In today’s rapidly evolving and competitive business landscape, mergers and acquisitions (M&A) and consolidation have become increasingly prevalent across various industries. These strategic corporate actions enable companies to broaden their market presence, access new technologies, or achieve greater operational efficiencies. However, despite the clear benefits, M&A or consolidation transactions must be conducted within a framework of strict legal and regulatory compliance to avoid significant risks. In Indonesia, M&A and consolidation activities, especially those involving substantial financial transactions, are closely scrutinized to prevent monopolistic practices and ensure fair competition, which in turn protects consumer welfare. Komisi Pengawas Persaingan Usaha (“KPPU”) plays a pivotal role in overseeing such transactions, particularly those that may potentially distort market dynamics. As such, it is critical for companies involved in M&A and consolidation to fully understand the legal requirements governing these transactions to avoid costly legal challenges, potential penalties, and even the revocation of the merger or acquisition itself.
Notification to the Indonesian Competition Commission (KPPU) Regarding M&A and Consolidation.
In compliance with Article 29 of Law No. 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition (“Law No. 5/1999”), companies involved in M&A or consolidation activities must notify the KPPU if the amount of the asset and/or the amount of the sell is exceeding a certain amount. Concerning the amount, Article 5 Government Regulation No. 57 of 2010 concerning the Merger or Consolidation of Business Entities and Acquisition of Company Shares That May Result in Monopolistic Practices and Unfair Business Competition (“GR 57/2010”) states that the amount that aforementioned before is consist of:
a. Asset with an amount of Rp2.500.000.000.000,00
b. Sell with an amount of Rp5.000.000.000.000,00
c. For the business actors in the banking sector are obligated to send the notification if the amount of assets exceeding Rp20.000.000.000.000,00
Furthermore, the amount of asset and/or the sell as mentioned above is counted based on the addition of asset and/or sell from:
a. The Business Entity resulting from a merger, consolidation, or acquiring the shares of another company and the business entity that is being acquired; and
b. Business Entities that directly or indirectly control or are controlled by the Business Entity resulting from a Merger, the Business Entity as a result of a Consolidation, the Business Entity that acquires the shares of another company, and the Business Entity that is being acquired
This notification to KPPU is mandated to be filed within 30 (thirty) days after the decision of the merger, consolidation, or acquisition in writing since the date of the transaction has been legally effective. According to the obligation, failure to submit a notification according to Article 6 of GR 57/2010 can lead to penalties of administration fine in the amount of Rp1.000.000.000 (one billion Rupiahs) for every late day, with a condition that the overall amount of administrative fine is at the highest amount of Rp25.000.000.000,00 (twenty-five billion Rupiahs).
Process of Notification.
Article 8 of GR 57/2010 regulates that the written notification should be conducted by fill in the form that has been stipulated by the KPPU at least contains:
a. The name, address, and the name of the leadership or management of the Business Entity conducting the Merger of Business Entities, Consolidation of Business Entities, or Acquisition of shares in another company;
b. A summary of the plan for the Merger of Business Entities, Consolidation of Business Entities, or Acquisition of shares in the company; and
c. The value of assets or the value of the sale of the Business Entity.
In addition, the form mentioned above should be:
a. Signed by the leadership or management of the Business Entity conducting the Merger of Business Entities, Consolidation of Business Entities, or Acquisition of shares in another company; and
b. Accompanied by supporting documents related to the Merger of Business Entities, Consolidation of Business Entities, or Acquisition of shares in the company.
KPPU will review the submission and will complete its initial review within 90 (ninety) working days since the written notification document was completely received by the KPPU.
Consultation to KPPU.
In addition, Articles 10 and 11 GR 57/2010 facilitated the business actors that will conduct an M&A or consolidation that will affect the amount of the asset and/or the amount of the sale exceeding a certain amount to consultation in writing or verbally to the KPPU by filling in the form as stipulated by KPPU. After that, KPPU will give advice, guidance, and/or written opinions regarding the plan for M&A or consolidation no later than 90 (ninety) work days after the written form document is completely received by the KPPU.
If you, a prospective client, have further inquiries about the topic discussed above, Schinder Law Firm is one of many corporate law firms in Indonesia that has handled numerous similar matters, with many experienced and professional corporate and civil lawyers in its arsenal, making it one of the top consulting firms in Indonesia. Feel free to contact us at info@schinderlawfirm.com for further consultation.
Author:
Budhi Satya Makmur