Member Article

Although it is included in Indonesia’s annual national legislation program(Program Legislasi Nasional/Prolegnas)so far, the draft new Indonesian Competition Law which will replace Law No. 5 of 1999 on The Prohibition against Monopolistic Practices and Unfair Business Competition (the “Competition Law”), has not been passed. The Indonesian Business Competition Supervisory Board (Komisi Pengawas Persaingan Usaha/”KPPU”) has been pushing for the proposed changes to the Competition Law, including among others, those regarding merger control, to be issued as soon as possible. In theory, the new merger control provisions should come into force upon the issuance of the relevant implementing regulation.

The prevailing Indonesian merger control rules only require a post-merger notification under Government Regulation No. 57 of 2010 and KPPU Regulation No. 2 of 2013. The new KPPU commissioners, appointed April last year, with Kurnia Toha as the Head of the KPPU leading 9 (nine) commissioners, stress the urgency of changing the post-merger notification requirement to a pre-merger notification requirement. They believe that the post-merger notification regime creates uncertainty for business actors given the possibility of the KPPU annulling a transaction after the transaction has been completed.However, the KPPU confirms that to date, the KPPU has never annulled any transaction reported to it although it is not impossible that in the future, the KPPU will assess mergers more strictly and might annul transactions deemed to have the potential to result in monopolistic practices and/or unfair business competition, if regulators and legislators decide in the end not to impose a pre-merger notification requirement. It seems that the spirit of the KPPU’s assessing mergers more strictly is reflected in the KPPU’s proposed actions this year:

• the Prevention Deputy (Deputi Pencegahan) will no longer handle merger control matters, the Law Enforcement Deputy (Deputi Penegakan Hukum) will;

• assessments of mergers involving state-owned enterprises (Badan Usaha Milik Negara/BUMN) will be stricter, not waived automatically;

• partnerships (kemitraan) will be supervised more strictly.

Click this link to read the full advisory