The Indonesian competition authority (KPPU) recently
imposed fines on two property companies as a result of their
failure to notify it of acquisition transactions.
Under Indonesian competition law, a notification must be
sent to the KPPU for any merger, consolidation or acquisition
(MCA) that meets the prescribed criteria within 30 business
days after the date of the legal effectiveness of the MCA
transaction. Should a notification not be filed within the
prescribed period, the KPPU may impose a fine of up to IDR1
billion ($70,000) a day, with a maximum overall ceiling of
IDR25 billion.
PT Plaza Indonesian Realty Tbk (Plaza Indonesia) was fined
IDR1 billion for the late notification of its acquisition of PT
Citra Asri Property, while PT Nirvana Property (Nirvana) was
fined the same amount for its late notification of the takeover
of PT Mutiara Mitra Bersama. Plaza Indonesia's notification was
345 days late, while Nirvana's notification was 161 days
late.
As far as we are aware, Plaza Indonesia and Nirvana are
respectively the eigth and ninth companies that have been fined
by the KPPU for filing late MCA notifications. To date, the
KPPU has never imposed the maximum daily fine of IDR1 billion,
or the total maximum fine of IDR25 billion. However, there is
no clear correlation between the number of days of delay and
the size of the fines that have thus far been imposed,
resulting in a high degree of legal uncertainty for companies
that fail to file notifications in relation to their
transactions within the prescribed period.
Plaza Indonesia and Nirvana may still appeal to the courts.
However, based on case law, there appears to be little chance
that the fines would be overruled on appeal. To date, all such
court appeals have in the end been dismissed.
Based on informal discussions with representatives of the
KPPU, we understand that the authority is in the process of
looking into other late MCA notification cases. Consequently,
it appears likely that the authority will impose fines on other
companies in the near future.
The KPPU's recent enforcement efforts confirm the importance
of always ensuring that an MCA transaction – even if
foreign-to-foreign – complies with all of the criteria
prescribed by Indonesian competition law.
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| Gustaaf Reerink |
Chandrawati Dewi |