Indonesia: Asia Pacific Competition Highlights | Q1 2022

In brief

Effective 1 May 2022, the authority has issued a regulation revoking the policy that extended the deadline for merger filings to 60 working days since closing. Programs approved by the ICC under the new regulation will be considered during an investigation or in the determination of penalties. The regulator has started to investigate cartel allegations involving crude palm oil producers as cooking oil prices have continued to rise. The ICC has concluded its first investigation into allegations of certain prohibited abusive conduct under this separate law.

This update was published as part of our quarterly newsletter, Asia Pacific Competition Highlights. Click here to access the full report, which covers the most notable antitrust developments across nine Asia Pacific jurisdictions.


Merger control filing deadline to revert to original 30 day period

The Indonesian Competition Commission (ICC) has issued a regulation revoking the policy that extended the deadline for merger filings to 60 working days since closing, from 30 working days. The original deadline will be applicable effective 1 May 2022.

Notably, this regulation does not specify whether transactions that close 31 working days before 1 May 2022 or earlier would still be covered by the previous relaxation policy. There is a possibility that individual exemption is still available upon request to KPPU, but this has not been tested. However, it is clear that the original, shorter deadline will apply to all transactions that close on 1 April 2022 or later.

ICC to certify competition compliance programs

The ICC has issued a new regulation setting out the procedure by which programs approved by the authority are valid for an initial five-year period and will be considered during an investigation or in the determination of penalties.

The regulation, issued on 23 March 2022, defines a compliance program as a series of activities that demonstrate compliance with the principles of fair business competition. These activities may include the issuance of ethics codes and guidelines or socialization and training activities.

The regulation aligns with current ICC sentencing guidelines under which having a compliance program is considered a mitigating factor. Business actors will, however, need to register their companies through a written request to the ICC in order to participate in the new initiative. The implication is that companies that have a compliance program but fail to register it may find that ICC would not consider it as a mitigating factor.

Companies are required to report the details of their compliance program for ICC review. After up to 45 days of hearings, the ICC may accept the report or may request that the business revise its compliance program. If the ICC accepts the compliance program, it will issue a decision recognizing the program.

Although the initiative is still new and procedural details are yet to be settled in practice, it is worthwhile for companies to consider registering their program now to ensure that the ICC will take it into account as there will be an investigation in the future.

ICC starts investigation of palm oil

The Indonesian Competition Commission (ICC) has issued a regulation revoking the policy that extended the deadline for merger filings to 60 working days since closing, from 30 working days. The original deadline will be applicable effective 1 May 2022.

Notably, this regulation does not specify whether transactions that close 31 working days before 1 May 2022 or earlier would still be covered by the previous relaxation policy. There is a possibility that individual exemption is still available upon request to KPPU, but this has not been tested. However, it is clear that the original, shorter deadline will apply to all transactions that close on 1 April 2022 or later.

ICC issues the first decision under the law governing large and small business cooperation

The ICC has initiated and concluded its first investigation into allegations of certain prohibited abusive conduct by a large business against its small business partner. Since 2008, the ICC has also been empowered by a separate law to supervise "cooperation activities" between small and large scale businesses. It is authorized to impose fines on large businesses that abuse cooperation with small businesses by "dominating" them.

In February 2022, the ICC issued its first decision on the cooperation activities between PT Pos (Persero) ("PT Pos"), the Indonesian post office, and Agenpos, one of its small retail partners. According to the ICC decision, Agenpos was granted the right to market postal products of PT Pos, in return for a fee, without taking ownership of the goods. PT Pos was accused of dominating Agenpos by making a unilateral decision on this fee, without prior consultation with the small business.

However, the ICC classified the relationship between PT Pos and Agenpos as being one of principal and agent, consistent with the definition of "agency" under Ministry of Trade regulations in Indonesia. Accordingly, the authority did not impose an administrative penalty, having decided that PT Pos, as principal and owner of the merchandise, for which Agenpos acted as its agent, may unilaterally decide on the agency fee payable to Agenpos.

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