Merger, consolidation and acquisition is a common transaction of business activity in the industry and modern business. However, this transaction can significantly impact the competition in the market. Therefore, the monitoring of business competition has an important role in maintaining the mergers, consolidation and acquisition transaction by the Business Competition Supervisory Commission (KPPU).
Notification Obligation of Mergers & Acquisitions
The obligation to notify the Business Competition Supervisory Commission has been stipulated in Law No. 5/1999 on Prohibition of Monopoly Practice and Unfair Business Competition. However, Article 29 of Law No. 5/1999 only stipulates that any merger, liquidation or acquisition of shares that cause the assets value and/or sale value exceed “a certain amount”, shall notify the KPPU 30 days since the day when the merger, liquidation or acquisition takes place without detail on the said certain amount.
In 2010, the government has issued Government Regulation No. 57/2010 on Merger or Consolidation of Business Entities And Acquisition of Company Shares which may result in Monopolistic Practices and Unfair Business Competition (GR No. 57/2010). KPPU has also issued KPPU Regulation No. 3/2023 on Assessments of Merger or Consolidations of Business Entities, or Acquisitions of Company Shares which may result in Monopolistic Practices and/or Unfair Business Competition (KPPU Regulation No 3/2023), which revoked KPPU Regulation No. 3/2019. In Article 2 paragraph (1) jo. Article 3 of KPPU Regulation No. 3/2023.
This KPPU regulation stipulates that a business actor must notify KPPU over a merger, liquidation or acquisitions based on following requirements:
- fulfilled the limit on the asset value and/or sales value;
- a change of control occurs;
- not a transaction between affiliated business actor; and
- a transaction between business actors who have assets and/or sales in Indonesia.
In addition to the requirements above, the business actor must notify the KPPU over a acquisitions if the merger, liquidation or acquisition:
- result in an improvement of control capability over a certain market by the business actor who does the acquisitions; and
- not included in the assets acquisitions transaction which exempted.
Moreover, the notification obligation to the KPPU, must be made in under these circumstances:
- merger, consolidation, or acquisition of company shares and/or assets among business practitioners in the banking sector, the obligation of notification applies to transactions with an Asset value exceeding IDR 20.000.000.000.000.
- In the event that only one of the parties conducting a merger, consolidation, or acquisition of company Shares and/or Assets is engaged in the banking field and another party engages in other fields, the business practitioner is obliged to notify the commission if the asset value of the business entity resulting from the merger, consolidation, or acquisition of company shares and/or assets exceeds IDR 2.500.000.000.000 or the sale value of business entities resulting from the merger, consolidation, or acquisition of company shares and/or assets exceeds IDR 5.000.000.000.000.
Notification Procedure to the KPPU
As stipulated in Article 8 of GR No. 57/2010 in conjuction with Article 2 paragraph 2 of KPPU Regulation No 3/2023, the notification shall be notified 30 days from the juridical effective date of the merger, at the latest, and the business actor shall submit to the KPPU based on following requirements:
- notification cover letter;
- identity card, assignment letter and/or power of attorney for a party representing the business actor;
- notification form (consists of merger form, consolidation form, or shares and/or assets acquisitions form); and
- supporting documents.
Furthermore, the supporting documents as mentioned in point (4) above consists of the following documents:
- audited financial statements for the last three years with the following provisions:
- in the acquisition transaction of company shares and/or assets, the acquisition shall be the takeover company up to the highest business entity and its subsidiaries, and the company that is taken over and its subsidiaries;
- in a merger, consolidation, or shares and/or assets acquisitions transaction occurs outside of Indonesia, attaching the financial statements of its subsidiaries which have business and/or sales in Indonesia;
- in an assets acquisition transaction, the financial statements of the acquisitor company until the holding and its subsidiaries;
- in a consolidation transaction, the financial statements of the company receiving the consolidation until the holding and its subsidiaries, and the company that does the consolidation and its subsidiaries;
- in a merger transaction, the financial statements of the company receive the consolidation until the holding which controls the company resulting from such merger and its subsidiaries;
- scheme of the group structure of business practitioners before and after the merger, consolidation, or acquisition of company shares and/or assets transactions;
- amendments to the articles of association before and after the transaction of:
- The business actor doing the consolidation and the company resulting from the consolidation;
- The business actor receiving the consolidation;
- The business actor doing the merger and the company resulting from the merger;
- The business actor who does the acquisition and the company which acquired; and/or
- The business actor who receives or acquires assets;
- company profile which at least contains the company’s identity including information on the structure of shareholders, commissioners, and directors, a list and description of products produced by the company, and marketing reach;
- transaction summary that contains at least juridical effective date, transaction value, and agreements related to the transaction;
- business plan after the transaction is carried out by the parties; and
- impact analysis that contains at least an estimate of the market share of the parties, the affected markets related to the transaction, and the benefits of the transaction for the parties.
- In an acquisition transaction less than or equal to 50%, the company shall submit the company legality documents which contain the board of management and the control form of the shareholders before and after the transaction.
However, based on Article 13 of KPPU Regulation No. 3/2023, such notification is submitted through www.notifikasi.kppu.go.id by registering an account. One account is only valid for one transaction. The business actor is able to represent their rights to an attorney by attaching a power of attorney.
After receiving the notification, the KPPU will conduct a checking for the documents at the latest three days after such notification is submitted and issue a statement that contains the notification registration number and the detail of mandatory or non-mandatory notification.
In addition , according to Article 6 of GR No. 57/2010, if the business actor does not comply to notify the KPPU regarding a transaction that fulfilled the requirements as stipulated above, the business actor will be subject to an administrative fine in the amount of IDR 1.000.000.000 for each day of delay with the maximum amount of IDR 25.000.000.000.
| Avan Oktabrian Buchori, S.H.
Mail : @siplawfirm.id
Phone : +62-21 799 7973 / +62-21 799 7975