervisory Board.

1.3 Definition of "control"

1.3.1 How are the concepts of "control" and "change of control" defined?

“Controlis presumed to exist if:

a. share ownership or control of voting rights in a business entity exceeds 50%; or

b. share ownership or control of voting rights is less than or equal to 50% but has the ability to influence and/or determine the management policy of the business entity.

The Indonesian Business Competition Supervisory Board recognizes joint control situations, so change in control from sole control to be joint control, or vice versa, would fall within change of control situation.

1.4 Minority shareholdings

1.4.1 Are minority and other interests less than control caught by the merger control rules?

Acquisitions of minority or other shares interests that do not lead to an acquisition of control do not fall under the Indonesian merger control rules and are exempt from the Indonesian merger filing requirements.

2. Establishing jurisdiction for notification of mergers

2.1 Merging parties/undertakings concerned

2.1.1 Which undertakings are considered parties to the merger ("undertakings concerned") in the various types of transactions identified under Section 1.1.1 and 1.2.1.

In a merger, the “undertakings concerned” are each of the merging entities consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.).

In a consolidation, the “undertakings concerned” are the consolidating entities consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.).

In an acquisition of sole control, the undertakings concerned are the acquiring undertaking consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.) and the target undertaking (i.e. including its controlled subsidiaries but not including the seller). 

Meanwhile, in an acquisition of joint control, the undertakings concerned are the acquiring undertaking consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.) and the target undertaking (including its controlled subsidiaries) and the party(ies) (e.g. seller) retaining joint control consisting of all entities belonging to the same group (i.e. parent, subsidiaries, sister companies etc.).

The turnover of a joint venture is allocated to the turnover of the controlling party of such JV.

2.2 Date for establishing jurisdiction

2.2.1 Which date is relevant for concluding whether the transaction is notifiable?

As the current merger control regime in Indonesia is a post-merger regime, it does not matter when the transaction is concluded for it to be notifiable.

The deadline for submitting post-merger notification to the Indonesian Business Competition Supervisory Board is 30 working days as of the effective date of closing.

2.3 General thresholds

2.3.1 Threshold(s) for when a concentration must be notified under the general merger control regime?

A transaction should be notified to the Indonesian Business Competition Supervisory Board when meeting one of the following asset/turnover value thresholds:

a. the combined audited value of the Indonesian assets of the undertakings concerned exceeds IDR 2,500,000,000,000; or

b. the combined audited value of the Indonesian turnover of the undertakings concerned exceeds IDR 5,000,000,000,000, excluding exports sales.

In the event of a significant deviation of more than 30% between the most recent, completed financial year’s value and the previous 2 financial years’ value, the average value for the last three financial years should be used to determine whether the thresholds are met.

Notwithstanding the above, the Indonesian Business Competition Supervisory Board may unwind or apply remedies to any transaction if in its opinion, the transaction has an adverse impact on competition in Indonesia..

2.3.2 For each threshold, can the threshold be triggered by only one party having local turnover?

Yes. This also applies to the asset threshold, i.e. only one party satisfies the minimum asset amount referred to in threshold a) under Section 2.3.1 above.

2.3.3 For each threshold, can the threshold be triggered without any party having local turnover?

Yes, if the asset threshold is satisfied by any or both of the parties.

2.3.4 Are there any circumstances where transactions falling below these thresholds may be still investigated?

The Indonesian Business Competition Supervisory Board may unwind or apply remedies to any transaction, irrespectively of the thresholds in Section 2.3.1 above, if in its opinion, the transaction has an adverse impact on competition in Indonesia.

Foreign-to-foreign transactions falling below the thresholds may be investigated by the Indonesian Business Competition Supervisory Board if it, at its own discretion, is of the view that the transaction will have an impact on the domestic market.

2.4 Other national thresholds for ex ante merger control (e.g. sector-specific rules)

2.4.1 Relevant thresholds for sector-specific or other ex ante merger control rules?

Transactions in which two or more undertakings concerned are engaged in the banking sector are notifiable if the combined audited value of the Indonesian assets of the undertakings concerned exceeds IDR 20,000,000,000,000.

Threshold b) under Section 2.3.1 above does not apply to the banking sector.

2.4.2 Are any such schemes mandatory or voluntary?

Mandatory.

2.5 Foreign-to-foreign mergers

2.5.1 Do any exemptions, special thresholds etc. apply to foreign-to-foreign mergers, i.e. where none of the undertakings concerned is domiciled in the jurisdiction?

