KPPU Regulation No. 3/2023: The New Merger Control Regulation
A. Introduction
Effective on 31 March 2023, the Indonesian Supervisory Business Competition Committee (Komisi Pengawasan Persaingan Usaha or
“KPPU”) replaced KPPU Regulation No. 3 of 2019 on Assessment of Merger, Consolidation, and/or Shares Acquisition That Could Result in
Monopolistic and/or Unfair Business Competition Practices (“Previous Merger Control Regulation”) with KPPU Regulation No. 3 of 2023
on Assessment of Merger, Consolidation, and/or Shares or Asset Acquisition That Could Result in Monopolistic and/or Unfair Business
Competition Practices (“New Merger Control Regulation”).
Despite the slight difference in the titles of the two regulations (with the Previous Merger Control Regulation mentioning shares acquisition
only, and not asset acquisition) both regulations, in fact, apply to any merger, consolidation, and/or shares or asset acquisition (collectively
“Merger”) carried out by business actors who meet certain criteria that are considered as potentially resulting in monopolistic and/or
unfair business competition practices.
The New Merger Control Regulation is intended to improve the Previous Merger Control Regulation by, among other things, introducing an
electronic notification system, limiting the scope of the assets that are used in calculating the merger valuation thresholds, expediting the
initial review period of all Merger filings, and introducing a mechanism for verbal pre-Merger filing consultation with the KPPU.
This Newsletter discusses the key changes under the New Merger Control Regulation, as well as the implications of some recently issued
regulations to the implementation of the New Merger Control Regulation.
B. Key Changes in the New Merger Control Regulation
1. Electronic Submission
The New Merger Control Regulation maintains the Previous Merger Control Regulation’s requirement for the filing of a notice with the
KPPU post completion of a Merger (“Merger Notice”). The difference is that the New Merger Control Regulation now requires all
Merger Notices to be submitted electronically through the KPPU’s website (notifikasi.kppu.go.id) (“Electronic Notification System”),
with the following guidelines:
a. a business actor must register its account by using an active email address;
b. only one email account can be used for one Merger Notice;
c. the Merger Notice may only be submitted on working days through the Electronic Notification System from 09.00 WIB – 14.00 WIB;
and
d. all information and documents submitted in the Electronic Notification System shall be in the Indonesian language.
Upon the filing of the Merger Notice in the Electronic Notification System, KPPU will have a maximum of 3 (three) working days to
check the completeness of such submitted documents. If the documents are complete, KPPU will proceed to issue a notice registration
number and will confirm whether the relevant Merger is subject to the notice requirement or not. If it is subject to the notice
requirement, the KPPU will have a period of 90 (ninety) working days to review the Merger Notice and to issue the result of its
assessment thereon through the Electronic Notification System and registered electronic mail. If the documents are incomplete,
however, KPPU will issue an incomplete remark in the Electronic Notification System and to the registered electronic mail.
The aforementioned 3 (three) working day initial review period significantly cuts down the previous 60 (sixty) calendar day initial
review period under the Previous Merger Control Regulation. However, business actors should take into account that under the New
Merger Control Regulation, the Merger Notice can only be submitted through the Electronic Notification System during working days,
which differs from the Previous Merger Control Regulation where a Merger Notice is allowed to be filed by electronic mail without
limiting it to working days.
Any Merger Notice submitted to KPPU by 31 March 2023 or after, should comply with the New Merger Control Regulation (including
any transaction that was completed, but had not been filed, before 31 March 2023).
Additionally, under the New Merger Control Regulation, KPPU may initiate its own assessment based on information found in (i) the
Merger Notice, (ii) information from the public, (iii) news publication, (iv) official letter from other government institutions, and/or (v) other sources as approved by KPPU, on any past Merger that should have been notified to KPPU but failed to be notified by the relevant business actors.
2. Applicable Tariff for Merger Notice
In less than a week following the enactment of the New Merger Control Regulation, the President of the Republic of Indonesia enacted
Government Regulation No. 20 of 2023 on the Types and Tariffs of Non-Tax State Revenue Types Applicable to the Supervisory Business
Competition Committee (“GR No. 20/2023”), which regulates the tariff payable by a business actor for each Merger Notice, being an
amount equal to:
0.004% x (the asset value or sales value based on a certain threshold, whichever is lower).
The asset value and sales value are calculated based on the following:
a. (i) the surviving entity resulting from a merger, or (ii) the entity as a result of a consolidation, or (iii) the acquiring company and
the acquired company, in the event of an acquisition; and
b. the entity that is directly or indirectly controlled by: (i) the surviving entity resulting from a merger, (ii) the entity as a result of a
consolidation; or (iii) the acquiring company and the acquired company, in the event of an acquisition.
GR No. 20/2023 imposes a IDR150,000,000 (one hundred fifty million Rupiah) maximum tariff limit payable by the relevant business actor on each Merger Notice.
