INDONESIA Law and Practice Contributed by: Agus Ahadi Deradjat, Gustaaf Reerink and Adri Dharma, ABNR Counsellors at Law
change of control could also involve a change from sole to joint control. The regulations issued by the KPPU stipulate that a merger, consolidation or acquisition between non- affiliated parties, in which any or all of the non-affili - ated parties are engaged in business activities in or sales to Indonesia, and which meets the specified thresholds (combined assets in Indonesia exceeding IDR2.5 trillion or, if all undertakings involved in the transaction are active in the banking sector, IDR20 trillion – or combined sales in Indonesia exceeding IDR5 trillion), is subject to mandatory notification to the KPPU even if the transaction occurs outside Indo - nesia. A transaction needs to be notified to the KPPU if all of these criteria are met. A transfer of assets (tangible or intangible) is tanta - mount to the acquisition of shares and, accordingly, should be notified to the KPPU if there is a transfer of their managerial or physical control, or an increase in the ability of the acquirer to control a relevant market. The following asset transfers are exempt: • a non-bank asset transfer transaction valued at less than IDR250 billion; • a bank asset transfer transaction valued at less than IDR2.5 trillion; • a transfer of assets that is carried out in the ordinary course of business – this depends on the business profile of the acquiring party and the purpose of the acquisition, and transactions in the ordinary course of business include (i) the transfer of finished goods from one undertaking to another for resale to consumers by an undertaking that is active in the retail sector (eg, the sale of consumer goods by retailers) and (ii) the transfer of supplies to be used within three months in the production process (eg, the purchase by an undertaking of raw materials and basic components from various sources for production); • a transfer of assets specifically in the property sector that is designed to provide (i) space for use by the buyer or (ii) social facilities or facilities for general use; and • assets that are not intended for business use by the acquirer (eg, land for corporate social respon -
sibility or not for-profit activities, or to comply with statutory requirements). A transaction that meets the relevant criteria should in principle be filed with the KPPU within 30 business days of the date that the transaction becomes legally effective. The KPPU has three business days from the date of submission to verify the completeness of the notification documents and issue a receipt confirming both the completeness of those documents and the notifiability of the transaction. Thereafter, the KPPU has 90 business days from the date the notification is declared complete to review the notification and issue its opinion. In practice, the KPPU may issue the opinion beyond the statutory deadline. As Indonesia has a post-merger system, there are no waiting periods and implementation of the transaction is not required to be suspended prior to clearance. 6.2 Criteria for Antitrust/Competition Review The KPPU applies the Herfindahl-Hirschman index (HHI) or concentration ratio. The KPPU carries out a comprehensive assessment and looks at other aspects if: • the HHI is between 1,500 and 2,500, and the change in the HHI is greater than 250; or • the HHI is above 2,500, and the change in the HHI is greater than 150. If the market concentration test is positive, the KPPU will consider certain factors, including entry barriers. The KPPU may look at the ease with which new play - ers may enter the market, the strength of new players, the time needed to enter the market, switching costs, the homogeneity of products and brand loyalty. 6.3 Remedies and Commitments If the transaction proceeds to a comprehensive assessment and raises competitive concerns, the KPPU may propose a conditional approval, including a timeline for its implementation. The undertaking may then choose to: (i) accept the proposal in its entirety; (ii) reject the proposal entirely; or (iii) partially reject the proposal.
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