The Indonesian competition authority (KPPU) recently imposed fines on two property companies as a result of their failure to notify it of acquisition transactions.
Under Indonesian competition law, a notification must be sent to the KPPU for any merger, consolidation or acquisition (MCA) that meets the prescribed criteria within 30 business days after the date of the legal effectiveness of the MCA transaction. Should a notification not be filed within the prescribed period, the KPPU may impose a fine of up to IDR1 billion ($70,000) a day, with a maximum overall ceiling of IDR25 billion.
PT Plaza Indonesian Realty Tbk (Plaza Indonesia) was fined IDR1 billion for the late notification of its acquisition of PT Citra Asri Property, while PT Nirvana Property (Nirvana) was fined the same amount for its late notification of the takeover of PT Mutiara Mitra Bersama. Plaza Indonesia's notification was 345 days late, while Nirvana's notification was 161 days late.
As far as we are aware, Plaza Indonesia and Nirvana are respectively the eigth and ninth companies that have been fined by the KPPU for filing late MCA notifications. To date, the KPPU has never imposed the maximum daily fine of IDR1 billion, or the total maximum fine of IDR25 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 file notifications in relation to their transactions within the prescribed period.
Plaza Indonesia and Nirvana may still appeal to the courts. However, based on case law, there appears to be little chance that the fines would be overruled on appeal. To date, all such court appeals have in the end been dismissed.
Based on informal discussions with representatives of the KPPU, we understand that the authority is in the process of looking into other late MCA notification cases. Consequently, it appears likely that the authority will impose fines on other companies in the near future.
The KPPU's recent enforcement efforts confirm the importance of always ensuring that an MCA transaction – even if foreign-to-foreign – complies with all of the criteria prescribed by Indonesian competition law.
|Gustaaf Reerink||Chandrawati Dewi|