28 Apr 2017

The Indonesian antitrust bill (the “Bill”) is still being deliberated in the House of Representatives (DPR). The Bill was originally proposed in 2014 in the National Legislation Program (Prolegnas), a program established by the DPR and the Government as an instrument for the formation of legislation. It is unclear whether the Bill will be further amended and when or if it will finally be enacted into law.


The Bill proposes amendments which would strengthen the position of the Indonesian Business Competition Supervisory Commission (the “KPPU”) in enforcing the prohibition of monopolistic practices and unfair business competition. It also introduces several new elements, two of which are significant: (i) the pre-merger notification requirement, which now also applies to greenfield joint ventures and asset acquisition transactions, and (ii) the leniency program.


The pre-merger notification


The current antitrust law, Law Number 5 of 1999, imposes on companies the obligation to notify the KPPU of a merger or consolidation or share acquisition that meets certain conditions and thresholds, i.e. is a transaction that has a direct impact on the Indonesian market, has a certain sale and/or asset value and is between non-affiliated parties, and they conducted within 30 days as of its occurrence. In addition, the KPPU through its Regulation Number 13 of 2010 on Guidelines for the Implementation of Company Mergers or Consolidations and Share Acquisitions which could Trigger Monopolistic or Unfair Business Practices (as amended several times and most recently by KPPU Regulation Number 2 of 2013) created a voluntary pre-merger notification option. With the post-merger notification being a requirement still, this may result in the KPPU’s opinion on the post-merger being different from the opinion it issues in the framework of the pre-merger notification. The current Law Number 5 of 1999 does not impose a notification requirement on greenfield joint ventures and asset transactions.


The Bill brings an end to the voluntary character of the pre-merger notification. It obliges companies to obtain the KPPU’s approval prior to a merger, consolidation, or share or asset acquisition that meets the prescribed conditions and thresholds described above. The Bill may also impose the pre-merger notification requirement on companies establishing a joint venture or engaged in an asset acquisition transaction.


The pre-merger notification procedure starts with the filing of a request for the KPPU’s appraisal of the merger, consolidation, acquisition plan, and of the joint venture company establishment plan. The plan is to be appraised by a tribunal of the KPPU within 25 working days as of the submission of the notification.


The sanctions stipulated by the Bill for non-compliance with the rules are; an obligation to cease the non-compliance, refusal or annulment of the merger or consolidation, or acquisition or establishment of the joint venture company; a fine of 5% to 30% of the company’s sales value or transaction value; a recommendation to the relevant authority for the revocation of business permits; blacklisting of the company.


The leniency program


The Bill also introduces a leniency program, under which companies that admit that their activities have infringed the Bill will receive amnesty or punishment reduction. This leniency program covers several types of violations, such as oligopoly, price fixing, boycotting, area distribution, trust, oligopsony, contract with foreign parties, and conspiracy. The leniency program should also apply to infringements which occurred under the current antitrust law but are admitted after the Bill has been enacted into law.


Other noteworthy changes included in the Bill are the expansion of the antitrust law’s reach - which now include the prohibition from misusing the dominant bargaining position, the inclusion of intellectual property agreements and franchise agreements as agreements which are obliged to comply with the Antitrust provisions, and the imposition of tighter sanctions. (by Gustaaf Reerink)