INDONESIA: An Introduction to Competition/Antitrust

Navigating Global Transactions to Comply With Indonesian Competition Merger Control Requirements

Merger control regime and coverage of notifications

Indonesia has a mandatory post-closing notification system for mergers, consolidations, and acquisitions of shares or assets for transactions (“Mergers”) that fulfil notification criteria (“Notification”) regulated under Article 29 of Law No 5 of 1999 on the Prohibition of Monopoly Practices and Unfair Business Competition as amended by Law No 6 of 2023 on the Stipulation of Government Regulation in conjunction with Law No 2 of 2022 on Job Creation into Law (or Indonesian Competition Law/ICL). Notification must be made to – and a registration number received from – the Komisi Pengawas Persaingan Usaha (KPPU), also known as the Indonesia Competition Commission, within 30 business days of the effective date of a transaction.

The KPPU has been actively monitoring domestic and foreign transactions since 2010. Based on ICL and Indonesian Merger Regulations (IMR), the KPPU accepts and reviews the Notification, and can order the parties to unwind an already-closed transaction under certain circumstances. The IMR covers ICL along with Government Regulation No 57 of 2010 on Government Regulation No 44 of 2021 on The Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition, as well as KPPU Regulation No 3 of 2023 on the Assessment of Mergers, Consolidations, or Acquisitions of Shares and/or Assets that May Result in Monopolistic Practices and/or Unfair Business Competition.

Unwinding a completed transaction is nevertheless complicated. Therefore, the IMR provides a voluntary consultation procedure (the Consultation) if the parties to a planned transaction wish to obtain the KPPU’s review of the transaction before closing it. This does not remove the obligation of a Notification submission once the transaction closes/ becomes effective.

Besides reviewing Notification and Consultations, the KPPU can initiate an investigation on a potential violation of competition law over a Merger that leads to a monopoly or anticompetition as regulated under Article 28 of ICL. This may also happen in the case of a Merger that does not satisfy Notification criteria and may give rise to anticompetitive concerns.

Triggering criteria

Notification also applies to transactions that meet all of the four criteria below:

1. the parties’ combined asset or revenue value on a group basis is or exceeds any of the following thresholds:

• IDR2.5 trillion (approximately USD152 million) for Indonesian assets;
• IDR5 trillion (approximately USD304 million) for Indonesian revenue;
• a higher revenue threshold, applicable for transactions between banks, equal to or exceeding IDR20 trillion (about USD1.219 billion. A transaction between a non-banking entity and a bank will apply non-bank thresholds. No assets value threshold is applicable for transactions between banks.·

1. the transaction results in a change of control of the target entity or asset; 
2. the deal takes place between non-affiliated or independent entities;
3. the deal fulfils the local nexus test – ie, both parties on a group basis have assets or generate sales in Indonesia. If only one party has a local presence, the transaction is not notifiable.

Additional criteria are applicable for assets acquisitions:

• they confer on the acquirer the ability to control a certain market; and
• they concern types of non-exempt asset.

Unlike in other jurisdictions, IMR applies group-wide thresholds, meaning that even unrelated business assets in or sales in or to Indonesia count. It also lacks a de minimis rule, requiring notification even if Indonesian market sales are negligible, provided other criteria are met. Control for IMR purposes means owning over 50% of shares/voting rights, or less than 50% if the ability to influence or determine company management is still conferred. Proxies for such influence include the right to nominate a majority of directors or board of commissioners, to veto business plan-/budget-related reserved matters, and to appoint a president or finance or operations director. The board of commissioner under Indonesian company law supervises and advises the board of directors (as the two-tier board regime is adopted).

Notification procedure

The IMR generally does not accept a group submission. It requires individual notifications by the direct surviving party within 30 working days of the transaction’s effective date. The surviving party is defined as the direct acquirer in asset/share deals, or the party accepting merger/consolidation. Filings are online, incurring a fee capped at IDR150 million (approximately USD9,146), which can sometimes be refunded or waived. With no simplified procedure, reviews can extend to five or six months, including additional requests for information and hearings. One of the reviews is on the potential competition impact of the transaction, so proper assessment must be prepared accordingly.

Transactions that are exempt from notification obligations

While current merger control carves out notification for greenfield joint venture (JV), this only applies to entities established from the ground up by controlling parties, and not the acquisition of existing shell or special purpose vehicle companies. Asset acquisitions are exempt from notification if their value is less than IDR250 billion (approximately USD15.2 million), if they are routine, or if they are unrelated to the acquiring party’s core business (eg, for corporate social responsibility, non-profit, or legally mandated activities). Transactions meeting general ICL exemption criteria (eg, mandated by legislative law) can also be exempt.

KPPU remedies

While the KPPU can issue both structural and behavioural remedies under ICL Article 29, it predominantly opts for behavioural remedies in problematic transactions, such as periodic reporting and commitments to avoid dominance abuse. For example, in the shares acquisition of PT Tokopedia by TikTok Nusantara (SG) Pte/Ltd, behavioural remedies restricted predatory pricing and self-preferencing. Despite its authority, the KPPU has not yet issued any structural remedies. Uniquely in Indonesia, remedy proposals originate from the KPPU, and outright rejection – either in part or in full – could ultimately lead to non-compliance findings and subsequent competition litigation.

Year in numbers: Sanctions for not filing; foreign-to-foreign transactions

Failure to notify the KPPU can result in an administrative fine of IDR1 billion (approximately USD59,400) per day delay up to IDR25 billion (approximately USD1.48 million) being imposed on the notifying party. Although there was a decline in notified foreign transactions from 63 to 41 of total transactions in 2023 to 2024, this should not result in merger-control compliance being relaxed, and the KPPU released a statement recently highlighting its supervision of mergers in the digital economy.

Expected amendments and key takeaways

The ICL has been processing amendments which are expected to shift merger control from post-closing to mandatory pre-closing clearance, among other things. While the KPPU chairman aims to conclude these this year, a detailed timeline has not yet been made public. Businesses should monitor updates to ensure ongoing compliance.