In general, in a foreign-to-foreign transaction which reaches either threshold in Section 2.3.1 above, the local effect test must be fulfilled to conclude whether the transaction is notifiable.

The “local effect”-test is satisfied if any of the following conditions exists (a reference to a party should be read as to a group of companies - the highest holding company down to all the controlled subsidiaries):

all the undertakings concerned do business in Indonesia, either directly or indirectly (for example, through controlled subsidiaries);

one of the undertakings concerned does business in Indonesia, while the other undertakings concerned do not but have sales to Indonesia;

one of the undertakings concerned does business in Indonesia and the other undertakings concerned do not but have a sister company which does business in Indonesia.

Notwithstanding the above, for foreign-to-foreign transactions the Indonesian Business Competition Supervisory Board has discretion to determine whether or not a transaction will have an impact on the domestic market.

3. Calculation and allocation of turnover, asset value, transaction value etc.

3.1 Relevant turnover

3.1.1 How is turnover defined (e.g. is income from other sources than "ordinary activities to be included, and how are rebates, taxes, internal turnover etc. treated)?

Despite the absence of a clear definition of the turnover value to be calculated under the Indonesian merger control rules, in general, the turnover value is the value calculated based on the latest audited Indonesian turnover values of the undertakings concerned (each as a group of companies), excluding export sales.

3.1.2 Identification and link to any official rules, guidance etc. on how to calculate turnover?

While there is no specific guideline/rule for calculating turnover, general guidelines on merger control in Indonesia are provided in the Indonesian Business Competition Supervisory Board’s Regulation Number 2 of 2013 on Guidelines on Mergers or Consolidations and Share Acquisitions which may Result in Monopolistic Practices or Unfair Business Competition.

This regulation is accessible at:

http://www.kppu.go.id/id/peraturan-merger/

http://eng.kppu.go.id/merger-regulation/

3.2 Relevant period for calculation of turnover

3.2.1 Which financial year(s) is relevant for the calculation of turnover?

In general, the turnover figures should be based on the latest financial year for which audited annual accounts exist.

In the event of a significant deviation of more than 30% between the most recent, completed financial year’s value and the previous 2 financial year’s value, the average value for the last three financial years should be used to determine whether the thresholds are met.

3.2.2 Should adjustments be made for e.g. divestitures, acquisitions, closings and other changes of the economic reality of the undertaking concerned made after or during the relevant financial year?

While the regulations are silent on this matter, the Indonesian Business Competition Supervisory Board might ask for additional information and/or documents from the parties following a notification and this information might be among the information that the Indonesian Business Competition Supervisory Board requests.

3.3 Relevant undertakings for the calculation of turnover

3.3.1 The "undertakings concerned", i.e. which parties?

See Section 2.1.1 above.

3.3.2 The undertakings whose turnover is taken into account?

See Section 2.1.1 above.

3.3.3 Shall the turnover of the existing seller be included in the target's group turnover?

No, unless following the transaction, the seller retains control (by means of joint control) over the target company.

3.4 Geographical allocation of turnover

3.4.1 The principles for the geographical allocation of turnover?

In general, the turnover values to be taken into account are those generated in and/or from Indonesia. Export sales are excluded.

3.5 Valuation and allocation of assets

3.5.1 The principles for valuation and allocation of assets?

In general, the asset values to be taken into account are those located in Indonesia.

3.6 Calculation of other thresholds

3.6.1 The principles for calculation of metrics for other thresholds (e.g. transaction value, market share, share of supply etc.)?

Not applicable.

3.7 Special rules

3.7.1 Do any special rules or principles apply to the calculation, allocation etc. of turnover, assets etc. for specific undertakings (e.g. State-owned undertakings, investment funds, credit and financial institutions, insurance companies, financial holding companies, others)?

No.

3.7.2 Does any exemptions apply?

Not applicable.

1. Practical information

1.1 Responsibility for filing

1.1.1 The parties responsible for filing?

The acquirer (for share acquisitions), the surviving company (for mergers), the new consolidated entity (for consolidations).

1.2 Deadlines for filing

1.2.1 Are there any mandatory deadlines for filing, and, if so, how these are calculated?

See Section 2.2.1 under the Merger Screening Schedule.

