Indonesia has an evolving regulatory framework for competition regulation. Australian businesses must consider how their international M&A activity might trigger competition consequences in Indonesia.


Indonesia’s Anti-Monopoly and Unfair Competition Law requires that M&A activity that meets certain thresholds must be notified to the Business Competition Supervisory Commission (KPPU).

The triggers for notification are any share acquisition, merger or consolidation that results in:

  • a company with assets exceeding 2.5 trillion rupiah (approximately A$240 million);
  • a bank with assets exceeding 20 trillion rupiah (approximately A$1.92 billion); or
  • a company with sales exceeding 5 trillion rupiah (approximately A$480 million),

(collectively, M&A Thresholds).

Exceptions apply to M&A activity between related companies.

KPPU will consider whether the M&A activity causes monopolistic or unfair competition, based on an analysis of:

  • market concentration;
  • barriers to entering the relevant market;
  • the potential for anti-competitive behaviour;
  • a comparison of any resulting efficiency compared to the anti-competitive impact;
  • the intentional avoidance of bankruptcy of one of the relevant companies; and
  • any other reason (to be regulated in a future KPPU rule).

In considering the M&A Thresholds and competition consequences, KPPU will aggregate the assets and sales values of all relevant companies involved in the M&A activity, including those which directly or indirectly control or are controlled by them.  Importantly, this includes any non-Indonesian relevant companies with assets and sales in Indonesia (excluding exports).

Therefore, KPPU’s regulations indicate that even if the M&A activity occurs outside Indonesia’s jurisdiction, but involves companies with direct or indirect business activities, assets or sales in Indonesia (including through related companies), if the M&A Thresholds are met, KPPU notification and approval will be required.

For example, in 2013 Nestlé SA acquired Wyeth (Hongkong) Holding Company Ltd.  Even though this was an international transaction, as both companies had Indonesian subsidiaries producing infant formula milk which met the M&A Thresholds, KPPU notification and approval was required.  KPPU approved the transaction, but imposed ongoing reporting obligations over a particular period.


There is a compulsory post-M&A activity notification procedure under Indonesia’s Competition Law if the M&A Thresholds are satisfied.  Within 30 business days of the M&A activity becoming legally effective, the surviving companies must notify KPPU. 

Companies are liable to a fine of 1 billion rupiah (approximately A$96,000) for each day of delay.  KPPU has previously imposed fines of 4.6 billion rupiah (approximately A$440,000) for delayed notification.

In theory, KPPU should make a determination of any monopolistic or unfair competition within 90 business days of receiving all required information.  The review is usually performed in two stages: an initial review to be completed within 30 business days of KPPU receiving all required information and a second stage full review (if required) completed within 60 business days of the initial review.  In practice, these timeframes are often longer.

Critically, as a result of its determination, KPPU may require the M&A activity to be amended (eg, via share or asset divestment) or even cancelled.


As such, it is advisable for companies to participate in the voluntary pre-M&A activity consultation procedure with KPPU.  Pre-M&A activity consultation may be carried out at any time before completion of the M&A activity, but does not eliminate KPPU’s right to carry out any post-M&A activity review.

While KPPU has undertaken to evaluate any M&A activity only once (absent any material change in information or market conditions), if a company participates in the voluntary pre-M&A activity consultation which results in certain KPPU conclusions, there remains a risk that KPPU may subsequently make a different determination during any post-M&A activity review (including potentially requiring amendment or cancellation).  KPPU advises it has never changed its preliminary conclusions during any subsequent post-M&A activity review.

Companies are exposed to administrative and criminal penalties if they fail to comply with KPPU’s determination, including a fine of up to 100 billion rupiah (approximately A$9.6 million) or 6 months goal.

Companies are able to challenge a KPPU determination before the Indonesian courts, although there has not been any such court challenge to date.


The Indonesian parliament is currently considering amendments to the Competition Law which may:

  • expand the extraterritorial application of the Competition Law (either by aggregating global assets or sales to meet the M&A Thresholds or through a new test which merely requires the M&A activity to have an impact on the economy of Indonesia);
  • extend the notification obligations beyond M&A activities to include acquisitions of assets and the establishment of joint ventures;
  • consolidate the voluntary pre-activity consultation and compulsory post-activity notification into the one mandatory pre-M&A activity notification;
  • establish a KPPU leniency regime for disclosures of breaches of the Competition Law; and
  • implement other proposals by KPPU to expand its role and powers.


When contemplating international M&A activity, Australian businesses with assets or sales in Indonesian must consider:

  • whether they meet the M&A Thresholds for compulsory notification of KPPU;
  • if so, the deadline for compulsory notification of KPPU;
  • whether to engage in any voluntary pre-M&A activity consultation with KPPU;
  • the structure and timeframes for the M&A activity.

It may also be worth considering proactively offering pro-competition concessions to KPPU to manage the risk of any delay in KPPU’s determination or any required amendment or cancellation of the M&A activity.  While KPPU welcomes proactive concessions, it has limited experience of actually receiving them.  Ultimately any concessions will depend upon the overall M&A activity structure, timeframes and strategy.