Following a lengthy period of discussion, the long-awaited amendment to Indonesia’s Competition Law (Law No. 5 of 1999) is finally gaining momentum. On 6 November 2025, Commission VI of the House of Representatives (Dewan Perwakilan Rakyat Republik Indonesia or “DPR“) held a public hearing with the Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha or “KPPU“) and the Ministry of Trade’s Director General of Consumer Protection and Trade Order. The hearing confirmed strong political support for reforming Indonesia’s competition regime, improving enforcement, and addressing challenges in digital markets.
 
The draft for the third amendment to the Competition Law introduces major policy shifts, some of which provide KPPU with stronger competition law instruments. They include:

• Mandatory pre-merger notification;
• Leniency program;
• Search and seizure powers;
• Recognition of economic evidence; and
• Institutional reforms.

Although the official draft has not yet been released to the public, discussions have provided insight into its direction. At the recent hearing, KPPU presented several significant proposals that signal a shift toward stronger enforcement and alignment with global standards. These proposals are outlined in more detail below.

Mandatory Pre-Merger Notification

KPPU proposes replacing the current post-merger notification system with a mandatory pre-merger notification. Under this new approach, parties entering into a merger must secure KPPU clearance before completing the transaction, bringing Indonesia’s merger control framework closer to international standards.

This shift to a pre-merger notification regime offers greater certainty for businesses. By obtaining clearance before closing, parties can resolve any competition concerns upfront, reducing the risk of enforcement actions later. In contrast, under the current post-closing regime, KPPU can still impose structural remedies, such as divestments or spinoffs, after a deal is completed. These interventions can significantly disrupt agreed commercial terms and force parties to revisit or renegotiate transaction structures.

Leniency Program

The proposed leniency program aims to reduce, or even eliminate, penalties for businesses that voluntarily admit or report involvement in cartel activities. This mechanism is intended to uncover secretive arrangements, including cartels formed through verbal or concealed agreements.

During the public hearing, KPPU noted that it is looking to models used in the United States, European Union, United Kingdom, and Japan. Although the official draft of the amendment is not yet public, we can expect the Indonesian leniency program to follow similar principles adopted in these jurisdictions.

KPPU’s Search and Seizure Authority

Under the current Competition Law, KPPU does not have the authority to conduct searches or seize evidence. The draft introduces this authority to overcome practical challenges in collecting evidence, particularly in cartel and covert arrangement cases. With this authority, KPPU will be able to secure both documentary and digital evidence more effectively.

Additional Proposed Amendments to the Competition Law Proposed by KPPU

In addition to the major changes discussed earlier, KPPU has proposed several other amendments to strengthen the Competition Law. These include:

• Extraterritoriality

  The draft amendment seeks to clarify KPPU’s authority to enforce the law against businesses incorporated or located outside Indonesia, provide they conduct activities within Indonesia. This aims to close gaps in enforcement against foreign entities operating in the local market.

• Definition of “relevant market” in the digital economy

  KPPU highlights the need to redefine “relevant market” to cover digital platforms and AI-driven transactions. Digital markets often involve multiple layers, such as markets for online sellers and buyers, making the traditional definition inadequate.

  KPPU also notes that market dominance can arise from misuse of user data, algorithmic discrimination, or AI-based predatory pricing. Companies with exclusive access to large volume of user data may create significant market power, limit competitors’ innovation, and foster dependency on certain platforms. To address this, KPPU sees a need for closer alignment between competition law and data governance, including rules on data portability and interoperability.

• Abuse of dominant bargaining position

  The scope of “dominant position” will be expanded to include “dominant bargaining position,” which frequently arises in partnerships between large enterprises and micro, small and medium enterprises (“MSMEs”). KPPU intends to scrutinise partnership arrangements that undermine MSMEs’ bargaining power or commercial independence.

• Recognition of indirect evidence

  The draft formally recognises economic and communication-based circumstantial evidence as legally valid “clues” (petunjuk). While indirect evidence is already recognised in KPPU Regulation No. 2 of 2023, this recognition is currently limited to KPPU internal proceedings. Elevating it to statutory level (i.e., as part of the Competition Law) will reduce inconsistencies in court reviews of KPPU decisions.