1.2.2 Are there any sanctions for not filing within the deadlines?

Failure to notify the Indonesian Business Competition Supervisory Board of a reportable transaction by the deadline will result in a fine of IDR 1,000,000,000 per day of delay, up to a total fine of IDR 25,000,000,000.

1.3 Early filing

1.3.1 Is it possible to file before the signing of merger agreement?

No, because currently, Indonesia adopts a post-merger notification regime.

However, Indonesia’s current merger control rules facilitate a pre-merger “consultation” (see Section 2.2.1 (Merger Control Regime Schedule). The pre-merger consultation can only be conducted after a written agreement (e.g. Memorandum of Understanding, Letter of Intent, etc.) has been concluded between the transacting parties. The submission of a pre-closing consultation does not remove the post-closing notification obligation.

1.4 Filing fees

1.4.1 Are there any fees for filing, and, if so, please describe how such fees are calculated?

There are no filing fees.

1.4.2 When must the filing fee must be paid?

Not applicable.

1.5 Publicity

1.5.1 When and in which format will the authority publish receiving a notification?

The Indonesian Business Competition Supervisory Board issues a formal receipt of notification documents and upon determining that the notification documents are complete, the Indonesian Business Competition Supervisory Board issues a decree to that effect. List of submitted and complete and evaluated merger filings are published and publicly available on the Indonesian Business Competition Supervisory Board’s official website which can be accessed through the following link: 

http://www.kppu.go.id/id

1.5.2 How will the authority in general handle the case publicly, e.g. will it usually comment in the media, send out press releases etc.?

The Indonesian Business Competition Supervisory Board will publish its opinion on reported mergers through its official website referred to in Section 1.5.1 above. In general, the Indonesian Business Competition Supervisory Board will abstain from commenting on active cases in the media.

1.5.3 Will third parties be able to review the notification?

The public can access the Indonesian Business Competition Supervisory Board’s opinion on reported mergers through the Indonesian Business Competition Supervisory Board official website referred to in Section 1.5.1 above.

2. Procedure and timing

2.1 Normal and simplified procedures

2.1.1. Does the regime allow for a simplified (fast track) procedure, and, if so, what are the criteria for using the simplified procedure?

No.

2.2 Procedural stages (cf. timetable below)

2.2.1 The various stages of (i) a simplified procedure and (ii) a normal procedure?

The current post-closing Notification regime consists of 1 review phase only, i.e. a 90 working day review as of receipt of the complete filing documents by Indonesian Business Competition Supervisory Board. After the 90 working day review, KPPU issues its decision whether to reject or approve the transaction (with or without remedies). However, there is no time limit for checking the completeness of the filing documents.

2.2.2 Is pre-notification contact with the relevant authorities customary/obligatory/encouraged/etc.?

It is not customary/obligatory. However, if the transacting parties suspect there may be a competition concern from the authority, it is recommended to submit pre-merger consultation to Indonesian Business Competition Supervisory Board.

2.2.3 Are there any sanctions for not filing within the deadlines?

Please also see Section 1.2.2 above.

2.3 Timetable (cf. timetable below)

2.3.1 The statutory timetable/deadlines for review of a notification?

The current post-closing notification regime consists of 1 review phase only, i.e. a 90 working day review as of the Indonesian Business Competition Supervisory Board’s receipt of the complete filing documents. After the 90 working day review, the Indonesian Business Competition Supervisory Board issues its decisions whether to approve the transaction (with or without remedies) or disapprove the transaction. However, there is no time limit for checking the completeness of the filing documents.

2.3.2 Can the statutory timetable/deadlines be suspended ("stop-the-clock"), and if so under which conditions?

No.

2.3.3 If pre-notification with the relevant authorities contact is possible/customary, how long will the duration of such contact usually be?

The Indonesian Business Competition Supervisory Board reviews a voluntary pre-closing “Consultation” in 2 phases. A preliminary review is conducted within 30 working days of receipt of the complete filing documents (again, there is no time limit for checking their completeness). In the preliminary review, the Indonesian Business Competition Supervisory Board assesses the market concentration (for a horizontal overlap) and whether any vertical integration creates market access issues (dominance). If in the preliminary review the Indonesian Business Competition Supervisory Board finds any concern on horizontal overlap or vertical integration due to the transaction, KPPU will proceed to the in-depth phase II review or the “full assessment” which takes an additional 60 working days.

