Answer ... The transactions that are subject to the merger control regime are mergers, consolidations and share acquisitions. In general, a ‘merger’ is defined as a combination of two entities in which one entity is dissolved and the other survives. A ‘consolidation’ is a consolidation of two entities in which both entities are dissolved and a new entity is established.
A ‘share acquisition’ is defined as a legal action undertaken by a business actor to acquire shares in a company which may result in a change of control over the target company (see question 2.2 on the test for control).
Answer ... Under GR 57/2010, control over a company is deemed to exist where a business actor or business actors acting together:
- own(s) more than 50% of the shares or voting rights of the company; or
- own(s) 50% or less of the shares or voting rights of the company, if and to the extent that such person or person(s) acting together can influence and determine that company’s policy or management.
There are no clear criteria to determine when a party is deemed able to influence and determine a company’s policy or management; therefore, this is determined by the Business Competition Supervisory Commission (KPPU) on a case-by-case basis.
Answer ... If an acquisition of minority interests does not result in a change of control, it will not be categorised as an ‘acquisition’ in the context of the merger control regime. An acquisition of minority interests might still be considered a change of control if, for example, the acquirer enters into a shareholders’ agreement with the other shareholders under which it will have a certain degree of control through the ability to appoint a majority of management members.
Answer ... Currently, the establishment of a joint venture is not in itself a notifiable transaction. However, if a transaction involving a joint venture constitutes a merger under the Anti-monopoly Law, the transaction will be notifiable.
Answer ... In its guidelines, the KPPU has taken the position that it has jurisdiction over any merger located outside Indonesia if the transaction directly affects the Indonesian domestic market in any of the following manners:
- All parties involved in the merger, consolidation or share acquisition conduct business activities in Indonesia, whether directly or indirectly, such as through Indonesian subsidiaries;
- One of the parties to the merger, consolidation or share acquisition operates in Indonesia and the counterparty has sales in Indonesia; or
- One of the parties to the merger, consolidation or share acquisition operates in Indonesia and the counterparty has a sister company that operates in Indonesia.
Accordingly, and in addition to the above, foreign-to-foreign mergers will be caught by Indonesia’s merger control regime if the relevant filing thresholds are met and the parties involved in the merger are not affiliates.
Answer ... GR 57/2010 applies the following alternative thresholds to assess whether a transaction is subject to merger control, both of which are calculated on a nationwide basis:
- The combined value of assets in Indonesia exceeds IDR 2.5 trillion; or
- The combined turnover in Indonesia exceeds IDR 5 trillion.
Only turnover relating to customers located in Indonesia and the value of assets located in Indonesia are taken into account.
The turnover or assets to be taken into account for verification against the thresholds are the relevant nationwide turnover/asset value mentioned above of the parties involved in the merger, as well as that of the group companies of the parties.
There are no specific rules for calculating the relevant nationwide turnover/asset value; the calculation is based simply on the cumulative relevant nationwide turnover/asset value of the parties and their group companies. The relevant nationwide turnover/asset value of non-wholly owned group companies is included in full in such calculation, provided that they are controlled by the relevant party.
The calculation is based on the most recent audited (annual) financial reports of the parties and their group companies. Specific rules apply to significant swings of more than 30% in turnover/asset value. Since only national turnover is taken into account, revenue derived from export activities should be excluded from the calculation.
Significantly higher thresholds apply in the banking sector. For banking transactions, post-merger notification is required if the combined value of assets in Indonesia exceeds IDR 20 trillion.
If the transaction is conducted between a bank and a non-banking institution, the applicable threshold is a combined value of assets in Indonesia that exceeds IDR 2.5 trillion.
Answer ... A merger, consolidation or share acquisition conducted between affiliated parties is exempt from mandatory post-merger notification. Parties are considered to be affiliated if:
- one controls the other (whether directly or indirectly); or
- they are controlled by the same entity.
Mergers, consolidations and share acquisitions between companies that are controlled by the government (eg, state-owned enterprises) do not qualify for this exemption.