KPPU has recently issued its long-anticipated guidelines on the Indonesian merger control rules (“KPPU Guidelines”) under KPPU Regulation No. 3 of 2019 on The Assessment of Mergers or Consolidations of Business Entities or Acquisitions of Shares in Companies (“KPPU Regulation 3/2019”) issued at the end of last year. The guidelines are relatively long and detailed (almost 100 pages), and some of their content is still subject to the KPPU’s interpretation. Below we discuss the key take away points of these new KPPU Guidelines, especially regarding the matters the introduction of which under KPPU Regulation 3/2019 was controversial.
Share Acquisitions, Asset Thresholds and Acquisitions of Instruments Deemed Similar to Shares
The KPPU Guidelines stress that in addition to conventional share acquisition transactions, merger control rules and postacquisition notification requirements also apply to share acquisitions on the stock exchange, share acquisitions through capital increases (the issuance of new shares) and, interestingly, acquisitions of other instruments with share-like characteristics such as assets and participating interests. An example is the acquisition of a participating interest in the oil and gas sector which is now also subject to the merger control requirements. On the other hand, the KPPU Guidelines explain that the acquisition of shares without voting rights or with limited voting rights (preferred stock) does not cause a change of control in the company and therefore does not need to be notified to the KPPU.
The KPPU Guidelines confirm (implicitly, still) that the sales/revenue and asset value taken into account for threshold calculation purposes are the Indonesian sales/revenue (excluding exports) and global assets of the parties. The same assets and sales/revenue thresholds apply, i.e. audited figures of IDR 5 trillion for sales/revenue and IDR 2.5 trillion for assets (for non-banking industries) on a group basis (including the ultimate HoldCo and all controlled subsidiaries).
Read more about it in the pdf.