Businesses could be fined billions of rupiah if they violate the new reporting requirement covering mergers and acquisitions, which was revealed by the Business Competition Supervisory Commission on Friday.
President Susilo Bambang Yudhoyono last month signed the regulation, which requires large companies to report their mergers and acquisitions with the commission, also known as the KPPU. However, full details were not available until Friday’s disclosure.
Under the regulation, firms that have assets exceeding Rp 2.5 trillion ($279 million) or a sale value of over Rp 5 trillion after a merger or acquisition must report to the KPPU within 30 days. For banks, the assets threshold is set at Rp 20 trillion.
Companies that fail to report by the deadline will be fined Rp 1 billion for each day they miss the window. Total fines are capped at Rp 25 billion.
The regulation, which has been in effect since its July 20 signing, elaborated on a law released in 1999, which deals with monopolies and other unhealthy business practices.
The new regulation also gives the KPPU 90 days to investigate and rule on each report.
One of the purposes of the investigation is to determine if merged companies will dominate a specific market.
The commission considers dominant any firm that controls more than 50 percent of market share in a certain sector.
Farid F Nasution, head of the monitoring and evaluation division of the KPPU mergers bureau, said on Friday that the regulation was expected to encourage companies to voluntarily consult with the KPPU before making mergers and acquisitions.
“It will be better for the firms to have our opinion before they realize their plans than for them to face possible sanctions or even have their acquisition or merger canceled,” Farid said.
The new regulation arrives in the wake of a series of well-publicized cases in which the KPPU has charged companies with violating monopoly laws.
Among them was the Singapore’s sovereign wealth fund Temasek Holdings, which the KPPU accused of fixing prices by using indirect stakes it held in Telekomunikasi Selular (Telkomsel) and Indosat, two of the country’s leading mobile-phone service providers.
At the Supreme Court in May, Temasek lost its final appeal of a ruling that it had indeed breached antimonopoly laws.
In September 2008, the Supreme Court rejected a previous appeal attempt and upheld the KPPU’s initial findings.
The Central Jakarta District Court first ruled in favor of the commission in May 2008.
Another notable case is the ongoing dispute between the KPPU and a local subsidiary of French-based retail giant Carrefour.
The commission alleged Carrefour Indonesia violated business competition laws by dominating the wholesale supplier market and forcing unfair trading terms upon its vendors.
The KPPU ordered Carrefour to sell its stake in retailer Alfa Retailindo and fined it Rp 25 billion, but it was overruled by the South Jakarta District Court in February.
Haryadi B Sukamdani, deputy chairman for tax and fiscal policy at the Indonesian Chamber of Commerce and Industry (Kadin), slammed the new regulation, saying it was excessive.
“Instead of requiring companies to report to the commission, the KPPU should monitor acquisitions and mergers, then take action if they receive complaints from consumers or other businesses in the same sector,” he said.
Haryadi also questioned the market domination benchmark set by the commission.
Djimanto, deputy chairman of the Indonesian Employers Association (Apindo), echoed his concerns.
“Having a large market share is not enough to charge a company with breaching monopoly laws,” Djimanto said.
“The commission has to prove the firms’ intention to dominate the market through acquisition or merger processes.”
http://www.thejakartaglobe.com/business/mergers-rule-may-cost-indonesian-firms-a-bundle/390163
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