CN12 - Failed to file - Enforcement of late merger filings

On 3 May 2021, the Indonesian Competition Commission ("KPPU") imposed a total of IDR 9 billion (~USD 630,000) in penalties on six companies for failing to notify their respective transactions in accordance with the mandatory post-closing notification requirements under the Indonesian merger control regime.

Key takeaways

• The Indonesian merger regime requires notifiable transactions to be submitted 30 days post-closing. Failure to meet filing deadlines could result in fines of at least IDR 1 billion being imposed.
• There is no express statute of limitations pursuant to the merger regime, meaning the KPPU can fine companies in relation to transactions which have been completed for a number of years.
• Since the introduction of the Omnibus Law in November 2020 which made major changes to the penalties regime under the competition law (see Ashurst article entitled Clarifications to "Omnibus changes" to Indonesia's Competition Law), the KPPU is using its penalties toolkit to make known the seriousness of non-compliance with Indonesian merger control requirements.

On 3 May 2021, the KPPU imposed a total of IDR 9 billion (~USD 630,000) in penalties on six companies for failing to notify their respective transactions in accordance with the mandatory post-closing notification requirements under the Indonesian merger control regime.

The merger regime in Indonesia requires notifiable transactions to be lodged with the KPPU 30 business days after closing.

The table below outlines the names of the relevant companies, transaction details, how late the filings were and the amount of fines imposed.

A majority of the cases above appear to have a direct nexus to Indonesia (ie, most of the cases above involve either an acquirer or target based in Indonesia).  This is expected given the KPPU's priorities are focused on transactions which impact on markets in Indonesia.  However, we note that the Travel Circle International/DEI Holdings Limited transaction does not appear to have a direct nexus to Indonesia, although Travel Circle International appears to have representative offices in Southeast Asia.  Travel Circle is, however, a repeat offender having been fined previously for delayed notification of its acquisition of shares in Asian Trails Holding Ltd. (a business engaged in the field of travel services) in March 2021.

This latest suite of penalties has demonstrated:

• the KPPU's monitoring and investigation is not only limited to transactions involving Indonesian entities. For example, the penalty imposed on Travel Circle appears to concern a foreign-to-foreign transaction;
• the KPPU will liaise with other regulatory authorities to monitor transactions in industries of particular importance to the Indonesian economy. For example, in respect of the Taiko Plantations acquisition of PT Putra Bongan Jaya, the KPPU also recommended that the Minister of Agrarian Affairs and Spatial Planning coordinate with the KPPU with regard to transactions related to oil palm land in Indonesia; and
• once on the KPPU's radar, a firm may face multiple fines for late filings made on past (notifiable) transactions. The KPPU is known to scrutinise merger notifications to ascertain whether parties have failed to notify prior transactions and this appears to be how the KPPU identified (yet another) one of DSNG's prior late filing cases (the 3 May 2021 penalty being the third time a sanction for late filing has been imposed on DSNG since 2020).

With thanks to Adelle Elhosni, Associate of Ashurst for her contribution.