INDONESIA Law and Practice Contributed by: Chandrawati Dewi, Gustaaf Reerink and Bilal Anwari, ABNR Counsellors at Law
Entry Barriers If the market concentration test is positive, the KPPU will assess entry barriers. This assessment normally includes factors such as: • the ease of entry for new market players; • the strength of new entrants; • the time required to enter the market; • switching costs; • the similarity of products; and • brand loyalty. Potential for Anti-Competitive Behaviour In addition to entry barriers, the KPPU will evaluate the potential for anti-competitive behaviour by the relevant parties. This includes examining potential unilateral effects, co-ordinated effects, and market foreclosure. 4.5 Economic Efficiencies The KPPU takes economic efficiencies into account. It will evaluate a transaction more favourably if it offers potential efficiency benefits to customers. These effi - ciency gains should be balanced against any anti- competitive effects of the transaction. The KPPU will prioritise healthy competition over efficiency. 4.6 Non-Competition Issues Under the Merger Control Guidelines and Regulation 3/2023, the KPPU will review a transaction more posi - tively if it can prevent a party from bankruptcy. The decrease in market players due to bankruptcy would be considered more harmful than a scenario where a market player becomes dominant as a result of the transaction. The KPPU may also consider other non-competition factors during its review, including: • policies to augment the competitiveness and strength of national industries; • development of technology and innovation; • protection of SMEs; • impact on the labour force; and • implementation of the relevant laws or regulations. In Indonesia, rules for foreign direct investment are primarily governed and enforced by the Ministry of
never seen this procedure implemented in practice, and within the KPPU’s sole portal used for the submis - sion of notifications, there does not appear to be any option to select a simplified assessment.
4. Substance of the Review 4.1 Substantive Test
The KPPU uses the HHI or concentration ratio. The KPPU will carry out a comprehensive assessment and examine other factors if: • the HHI falls between 1,500 and 2,500 and the change in the HHI exceeds 250; or • the HHI exceeds 2,500 and the change in the HHI exceeds 150. 4.2 Markets Affected by a Transaction The KPPU identifies which markets might be impacted by the transaction by determining the relevant prod - ucts and geographical market. For relevant product markets, the KPPU identifies similar or substitute products based on demand and supply aspects. For relevant geographical markets, the KPPU assesses the distribution, selling, marketing coverage, and loca - tion where the products are available. In cases where parties’ activities overlap, there is no de minimis level below which competitive concerns are automatically deemed unlikely. 4.3 Reliance on Case Law The notifying party may submit other jurisdiction fil - ings that contain case law or market definition for the KPPU’s consideration in performing its review. In the authors’ experience, the KPPU also allows the par - ties to submit an economic analysis based on market definitions used by competition authorities in other jurisdictions where the transaction was also notified. However, it is not entirely clear how the KPPU arrives at certain market definitions, as this is not explained
in the current format of opinions. 4.4 Competition Concerns
The KPPU will assess the following competition con - cerns (ie, entry barriers and potential for anti-compet - itive behaviour).
324 CHAMBERS.COM
Powered by FlippingBook