• Strengthening enforcement of KPPU decisions

  Currently, KPPU decisions are not directly enforceable and unpaid fines often become uncollectible. The draft introduces a court-based enforcement mechanism through collateral seizure (sita jaminan or conservatoir beslag) of the reported party’s assets. Under this system, after KPPU issues a decision, it may seek collateral seizure via the Commercial Court to ensure compliance by the reported party. If the party later wins an appeal, the seized assets must be released and returned.

  What remains unclear is the procedure, timing, and legal basis for such seizures, particularly whether they can be ordered at an interim stage (putusan sela) or only after a final ruling. This will be critical from a due process and enforcement-risk perspective.

Institutional Reforms

Beyond substantive changes to enforcement powers and market rules, the draft amendment also addresses the strengthening of KPPU’s institutional framework. These updates aim to enhance its independence, improve operational capacity, and ensure consistent enforcement of the reforms outlined above. Key proposal includes:

• Clearer legal status

  The draft codifies KPPU’s position as a state auxiliary body, providing a stronger legal foundation for its authority. This codification is consistent with Constitutional Court Decision No. 85/PUU-XIV/2016, which affirmed that KPPU is a state auxiliary organ, i.e., an independent state institution that functions to exercise state’s authorities on public needs but is not listed in the 1945 Constitution as a state organ.

• Civil service designation

  KPPU officers will be formally designated as civil servants (aparatur sipil negara or ASN). This change is intended to provide career protection and strengthen independence from external influence. This designation also confirms the recent appointment of KPPU’s officers as civil servants on 18 December 2025. As a result, KPPU officers will now be subject to the disciplinary, ethical, and supervisory systems applicable to civil servants.

• Regional expansion

  The draft calls for the establishment of additional provincial representative offices to strengthen the coverage and enforcement at the regional level. KPPU views this as an important step toward implementing administrative decentralisation. According to KPPU, expanding its presence through representative offices will enhance the effectiveness of enforcing the Competition Law across more cities.

  Currently, KPPU operates seven regional offices in Medan, Lampung, Bandung, Surabaya, Samarinda, Makassar, and Yogyakarta. However, KPPU has not clarified the distinction between “regional offices” and “representative offices”, other than the latter would extend KPPU’s reach to additional locations.

Antitrust Immunity

The draft amendment may also create space for new policy tools that could reshape businesses’ collaboration strategies. One such tool is the potential introduction of antitrust immunity procedures.
 
Although the current draft amendment does not include antitrust immunity, this amendment process offers a strategic moment to introduce and formalise such a mechanism. Doing so would align with KPPU’s recent approach of conditionally approving strategic partnerships, such as in the airline sector (see our Client Update dated 27 March 2025), and provide clear pathways for lawful collaboration.
 
Antitrust immunity is commonly used in other jurisdictions to advance broader public policy goals, including sustainability and net-zero emissions commitments. Under such a framework, certain cooperation between competitors or supply chain partners could be permitted in advance (ex ante), provided it meets regulatory safeguards. Examples include joint research and development, cost-sharing, or revenue-sharing arrangements, all of which are initiatives that drive innovation while supporting public interest objectives.

Key Takeaways

Although the official draft of the amendment is not yet available, KPPU has indicated in public forums that it is expected to be enacted around February 2026, subject to the legislative process. In light of this, businesses should begin assessing the potential implications, including those related to merger control. Key aspects such as filing timelines, documentation requirements, assessment frameworks, and notification thresholds and criteria may change once the new regime takes effect.  
 
The amendment will likely set out broad principles, with detailed procedures and technical implementation, such as those for pre-merger notification, leniency, and search and seizure to be addressed in implementing regulations. Until those regulations are issued, existing rules will continue to apply unless they conflict with the new law.
 
Current observations are based solely based on DPR’s hearing records, which are available in Indonesian at this link. Accordingly, the full scope of the changes may evolve once the official draft is released. During the hearing, DPR emphasised the need for clear procedures, particularly for leniency, and for balancing stronger enforcement powers with appropriate safeguards, including for MSMEs. Beyond these points, DPR expressed its support for passing the amendment to the Competition Law.
 
These developments may require significant compliance adjustments for companies operating in Indonesia. Early monitoring and internal review will help businesses manage risks and adapt to the upcoming changes.