By Gustaaf Reerink and Bilal Anwari, ABNR

The Indonesian Competition Authority (“KPPU”) recently imposed fines on two companies for failure to notify their acquisitions to it.

 Indonesian competition law requires that a merger, consolidation or acquisition meeting certain criteria should be notified to the KPPU within 30 business days after the transaction becomes legally effective. In the event of a failure to notify within 30 business days, the KPPU may impose sanctions in the amount of IDR 1 billion (approximately USD 70,000) per day, up to a maximum of IDR 25 billion (approximately USD 1.75 million).

 PT Plaza Indonesian Realty, Tbk. (“Plaza Indonesia”) was fined IDR 1 billion for its late notification of the acquisition of PT Citra Asri Property, while PT Nirvana Property (“Nirvana”) was fined the same amount for its late notification of the acquisition of PT Mutiara Mitra Bersama. PT Plaza Indonesia Realty Tbk.’s notification was late by 345 days, while PT Nirvana Property’s was 161 days late.

 As far as we are aware, Plaza Indonesia and Nirvana are respectively the eighth and ninth company that has been fined by the KPPU for late notification of transactions. The KPPU has to date never imposed the maximum daily fine of IDR 1 billion or the total maximum fine of IDR 25 billion. However, there is no clear correlation between the number of days of delay and the size of the fines that have thus far been imposed, resulting in a high degree of legal uncertainty for companies that fail to notify their transactions within the prescribed period.

 The KPPU’s decisions to fine Plaza Indonesia and Nirvana may still be appealed to the courts. However, based on existing case law, there appears to be little chance that these KPPU decisions would be overruled on appeal: public records reveal that to date, all such court appeals have in the end been dismissed.[1]

 Based on informal discussions with representatives of the KPPU, we understand that the authority is currently looking into other cases of late notification. Therefore, it is likely that the KPPU will impose fines for late notification on other companies in the near future.

 The KPPU’s recent and ongoing enforcement efforts reconfirm the importance of always assessing whether a transaction – even if foreign-to-foreign – constitutes a merger, consolidation or acquisition within the meaning of Indonesian competition law, and meets all of the following criteria:


 A notifiable transaction should meet the following thresholds:

  • the combined asset value exceeds IDR 2.5 trillion (approximately USD 185 million at current exchange rate) (for banking businesses the threshold is IDR 20 trillion or approximately USD 1.48 billion); and/or
  • the combined sales value exceeds IDR 5 trillion (approximately USD 370 million).

 The KPPU Guidelines provide that relevant for the calculation are the assets and/or sales (excluding exports) in Indonesia of:

  • the target,
  • the acquirer,

  • the ultimate shareholders of the target/the acquirer, and

  • all controlled direct and indirect subsidiaries of the ultimate shareholders, the acquirer and the target.

 Direct impact on Indonesian market

 A transaction is deemed to have a direct impact on the Indonesian market if the target is an Indonesian business entity (e.g. a Perseroan Terbatas or PT) or:

  • all parties involved in the transaction are conducting business in Indonesia, whether directly or indirectly (the KPPU Guidelines give an example of “conducting business” through controlled subsidiaries in Indonesia), or
  • one of the parties to the transaction is conducting business in Indonesia while the other party is conducting sales in Indonesia, or

  • one of the parties to the transaction is conducting business in Indonesia while the counterparty has a sister company conducting business in Indonesia.

 According to the KPPU Guidelines, other mergers, consolidations or acquisitions involving a foreign party are assessed by the KPPU on a case by case basis, where the KPPU will look whether (i) the transaction has any effect on local competition and (ii) its authority can effectively be applied. Therefore, if the three other criteria are met, it is advisable to always notify the transaction to the KPPU.

 Conducted between non-affiliated companies

 If the transaction is conducted between affiliates, the transaction is exempted (regardless if other criteria are met). According to the KPPU Guidelines, a company is an affiliate of another if:

  • it either directly or indirectly controls or is controlled by that company,
  • both it and the other company, directly or indirectly, are controlled by the same parent company, or

  • there is a “main principal shareholder” relationship with the counterparty (pemegang saham utama).

If the target is foreign, the aforementioned should be determined on the basis of the law applicable in the jurisdiction in which the target is established and domiciled.


[1] See Supreme Court Decisions No. 679 K/Pdt.Sus-KPPU/2014 and No. 29 PK/Pdt.Sus-KPPU/2017; Supreme Court Decisions No. 687 K/Pdt.Sus.KPPU/ 2014 and 51 PK/Pdt.Sus-KPPU/2016; Supreme Court Decision No. 95 K/Pdt.Sus-KPPU/2015; and Supreme Court Decision No. 310 K/Pdt.Sus-KPPU/2017.

Related Articles by Firm
New Provisions to support the use of Renewable Energy for Electricity Generation
Despite the primary role that coal and gas continue to play in meeting Indonesia’s electricity needs, the Government of Indonesia (“GoI”) seems to be demonstrating a commitment to promote renewable energies ...
Indonesia: New Regulation Regarding Public Companies’ Shareholding Reporting Obligation
The Financial Services Authority has updated public companies’ obligation to report on their shareholding by way of OJK Regulation No. 11/POJK.04/2017 regarding Report on Public Company Ownership ...
Related Articles
Are you ready for the global tax reform?
A brief discussion on how MNCs should respond to the OECD’s new measures relating to Automatic Exchange of Information and Transfer Pricing issues
Vietnam: Remarkable changes in the new Law on Enterprises
On June 17, 2020, the National Assembly officially passed a new Law on Enterprises to replace the current Law on Enterprises ...
Copyright and remote learning in the time of Covid-19
On August 15, 2020, Philippines’ President Rodrigo Duterte approved the recommendation of Department of Education Secretary Leonor Briones to defer the opening of classes from August 24, 2020 to October 5, 2020 in view of the Covid-19 pandemic ...
Related Articles by Jurisdiction
Bank Indonesia issues a new regulation on the reporting of foreign exchange flows
Bank Indonesia (BI) recently issued Regulation No. 21/2/PBI/2019 on the Reporting of Foreign Exchange Flow Activities ...
Compliance road map for companies
Compliance is an important issue for foreign investment companies doing business in Indonesia. As international organisations, foreign investment companies are not only …
Latest Articles
Are you ready for the global tax reform?
A brief discussion on how MNCs should respond to the OECD’s new measures relating to Automatic Exchange of Information and Transfer Pricing issues
Sanctions and Investigations Q&A
Asian-mena Counsel sought wise counsel on the key issues in these risk-heavy areas from those with expertise at leading International law firm Baker McKenzie, and two thought-leading GC’s ...