The Indonesian Business Competition Supervisory Commission – Komisi Pengawas Persaingan Usaha (“KPPU”) issued KPPU Regulation No. 3 of 2023 (“Reg 3/2023”) as a new merger filing regulation, replacing, and revoking the previous regulation on the same matter, namely KPPU Regulation No. 3 of 2019 (“Reg 3/2019”).
Reg 3/2023, which came into effect on 31 March 2023, provides significant changes on the criteria to determine the applicability of the mandatory merger filing to KPPU but any consultation and notification submitted to KPPU prior to 31 March 2023 remain subject to Reg 3/2019.
Some of the key takeaways from Reg 3/2023 are briefly discussed below:
- Merger Filing Requirement: Local Nexus Test in Foreign-to-Foreign (F2F) Transactions
Pursuant to Reg 3/2023, a mandatory merger filing is only triggered if all transacting parties have assets or sales in Indonesia. This is a notable change compared to the regime of Reg 3/2019, which required a merger filing obligation if one transacting party had sales or assets in Indonesia.
- Calculation of Assets Value
Both Reg 3/2019 and Reg 3/2023 refer to the parties’ combined assets when calculating the assets threshold. The critical difference is while Reg 3/2019 calculated parties’ combined assets on a worldwide/global basis, the new Reg 3/2023 calculates the assets within Indonesia’s jurisdiction only. This is a significant change, which many believe much more sensible.
- Merger Filing Fee
As of 5 May 2023, merger filing fees are treated as non-tax state revenue, which is calculated based on the following formula:
0.004% x [the value of assets OR sales in excess of the notification threshold, whichever is the lower]
The value of the assets or sales will be calculated from the assets or sales of:
1. the surviving entity/the consolidating entity/the acquiring entity and the acquired entity; and
2. the entities that are directly or indirectly controlled by the surviving entity/the consolidating entity/the acquiring entity and the acquired entity.
This fee is capped at IDR 150 million (approx. USD 10,000, assuming USD 1 is Rp 15,000) and can be waived in certain conditions, for example, if the proposed transaction is due to a government’s policy.
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