20/12/2010
KPPU REGULATION ON MERGERS AND ACQUISITIONS
The Business Competition Supervisory Commission (“KPPU”) on 18 October 2010 issued the Implementing Guidelines for Mergers and Acquisitions that May Result in Monopolistic Practices and Unfair Competition in its Regulation No. 13 of 2010 (“Regulation”). The Regulation is the implementation regulation for Articles 28 and 29 of the Law No. 5/1999 on Prohibition of Monopolistic and Unfair Business Practices (the “Law”) as well as for the recent Government Regulation No. 57/2010 on Mergers and Acquisitions that May Result in Monopolistic and Unfair Competition Practices (“GR”).
Chapter III of the Regulation attempts to clarify the meaning of the terms by providing detailed definitions, explanation of the terms’ usage and illustrations of the forms of prevalent mergers and acquisitions, such as those between privately held companies, between private and public companies, or between public companies.
Article 29 of the Law and GR basically allows businesses to either file a post-merger notification or conduct a pre-merger consultation with KPPU. The Regulation provides the procedures and mechanism for both of these acts. KPPU will also extend its services to mergers and acquisitions outside of Indonesia that have an impact in Indonesia.
Under the Regulation, the KPPU will make an assessment of whether a merger or acquisition may cause a monopolistic or unfair business practice as meant by Article 28 of the Law. The assessment will be made by analyzing the following: (i) market concentration; (ii) entry barrier; (iii) anti competitive behavior of the business actors; (iv) efficiency objective of the M/A activities; and (v) bankruptcy element in the M/A processes. The mechanism of the assessment as well as for the assessment outcome and notification are stipulated in the Regulation.
The Regulation became effective immediately upon its issue. (by: Hamud M. Balfas).