3. Change of Control Definition
The New Merger Control Regulation reiterates the types of Merger that will require the filing of a Merger Notice under the Previous
Merger Control Regulation, in particular:
a. when the Merger reaches the Merger Valuation Thresholds (as defined in paragraph 4 below) of the business actors;
b. when the Merger results in a change of control;
c. when the Merger involves a transaction between non-affiliated business actors; and
d. when the Merger is between business actors having assets and/or sales in Indonesia.
Unlike the Previous Merger Control Regulation, the New Merger Control Regulation now clearly defines ‘change of control’ as a change in the controlling business actor from:
a. the merging business actor to the surviving business actor;
b. the consolidating business actor to the consolidated business actor;
c. the business actor whose shares are being acquired to the business actor who is acquiring the shares; or
d. the business actor whose assets are being acquired to the business actor who is acquiring the assets (change of control in respect
of assets).
The New Merger Control Regulation also defines a “controlling business actor” in the context of item c of the second paragraph above
as one who has more than 50% (fifty percent) shares or voting rights, or who has 50% (fifty percent) or less shares or voting rights but
has the ability to control and determine the management policies and/or management of the acquired company.
If the acquirer only acquires less than or equivalent to 50% (fifty percent) shares in the acquired company, the acquirer, as the notifying
party, must also submit the corporate documents reflecting the management composition of the acquired company, along with an
explanation regarding the form of control of the shareholders, both prior to and after the acquisition.
4. Calculation of Assets
One of the triggering conditions for the Merger Notice requirement is when the value of the assets and/or sales of the business actors
under a Merger reaches certain thresholds (“Merger Valuation Thresholds”), in particular:
a. when the combined value of the assets exceeds IDR2,500,000,000,000 (two trillion five hundred billion Rupiah);
b. when the combined annual sales value exceeds IDR5,000,000,000,000 (five trillion Rupiah); or
c. when the combined value of assets/annual sales value exceeds IDR20,000,000,000,000 (twenty trillion Rupiah) for a Merger between business actors in the banking sector.
Under the New Merger Control Regulation, the value of assets is calculated based on the assets that are located in the Republic of
Indonesia in the year prior to the date of the Merger. This differs from the Previous Merger Control Regulation, which calculates the
value of assets based on the financial statement of the business actor which could possibly include the worldwide assets of such
business actor.
5. Exemption from the Merger Notice Requirement for Asset Acquisition
The New Merger Control Regulation exempts certain asset acquisitions from the Merger Notice requirement if the asset acquisition
satisfies any of the following criteria:
a. when the transaction value of the asset acquisition is less than IDR250,000,000,000 (two hundred fifty billion Rupiah);
b. when the transaction value of the asset acquisition is less than IDR2,500,000,000,000 (two trillion five hundred billion Rupiah) if
the business actor is in the banking sector;
c. when the asset acquisition is carried out in the ordinary course of business; or
d. when the acquired asset has no relationship with the business activities of the acquiring business actor.
There was no such exemption under the Previous Merger Control Regulation.
6. Pre-Consultation
Aside from the written pre-acquisition consultation stipulated in the Previous Merger Control Regulation (“Written Consultation”),
the New Merger Control Regulation allows business actors to carry out verbal pre-acquisition consultation with the KPPU (“Verbal
Consultation”) in order to obtain preliminary information from the KPPU on the proposed Merger, however, the result of this Verbal
Consultation cannot be referred to or used as basis in the review process of the Merger Notice.
Similar to the Previous Merger Control Regulation, the New Merger Control Regulation also provides that the result of the Written
Consultation can be used as basis for the review process of the Merger Notice as long as there are no changes to the supporting
documents, but only for a period not exceeding 1 (one) year from the issuance of the Written Consultation result. This differs from the
Previous Merger Control Regulation, which provided for a 2 (two) year validity period for the Written Consultation result.
C. Other Notable Changes In Respect of Merger
In issuing KKPU Regulation No. 5 of 2023 which became effective on 31 March 2023, KPPU revoked KPPU Regulation No. 4 of 2012 on
the Imposition of Fine Procedures for Late Merger Filing (“KPPU Regulation No. 4/2012”), which prescribed the imposition of a
penalty for the late filing of a Merger Notice in the form of a IDR1,000,000,000 (one billion Rupiah) daily fine or a maximum fine of
IDR25,000,000,000 (twenty-five billion Rupiah).
The revocation of KPPU Regulation No. 4/2012, however, does not necessarily mean that late Merger filings are no longer subject to
any fine as the imposition of a fine is regulated elsewhere under Government Regulation No. 57 of 2010 on Merger, Consolidation and
Share Acquisition of a Company which Could Trigger Monopolistic Practices and Unfair Business Competition (“GR No. 57/2010”),
which remains applicable to a Merger. Under GR No. 57/2010, sanctions in the form of a IDR1,000,000,000 (one billion Rupiah) daily
fine or a maximum fine of IDR25,000,000,000 (twenty-five billion Rupiah) shall be imposed on business actors for late filing of a Merger
Notice.
Should you have any further questions, please do not hesitate to reach out to our team at newsletter@makeslaw.com.
For more details, please read the document below
The Newly Issued Merger Control Regulations in Indonesia and its impact on the M&A business
Best regards,
Makes Team