Trend on merger assessment handled by KPPU in 2018
In 2018, mergers and acquisition (M&A) cases in Indonesia was on the rise. The media reported the amount of merger and acquisition transactions in Indonesia exceeds IDR 150 trillion. Various transactions showed increasing consolidation plans within the banking sector, especially interbank acquisitions conducted by several top banks and foreign banks in acquiring small banks in Indonesia.
The KPPU itself received 74 notifications of merger and acquisition transactions in 2018. Most of these notifications were share acquisition transactions (97.3%). The rest were merger transaction (business entity merger). There were no consolidation submitted to the Commission in 2018. Most of the notified transactions were transactions carried out between domestic companies (67.70%), followed bytransactions carried out by foreign companies (18.45%) and foreign companies takingover domestic companies (13.85%). Three countries, namely Japan, Singapore, and United States were the countries that have the most reported transactions in mergers and acquisitions in Indonesia during 2018.
Most notified merger and acquisition occur in the manufacturing industry (35.4%), followed by the energy sector (17%) and property (14%). The value of notified transactions filed to the Commission last year exceeded IDR 1,000 trillion, including mega transactions such as PT Inalum's acquisition of PT Freeport Indonesia, Monsanto's acquisition by Kwa Investment Co. (Bayer Group), acquisition of PT Bank Danamon Tbk by MUFG Bank Ltd, and acquisition of TMF Orange Holding BV by Saphire Bidco BV.
To date, the Commission has completed its analysis on 41 notifications, with 31 resolved cases through the assessment process. The remaining notifications, namely 11.54%, did not meet the stipulated notification threshold, hence, an assessment was not necessary. The percentage above shows that the level of knowledge of business actors on the substance of notification has been quite satisfying.
In terms of law enforcement, the Commission decided 7 (seven) cases of violation of Article 29 relating to notices of mergers and acquisitions were not delivered at the stipulated period. These cases include the acquisition of PT Telekomunikasi Indonesia Professional on PT Iforte Solusi Infotek (administrative fines of IDR 1.1 billion); acquisition of PT Darma Henwa Tbk on PT Cipta Multi Prima (administrative fines of IDR 3.75 billion); acquisition of PT Japfa Comfeed Indonesia on PT Multi Makanan Permai (administrative fines of IDR 3.75 billion); and acquisition of PT Nippon Indosari Corpindo, Tbk. on PT Prima Top Boga (administrative fines of IDR 2.8 billion).
Apart from the various facts above, the Commission observed that M&A transactions experienced an increasing trend, especially with the rise of foreign investment and domestic consolidation in the financial sector in Indonesia (through the acquisition of various financial services companies), and consolidation in the e-commerce sector by various technology and online application companies.
In 2019, the Commission will prioritize inmonitoring thevarious consolidations in the sector, as well as increase the portion of its law enforcement on merger and acquisition transactions which has not been submitted to the Commission, and impose changes on notification regulations to accelerate the process of evaluating mergers and acquisitions cases at the KPPU.
*Further update and information on KPPU could be accessed through eng.kppu.go.id