In response to the multiple interpretation of the latest Merger Regulation (“2019 Merger Regulation“), the KPPU finally issued implementing guidelines on merger, consolidation, or acquisition, which came into force in 6 October 2020.
First introduced in July 2020 (despite already being a common practice of the KPPU from an earlier period), (click here to read our client update on this topic), the KPPU has now formally acknowledges the simplified merger1 notification procedure under the new guideline. Now, the simplified procedure is referred to as an “simplified assessment.”.
Once KPPU approves or decides to implement an assessment, eligible businesses will essentially be on the “fast track” for receiving their merger review. The guideline regulates that the KPPU must complete this simplified assessment within 14 business days, which is expected to occur and be completed within the 60 business days clarification and research phase. This is a significantly shorter timeframe compared to the maximum 150 business days of the traditional merger notification process.
Either the KPPU or the notifying party can request for a simplified assessment if, among others:
Exempted Asset Acquisition
The guideline also affirms that an asset acquisition that satisfies one of the criteria below would not trigger the mandatory notification post-acquisition to the KPPU:
Other Notable Items
Lastly, the new guideline also asserts or clarifies notable topics within the competition law framework in Indonesia. First, the KPPU confirms that it will assess any acquisition that is equivalent to a shares acquisition. This means that transactions such as a transfer of asset or an acquisition of participating interest are now subject to the KPPU’s scrutiny.
Second, the KPPU clarifies that the value of the acquired assets as part of the threshold calculation is calculated based on either the value of the target asset as stated in the latest financial statements of the seller or the transaction value, whichever is higher.
Third, in a merger involving a joint venture entity, the KPPU will consider the joint venture entity as the ultimate parent entity of the group. Consequently, the calculation of thresholds and local nexus test will only take into account the Indonesian sales value, the worldwide assets value, and the local presence of the joint venture and its subsidiaries. This will also be the case where the purchaser is a subsidiary of a joint venture. As a result, the list of relevant parties in a merger involving a joint venture will significantly change.
Here, it is worth noting that a greenfield joint venture is exempted from the notification obligation. But a joint venture created as a result of a shares or asset acquisition will still trigger the notification obligation if it meets the necessary criteria.
Fourth, a foreign merger that has an impact to the Indonesian market will be notifiable. The impact criterion will be satisfied if, among others, a party to the transaction has business activities in Indonesia and the other party has a sister company that conducts business activities in and/or sales into Indonesia.
Lastly, the KPPU confirms that financial statements and articles of association that will be submitted to the KPPU must either be summarised or translated into Indonesian. This has always been the approach of the KPPU and in the past, KPPU could refuse to register a notification for failure to provide the Indonesian summary or translation.
The introduction of the simplified assessment is one of the major breakthroughs from the KPPU. But in order to be able to enforce it, the KPPU is likely to request for more comprehensive information and documents in complex transactions compared to the traditional merger notification process. Thus, it is crucial that transacting parties ensure the availability of documents (such as market data) before applying for an assessment.
The other clarifications are certainly welcomed, and we expect that transacting parties will benefit greatly from this guideline.
HMBC Rikrik Rizkiyana
D (62) 21 2555 7855
Farid Fauzi Nasution
D (62) 21 2555 9998
D (62) 21 2555 9938