On 2 October 2012, the Indonesian Competition Commission (KPPU) published new regulations addressing mergers and acquisitions. Regulation No. 3 of 2012 further revises the KPPU’s 2010 merger review guidelines and Regulation No. 4 of 2012 refines the procedure for imposing fines for late filing of merger notifications.
1. Fines for late filing of merger notifications
Under Indonesia’s merger regime, mandatory notification of reportable transactions must be made by merger parties within 30 days of the transaction becoming legally effective (i.e. closing). Failure to notify within the prescribed period could result in the KPPU imposing fines pursuant to The Anti-Monopoly Law and Government Regulation No. 57 of 2010, amounting to IDR one billion per day of delay, up to a maximum of IDR 25 billion. Previously, no procedure has been specified for the imposition of such fines but the new regulations now provide for an expedited process. Going forward, the KPPU has a total of 21 working days to examine the matter after which it can impose a fine as appropriate.
2. Revision of the merger guidelines
The regulations amend the 2010 Merger Guidelines which, in particular, amend the manner in which notification thresholds for mergers are determined, clarify the notification threshold for transactions occurring in the banking industry, clarify whether notification is required where transactions involve foreign merger parties, and exempt notification of new joint venture companies.
In relation to the threshold calculations, the combined assets or turnover of the merging parties are taken into account when determining if the thresholds are satisfied (the asset threshold being IDR 2.5 trillion and the turnover threshold being IDR 5 trillion). Under the previous guidelines, asset values of the merging parties, the target’s subsidiaries and the acquirer’s parent companies and its subsidiaries were relevant but not the acquirer’s sister companies. Under the new guidelines, the turnover and assets of the acquirer’s sister companies are also relevant for purposes of whether the thresholds are satisfied.
In relation to mergers in the banking industry, a higher threshold of IDR 20 trillion applies to transactions between banks. The previous guidelines provided that this higher threshold applied even if only one of the transacting parties was a bank. The new guidelines clarify that in cases where only one of the parties is a bank the lower threshold of IDR 2.5 trillion applies.
Under the revised guidelines, a foreign transaction must be notified to the KPPU if one of the merger parties has a subsidiary in Indonesia and the other has a sister company in Indonesia. Such a transaction would not previously have triggered notification.
Finally, the revised guidelines exempt parties from having to notify the formation of new joint venture companies. However, if a joint venture is formed by merging or consolidating two companies, such a merger would nevertheless continue to require notification.