NOTIFICATION OF MERGER, CONSOLIDATION, AND/OR ACQUISITION OF SHARES AND/OR ASSETS

REGULATION OF THE COMMISSION FOR THE SUPERVISION OF BUSINESS COMPETITION NUMBER 3 OF 2023 ON ASSESSMENT OF MERGER, CONSOLIDATION, OR ACQUISITION OF SHARES AND/OR ASSETS WHICH MAY RESULT IN MONOPOLY PRACTICES AND/OR UNFAIR BUSINESS COMPETITIONS

A. Introduction

In an economic activity, it is very common for one or several business owners to consolidate themselves through corporate actions in the form of mergers, consolidations, and/or acquisitions. Under Article 126 paragraph (1) item c of Law Number 40 of 2007 on Limited Liability Companies (“Law No. 40/2007”) juridical acts of merger, consolidation, and/or acquisition must take into account the public interest and fair competition in conducting business (1). In some cases, a merger, consolidation, and/or acquisition can lead to unfair business competition. Uncontrolled mergers, consolidations, and/or acquisitions have the potential to cause a lack of choice for consumers, resulting in increased prices, and decreased service quality. Law Number 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competitions (“Law No. 5/1999”) was established with one of the objectives being to avoid the concentration of economic power in certain individuals or groups (2)

An assessment of whether a merger, consolidation, and/or acquisition may result in a monopolistic practice and or an unfair business competition is left to the Commission for the Supervision of Business Competition (KPPU), an independent agency free from the influence of the government and other parties, which has the authority to supervise and impose penalties (3). In Government Regulation Number 57 of 2010 on Mergers or Consolidations of Business Entities and Acquisitions of Company Shares Which May Result in Monopolistic Practices and Unfair Business Competitions (“Gov. Reg. No. 57/2010”), Article 3 paragraph 1 stipulates that KPPU has the right to conduct an assessment against a merger or acquisition of company shares which has been legally effective, which is suspected of causing a monopolistic practice and/or unfair business competition (4).

Based on this authority, KPPU then issued KPPU Regulation Number 3 of 2023 on Assessment of Mergers, Consolidations, or Acquisitions of Shares and/or Assets Which May Lead to Monopolistic Practices and/or Unfair Business Competitions (“Perkom No. 3/2023”). Perkom No. 3/2023 is a replacement regulation for KPPU Regulation Number 3 of 2019 on Assessment of Mergers or Consolidations of Business Entities, or Acquisitions of Company Shares which May Lead to Monopolistic Practices and/or Unfair Business Competitions. 

At this time, the author intends to briefly discuss the obligation to notify or to send a notification to KPPU in the event of an act of merger, consolidation, or acquisition of shares and/or assets which meets certain requirements (“Notification”).

B. Discussion

Under Law No. 5/1999, a juridical act of merger, consolidation, and/or acquisition resulting in the value of assets and/or sales exceeding a certain value must be notified to KPPU no later than 30 (thirty) days from the date of the merger, consolidation, and/or acquisition (5). Furthermore, Article 1 point 17 of Perkom No. 3/2023 defines ‘Assets’ as ‘movable and immovable objects, both tangible and intangible, which have economic value’. While ‘Sales’ under Article 1 point 15 of Perkom No. 3/2023 is defined as ‘gross inflow of economic benefits arising from the activities of a Business Entity during a certain period and not originating from investment contributions’.

Under Perkom No. 3/2023, an act of merger, consolidation, and/or acquisition of shares and/or assets (“Transaction”) must be notified to KPPU, if the Transaction causes:

  1. the value of the business owner’s assets resulting from the Transaction exceeds IDR 2,500,000,000,000.- (two trillion five hundred billion Rupiah); or
  2. the value of the business owner’s sales resulting from the Transaction exceeds IDR 5,000,000,000,000.- (five trillion Rupiah) (6)

In the event that the Transaction is conducted by a bank, the Notification obligation applies if the value of the Business Owner’s Assets resulting from the Transaction exceeds IDR 20,000,000,000,000.- (twenty trillion Rupiah), and if only one of the parties conducting the Transaction is a bank, then the Notification must be made if the value of the business owner’s Assets resulting from the Transaction exceeds IDR 2,500,000,000,000.- (two trillion five hundred billion Rupiah) or the value of the Business Owner’s Sales resulting from the Transaction exceeds IDR 5,000,000,000,000.- (five trillion Rupiah) (7).

