There is no provision concerning the deadline for filing a pre-merger notification, and accordingly, no sanction applies. A post-merger notification, on the other hand, has to be made within 30 working days of the date on which the merger becomes legally effective. For a merger involving an Indonesian limited liability company, the definition of ‘legally effective’ refers to the following alternative conditions:
- approval by the Minister of Justice and Human Rights upon the amendment of the articles of association, in case of a merger;
- receipt by the Minister on notification for particular amendments; or
legalisation by the Minister upon the deed of establishment of the company, in case of a consolidation.
In general, notification shall be made within 30 working days of the closing date. In a merger between foreign companies, the merged entity needs to provide an official document indicating that the merger has been completed. Where there are no official documents released by the relevant authority, the KPPU may accept other documents such as a statement letter stamped and signed by an authorised representative of the merged party indicating the completed merger. This alternative option is subject to change and solely at the KPPU’s discretion.
If the merged party fails to meet the deadline, according to the Commission Regulation 02/2013, the KPPU may impose fines in the amount of 1 billion rupiah per day commencing after 30 working days, with a maximum fine of 25 billion rupiah. To date, there have been fifteen decisions issued in relation to the failure to notify a merger. Under Commission Decision No. 08/KPPU-M/2012, the KPPU decided that the notification made by PT Bumi Kencana Eka Sejahtera was still in good time for notification, as the calculated cut-off date was the date of Acceptance Letter of the Change of Data of PT Andalan Satria Lestari. Meanwhile, the KPPU imposed a 4.6 billion rupiah fine on PT Mitra Pinasthika Mustika (MPM) as it notified the merger only after 62 days had elapsed since completion of the merger. MPM should have been fined the maximum amount, but in consideration of its good cooperation with the KPPU and the KPPU’s intention to make this case an example to other businesses, the KPPU reduced the amount of the penalty imposed.
Although the KPPU has made the MPM case an example to undertakings failing to notify the merger, it still found four violations on the post-closing notification submission during 2013 and 2014 alone. The first is the case of PT Muarabungo Plantation’s (MP) acquisition of PT Tandan Abadi Mandiri, where the notification was submitted 76 days after the closing. In that regard, MP was fined 1.249 billion rupiah. Secondly, the acquisition of PT Subafood Pangan Jaya by PT Balaraja Bisco Paloma (BBP) was notified 43 working days after the transaction completed, thus the KPPU imposed a 5 billion rupiah fine on BBP as the acquiring party. Third, a 1 billion rupiah fine was imposed on PT Dunia Pangan for its failure to notify its acquisition of PT Sukses Abadi Karya Inti within the 30-working-day requirement. And in the fourth, although PT Tiara Marga Trakindo (TMM) participated in the pre-merger notification (consultation), it was fined 1 billion rupiah for submitting the mandatory post-merger notification of its acquisition of PT HD Finance, Tbk (HF) 41 working days after closing. In the TMM/HF acquisition case, the KPPU also emphasised that participation in pre-merger notification does not exclude the obligation of the acquiring party to properly notify the transaction post-closing.
In 2016, the KPPU imposed fines on two more transactions because of failure to notify. In the acquisition of Woongjin Chemical Co (WCC) by Toray Advanced Material Korea Inc (TAMK), the KPPU imposed 2 billion rupiah fines on TAMK for submitting the notification four days past the deadline. This has been a landmark case as the TAMK/WCC case was the first precedent of KPPU imposing fines on a foreign company for failure to notify. Later on in 2016, the KPPU imposed an 8 billion rupiah fine, the highest so far, to LG International Corp (LG) for submitting the notification of its acquisition of PT Binsar Natorang Energi 20 working days past the deadline.
In March 2018, the KPPU fined the following two companies for their late notifications on the below transactions:
- PT Plaza Indonesia Realty, Tbk was fined 1 billion rupiah for its late notification on the acquisition of PT Citra Asri Property (Plaza Indonesia/Citra Asri). The combined assets and sales of the parties exceeded the statutory thresholds. However, the notification was only made to KPPU on 13 May 2016. Therefore, it was 345 days past due according to the KPPU press release. This sets the record for longest period of failure to notify to date; and
- PT Nirvana Property was fined 1 billion rupiah for its late notification on the acquisition of PT Mutiara Mitra Bersama (Nirvana Property/Mutiara Mitra). The transaction was legally effective on 29 December 2015, but was notified to KPPU on 7 October 2016. Therefore, according to the KPPU press release, the notification was 161 days late.
Afterwards, KPPU scrutinised five more companies until the end of 2018 and fined four of them, including PT Japfa Comfeed Indonesia Tbk (Japfa) with 3.7 billion rupiah, for its late notification on the acquisition of PT Multi Makanan Permai. Despite the insignificant transaction value, which only amounted to 483 million rupiah, the combined assets and sales of the parties still exceeded the statutory thresholds. The transaction was legally effective on 27 April 2015 but was notified to KPPU on 19 September 2016. Therefore, it was 310 days past due according to the KPPU decision and represents the second longest period of failure to notify to date. At the end of 2018, Japfa filed an appeal to the district court against the KPPU decision and received a fine reduction of 1.7 billion rupiah from the district court.
The one company that was scrutinised by KPPU because of its alleged late notification but was not declared as violating the Competition Law and thus not fined by KPPU in 2018 was PT Erajaya Swasembada, Tbk (Erajaya) when it acquired 51 per cent shares of PT Axioo International Indonesia (Axioo). According to the KPPU decision, the notification was submitted 145 days after the initial deadline on 7 July 2015. However, Erajaya was acquitted of all charges and fines as KPPU was of the view that the acquisition was exempted from the notifiable transaction, as it was conducted based on a regulation that required certain importers to have certain business activities in Indonesia.
We believe the number of companies that are fined will continue to increase because we understand that the KPPU is in the process of investigating other late notification cases.
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