UPDATE: DRAFT IMPLEMENTING REGULATIONS OF INDONESIA PERSONAL DATA PROTECTION LAW
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Indonesia’s Competition Supervisory Commission, Komisi Pengawas Persaingan Usaha (KPPU) Revamps Merger Control Regulations
On March 31, 2023, KPPU issued a new regulation, KPPU Regulation No. 3 of 2023 Assessment of Mergers, Consolidations, or Acquisitions of Shares and/or Assets that may Result in the Occurrence of Monopoly Practices and/or Unfair Business Competition (“KPPU Regulation No.3/2023”). The new regulation aims to improve the efficiency of the notification process for mergers, acquisitions, and asset acquisitions by introducing an electronic notification system in order to adapt to the changing times, and streamlining certain assessment processes. In addition, it changes certain rules for calculating asset/sales value, speeds up document examination, and includes a comprehensive assessment hearing. KPPU Regulation No.3/2023 has replaced the previous KPPU 2019 regulation, with no explicit mention of the 2020 merger control guidelines that were introduced to implement the previous regulation. It is therefore assumed that the 2020 guidelines will continue to be in effect unless they contradict the new regulation. The new rules will only apply to transactions that are notified on or after 31 March 2023.
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General Criteria for Notification
Principally, any merger, consolidation, or acquisition of shares and/or assets (excluding exempted asset acquisitions) that satisfies the mandatory notification criteria must be reported to the KPPU within 30 (thirty) days after the transaction becomes legally effective. These criteria include:
a. Meeting the specified value thresholds for assets and/or sales[1];
b. A change in control taking place;
c. Not a transaction between affiliated parties; and
d. Transactions involving parties that possess assets and/or engage in sales activities in Indonesia.
In addition to the above criteria, parties are required to submit notifications to the KPPU for any asset acquisitions that:
a. Result in an increased control over a specific market by the acquiring business operator; and
b. Are NOT exempted[2].
New Takeaways
The new KPPU Regulation No.3/2023contains several enhancements to the notification process:
a. Calculation of Assets
One improvement is that the calculation of assets or sales for notification purposes now only includes assets or sales that are directly or indirectly owned by the business actor in Indonesia. Previously, the calculation of sales was limited to sales made in Indonesia, while the calculation of assets could include the assets of the business actor located outside of the country.
b. Foreign to Foreign Transaction
Under the previous merger regulation in Indonesia, a merger notification was triggered even if only one of the parties involved had business activities, assets, or sales in or to Indonesia.
However, under the new regulation, a foreign-to-foreign transaction will only need to be notified to the KPPU if all parties involved in the transaction have assets and/or generate sales/turnover in Indonesia, either directly or indirectly.
c. Online Notification
The new merger control regulation requires notifications to be submitted through an online portal on its website, https://notifikasi.kppu.go.id/ .
d. Process and Timeline
The notification process consists of two phases: completeness check and review. The completeness check will also include a check if the transaction is notifiable. If the notification is complete, the KPPU will issue a registration number and confirm the notifiability. The review phase will take into account factors such as competitiveness and innovation, and the process will last for 3 plus 90 business days.
The new merger control regulation has a shorter timeline than the 2019 regulation, which required 60 business days for the completeness check and 90 business days for comprehensive review.
Notification Fees
Additionally, starting from 5 May 2023[3], parties that submit notifications of mergers, consolidations, or acquisitions of shares and/or assets to KPPU will have to pay a fee for the assessment process. The fee is 0.004% of the asset value OR sales value stated in the notification that exceeds the notification threshold, whichever is lower[4], or a maximum of Rp. 150,000,000 (one hundred and fifty million Rupiah), OR approximately JPY 1,398,150.00 (one million three hundred ninety-eight thousand one hundred fifty Japanese Yen).
[1] Similar to the previous KPPU 2019 regulation, the thresholds include a combined asset value exceeding IDR 2.5 trillion (approx. JPY 23,285,255,565) and/or a combined annual sales value exceeding IDR 5 trillion (approx. JPY 46,570,511,130).
[2] Exempted asset transfers are:
- A Non-bank asset transfer transactions with a value below IDR 250 billion (approximately JPY 2,328,525,556);
- A Bank asset transfer transactions with a value below IDR 2.5 trillion (approximately JPY 23,285,255,565);
- An asset transfer that is conducted as part of a party’s regular business operations;
- A transfer where the assets being transferred have no connection to the business activities of the acquiring entity.
[3] 30 days after the issuance of Government Regulation No. 20 of 2023.
[4] The calculation of asset or sales value will be determined by considering the total value of assets or sales from the following entities:
- The surviving entity, consolidating entity, or acquiring entity, and acquired entity.
- Entities directly or indirectly controlled by the surviving entity resulting from the merger, consolidating entity, or acquiring entity, and acquired entity.
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The information provided in this article does not, and is not intended to, constitute legal advice and is for general informational purposes only. Readers of this article should contact an attorney to obtain advice with respect to any particular legal matter.