Furthermore, in addition to the limit on the value of Assets and/or Sales, Perkom No. 3/2023 also requires an asset acquisition transaction to be notified to KPPU, provided that (8):

  1. the asset acquisition transaction results in an increase in the ability to control certain markets by the business owner conducting the asset acquisition; and
  2. it does not include an acquisition of excluded assets.

In the event of a Transaction, the business owner who is required to submit a Notification is: (9)

  1. a business owner receiving the merger;
  2. a smelting business owner;
  3. a business owner who acquires shares; or
  4. a business owner who acquires assets.

Regarding the period that must be fulfilled, a Notification must be submitted no later than 30 (thirty) working days from the date the Transaction becomes legally effective (10). The term ‘legally effective’ refers to (11) 

  1. the date of the Minister’s approval of the amendment to the articles of association in the case of a limited liability company merger;
  2. the date of the Minister’s approval of the deed of establishment of a limited liability company in the event that the consolidation is carried out by a limited liability company;
  3. the date of the notification received by the Minister regarding the amendment to the articles of association in the event that the acquisition of shares is carried out by a limited liability company;
  4. the date of the asset sale and purchase agreement and/or asset transfer documents in the event that the asset acquisition is carried out by a limited liability company; 
  5. the date of the information disclosure letter regarding the implementation of the Transaction submitted to the Financial Services Authority in the event that the Transaction is carried out by a public company against a public company;
  6. the last date for payment of shares and/or other equity securities in the exercise of pre-emptive rights in the event that the Transaction is conducted by a closed company against a public company;
  7. the date the agreement was signed by the parties in the event that the Transaction is conducted by a business owner that is not in the form of a limited liability company; or
  8. the date of signing of the agreement or the date of closing of the Transaction by the parties, or the date of government approval of the parties in the event that the Transaction occurs outside the territory of the Republic of Indonesia.

In the event that the Notification is neglected or conducted late, Perkom No. 3/2023 stipulates that KPPU will conduct an investigation into the alleged delay of Notification (12). By not ruling out an investigation into a delay or negligence of Notification, KPPU will also conduct an initiative assessment of a Transaction that is subject to the mandatory requirements for Notifications but no Notifications have been submitted (13) , to assess whether the Transaction has the potential to result in a monopolistic practice and/or unfair business competition. 
If KPPU declares that the business owner is negligent in submitting a Notification or is late in submitting the Notification, then under Article 47 paragraph (2) of Law No. 5/1999 as amended by Law Number 6 of 2023 on Government Stipulations in lieu of Law Number 2 of 2022 on Job Creation to become Law juncto Article 6 Gov Reg No. 44 of 2021 on the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competitions, KPPU can impose penalties in the form of administrative actions against business owners. Under Article 6 of Gov Reg No. 57/2010 a failure to submit a Notification will result in the imposition of a penalty in the form of administrative fine of IDR 1,000,000,000.- (one billion Rupiah) per day of delay, for a maximum of IDR 25,000,000,000.- (twenty-five billion Rupiah)


  1.  Article 126 paragraph (1) item c of Law No. 40/2007,
  2.  Paragraph 6, line 4, Page 2 of the Elucidation of Law No. 5/1999
  3.  Paragraph 9, line 3, page 2 of the Elucidation of Law No. 5/1999
  4.  Article 3 paragraph (1) of Gov Reg No. 57/2010
  5.  Article 29 paragraph (1) of Law No. 5/1999
  6.  Article 6 paragraph (1) of Perkom No. 3/2023
  7.  Article 6 paragraph (3) of Perkom No. 3/2023
  8.  Article 3 paragraph (2) of Perkom No. 3/2023
  9.  Article 13 paragraph (1) of Perkom No. 3/2023
  10.   Article 2 paragraph (2) of Perkom No. 3/2023
  11.   Article 4 paragraph (1) of Perkom No. 3/2023
  12.  Article 46 paragraph (1) of Perkom No. 3/2023
  13.  Article 45 paragraph (2) of Perkom No. 3/2023

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