INDONESIA Law and Practice Contributed by: Chandrawati Dewi, Gustaaf Reerink and Bilal Anwari, ABNR Counsellors at Law
• meets the jurisdictional thresholds; • meets the dual nexus requirements; • is carried out between non-affiliated companies; and • is not carried out to implement prevailing laws and regulations. In line with the criterion that the transaction must be carried out between non-affiliated companies, inter - nal restructuring or reorganisation are in principle not caught by Indonesian merger control rules if they con - cern transactions between affiliated parties. The KPPU has considered transactions involving sales and purchase of units in a trust as notifiable transac - tions, although they do not fall under the category of share or of asset transactions from an Indonesian law perspective. 2.4 Definition of “Control” Under Indonesian competition law, a change of con - trol occurs when the acquiring party obtains more than 50% of the shares and voting rights or obtains less than 50% of the shares and voting rights but holds factual control (allowing them to influence or direct the company’s policies and management). Normal - ly, the KPPU would look into reserved matters, veto rights and the power to nominate the majority of the directors as indications of change of control, when the acquired share capital is less than 50%. Although the law is unclear on this matter, a change from sole to joint control could also constitute a change of control. Further, a transfer of assets (tangible or intangible) can be deemed the equivalent of an acquisition of shares and should be reported to the KPPU. This is the case if the following conditions are met: • results in a transfer of management control and/or physical control over the assets; and/or • increases the acquiring party’s ability to control a relevant market. An asset is defined as any movable or immovable object owned by an undertaking – both tangible and intangible – that has economic value (eg, bonds or stocks). Additionally, in the authors’ experience, a par -
ticipating interest in a joint operation in Indonesia may also be considered an Indonesian asset. In foreign-to-foreign transactions, the question of change of control is in principle determined by the applicable law in the jurisdiction where the share or asset transaction occurs. However, it has been observed that in acquisitions of 50% or less of the shares, the KPPU may also make its own assessment of decision-making mechanisms, the appointment of board members, and the day-to-day operation man - agement system, to determine whether the transac - tion has resulted in a change of control. Acquisitions of minority or other interests not resulting in a change of control are not subject to these rules. 2.5 Jurisdictional Thresholds The jurisdictional thresholds for notification are: • combined value of assets in Indonesia exceeds IDR2.5 trillion (approximately USD145.9 million) or, if all undertakings involved in the transaction are active in the banking sector, IDR20 trillion (approxi - mately USD1.17 billion); and/or • combined turnover in Indonesia exceeds IDR5 trillion (approximately USD292 million) – Indone - sian turnover includes sales of products produced domestically and imported products (exported products should be excluded from the calculation). The jurisdictional threshold is one of the major chang - es introduced by Regulation 3/2023. Previously, the assets threshold was calculated on a worldwide basis, rather than an Indonesian basis – although the thresh - old amount remains the same. If there is a 30% or greater reduction in the value of assets and/or sales from one year to the previous year, the calculation of these values will be based on the average of the values over the past three years. Special jurisdictional thresholds are only available for the banking sector, as mentioned.
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