|Freddy Karyadi||Oene Marseille|
Recently Indonesia implemented its merger and acquisition notification regulation which had been dormant for many years.
More than a decade after Law No. 5 1999, concerning the prohibition of monopolistic practices and unfair business competition (Anti-Monopoly Law) which mandates the implementation of a regulation on the prohibition of merger or consolidation and shares acquisition causing monopolistic practices and unfair business competition (the Transaction) and the mandatory notification to the Commission for the Supervision of Business Competition (KPPU) for any transaction having assets or value exceeding certain nominal value or threshold (Material Transaction) last month, the Indonesian Government enacted Government Regulation No. 57 2010 on merger or consolidation and shares acquisition which may cause the conduct of monopolistic practices and unfair business competition (GR 57/2010).
GR 57/2010 provides that a transaction can be classified as such Transaction if the resulting/surviving entity or the acquirer of the shares is suspected to have: entered into a prohibited agreement, conducted a prohibited activity and/or misused its dominant position.
Any party performing a Material Transaction (except for a transaction conducted with an affiliated party) having total asset value in excess of Rp 2.5 trillion ($278 million) and/or acquisition value in excess of Rp 5.0 trillion ($555 million) with the exception of the banking sector which may enjoy a higher threshold of total asset value in excess of Rp 20 trillion (approx $2.22 billion) shall report it to the KPPU. Such mandatory notification must be submitted within 30 working days after the effectiveness of the transaction, or otherwise be subject to administrative sanctions of Rp 1 billion up to a maximum of Rp. 25 billion (approx $2.8 million) per day. A party may voluntarily notify, prior to the execution of the transaction in order to seek input from the KPPU, however, this would not waive any of the KPPU's right to re-asses the transaction.
On the basis of suspicion/expectation and/or mandatory notification of Material Transaction, the KPPU may perform an assessment (including applying certain analysis and requesting information from various parties) to a transaction (which has been effective). As a result of such assessment, the KPPU may impose administrative sanctions in various forms such as revocation of agreements, imposition of fines from Rp 1 billion (approx $110,000) up to Rp 25 billion (approx $2.8 million), imposition of compensation, ceasing the prohibited practices and/or activity and stipulating the cancellation of the effectiveness of the transaction.