3. Format and content of notification

3.1 Notification forms

3.1.1 Must the notifying parties use any mandatory notification forms, e.g. for simplified and normal procedures, and, if relevant, add a link to the relevant forms?

The Indonesian Business Competition Supervisory Board has mandatory Notification Forms for share acquisitions, mergers and consolidations (each, voluntary pre-merger and mandatory post-merger).

Please see the Indonesian Business Competition Supervisory Board’s Regulation No. 10 and 11 of 2010, which are accessible via the following link:

http://www.kppu.go.id/id/peraturan-merger/

In English:

http://eng.kppu.go.id/how-to-file-merger-notification/


3.2 Supporting documentation

3.2.1 List of the supporting documentation which must as a minimum be submitted along with the notification?

Cf. checklist below.

3.3 Originals, legalization and apostillation (cf. checklist below)

3.3.1 List of all documents which must be submitted in original/legalized versions and whether any documents must be apostilled?

If the notification form is to be submitted by a representative using a Power of Attorney (POA) signed outside of Indonesia, the POA must be notarized and then authenticated by consularization at the Indonesian Embassy or Consulate where the Power of Attorney is signed.

The party submitting the notification must also submit a declaration of the correctness of the information submitted, which does not need to be notarized or authenticated.

Originals of both above documents are required.

3.3.2 If the merger regime has a mandatory filing deadline, must all the documents identified under Section 3.3.1 be submitted within this deadline?

Yes.

3.4 Language

3.4.1 Which languages may be used for drafting and filing a notification?

The law is silent on this, but it is ideal to submit the documents in the Indonesian language or at least bilingual format (one of them is Indonesian), especially the narrative documents (e.g. the summary of the acquisition).

Usually, it is acceptable to the Indonesian Business Competition Supervisory Board if the non-narrative documents (e.g. constitutional documents) are submitted in their original language, but the Indonesian Business Competition Supervisory Board may ask for the documents to be translated into the Indonesian language.

3.4.2 Does translations have to be certified/legalized and apostilled?

The law is silent on this so it is at the Indonesian Business Competition Supervisory Board’s discretion.

Statutory timetable

Step Description Time
1

Pre-notification

It is not customary/obligatory. However, if the transacting parties suspect there may be a competition concern from the authority, it is recommended to submit pre-merger consultation to Indonesian Business Competition Supervisory Board.

The Indonesian Business Competition Supervisory Board reviews a voluntary pre-closing “Consultation” in 2 phases. In the preliminary review, the Indonesian Business Competition Supervisory Board assesses the market concentration (for a horizontal overlap) and whether any vertical integration creates market access issues (dominance). If in the preliminary review the Indonesian Business Competition Supervisory Board finds any concern on horizontal overlap or vertical integration due to the transaction, the Commission (KPPU) will proceed to the in-depth phase II review or the “full assessment”.

A preliminary review is conducted within 30 working days of receipt of the complete filing documents (there is no time limit for checking their completeness). A " full assessment" takes an additional 60 working days.

2

Phase I

The current post-closing Notification regime consists of 1 review phase only after which KPPU issues its decision whether to reject or approve the transaction (with or without remedies).

90 working days as of receipt of the complete filing documents by Indonesian Business Competition Supervisory Board. However, there is no time limit for checking the completeness of the filing documents.

  • Step 1 1
  • Step 2 2
  • 30 + 60 days
  • 90 days

Checklist

List of the supporting documentation which must as a minimum be submitted along with the notification.

Supporting documentation

This content was delivered
and last updated on 04-10-2019 by
Contact Person
Lia Alizia, Partner
CONTACT DETAILS:

Update 05-11-2019: Please note that the Indonesian merger control rules have been changed recently and that it is recommended to contact our partner for any queries on the merger control related matters. 

Makarim & Taira S. (M&T) has provided all input on merger control in Indonesia.

Founded in 1980, M&T is an internationally recognized full service law firm with a reputation for detail and impeccable ethics. We are one of the country’s few independent full-service firms, and we have been advising blue-chip clients from four continents.

We have an experienced team of lawyers handling competition matters in Indonesia, particularly merger control. With a combined experience in M&A/investment/corporate, our lawyers and litigators are ready to assist clients with their broader needs, offering a full range of expertise needed to handle Indonesian competition and merger control matters.

For more information about Makarim & Taira S. and merger control in Indonesia, please contact our Partner directly.

Banner Logo     Banner Logo    Banner Logo    Banner Logo