Merger Notification Thresholds Indonesia: KPPU Regulation No.3/2023 and the Local‑effect Test (2026 Update)

Merger notification thresholds Indonesia are the first question every M&A team, in‑house counsel and private equity sponsor must answer before signing a transaction with any Indonesian dimension. The governing framework sits in Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition, as amended by the Job Creation Law (Law No. 6 of 2023 confirming Government Regulation in Lieu of Law No. 2 of 2022), and is implemented by the Komisi Pengawas Persaingan Usaha (KPPU) through KPPU Regulation No. 3 of 2023, which addresses how turnover and assets are measured, how corporate groups are aggregated and when foreign‑to‑foreign deals may fall within Indonesian jurisdiction via the local‑effect test.

This guide gives practitioners a step‑by‑step view of when an Indonesian filing is triggered, how to calculate the relevant figures and what happens if notification is missed. It is written for deal teams who need a reliable compliance answer rather than a theoretical overview.

Quick summary, do I need to file in Indonesia?

Before diving into the detail, run through this topline checklist. If you answer “yes” to the change‑of‑control question and both the value and local‑effect tests are met, a filing is almost certainly required. The merger notification thresholds Indonesia framework is cumulative: a transaction must clear a qualifying change of control, satisfy the financial thresholds, and have an effect felt within the Indonesian market.

• Is there a merger, consolidation or share acquisition? KPPU control extends to statutory mergers, consolidations and acquisitions of shares that confer control, and, following the 2023 reforms, to acquisitions of assets that meet the qualifying criteria.
• Does the deal result in a change of control? Internal reorganisations between entities already under common control are generally exempt from notification.
• Are the parties “affiliated”? Transactions between affiliated parties are carved out, the aggregation and affiliation rules decide this.
• Do the combined parties’ assets or turnover exceed the KPPU value thresholds? Either the asset test or the turnover test being met is enough to trigger reportability.
• Is there a local effect in Indonesia? For foreign‑to‑foreign deals, you must have activity, sales or assets that touch the Indonesian market.
• Has the transaction legally closed? Indonesian notification is primarily a post‑closing obligation, measured in working days from the effective date.
• Does any exemption apply? Confirm there is no affiliation, common‑control or statutory carve‑out before concluding you are exempt.

If the checklist points to a filing, the remaining sections explain how to measure the figures, aggregate the group and meet the KPPU’s documentary and timing requirements. Where a deal is marginal, obtaining a thresholds review from Indonesian competition counsel early is the most reliable way to avoid a missed‑filing exposure. Because the applicable monetary thresholds are set by regulation and may be revised, always confirm the current figures with the KPPU or Indonesian counsel before concluding.

KPPU thresholds explained, turnover, assets and aggregation

The merger notification thresholds Indonesia regime rests on two alternative value tests: an assets test and a turnover (sales) test. The current KPPU rules set out how each is calculated, and crucially either test being satisfied is sufficient, the two are disjunctive, not cumulative. The thresholds are assessed by reference to the combined figures of the merging entities and the business groups to which they belong, following consolidation and attribution principles set out in the regulation. The specific monetary values are prescribed by KPPU regulation and may be updated; practitioners should verify the current thresholds rather than rely on a figure that may have changed.

Because the assets and turnover figures are measured at group level rather than at the level of the individual transacting entity, the practical reach of the regime is far wider than the standalone size of a target might suggest. A small Indonesian target owned by a large multinational group can still pull a transaction over the line once group figures are aggregated. This is the single most common area where deal teams misjudge reportability.

Turnover threshold, calculation method

Under the turnover limb of the merger notification thresholds Indonesia test, the KPPU looks at the combined sales value of the surviving entity together with the business group of which it forms part. The turnover figure is drawn from the most recent audited financial statements and is measured on a consolidated basis, capturing the sales of the ultimate parent and its controlled subsidiaries rather than only the entity that is party to the deal. Intra‑group sales are generally eliminated to avoid double counting, consistent with ordinary consolidation practice.

For the turnover test, the relevant question is the value of sales attributable to the combined group in the period covered by the latest audited accounts. Deal teams should obtain the audited consolidated statements of both the acquirer’s ultimate parent and the target’s ultimate parent, identify the line items that constitute sales, and sum them after eliminating transactions between group members. Where accounts are reported in a foreign currency, convert at a consistent and documented exchange rate and retain the working so the calculation can be reproduced if the KPPU queries it.

Assets threshold, calculation method

The assets limb works in parallel. The KPPU aggregates the asset value of the surviving entity and its business group, again taken from the most recent audited financial statements and measured on a consolidated basis. Assets located both inside and outside Indonesia may be relevant to the value calculation, but, as the local‑effect discussion below makes clear, a separate nexus question governs whether a foreign‑to‑foreign transaction is caught at all.

In practice, the assets test is frequently decisive for capital‑intensive businesses, asset‑heavy industrials, infrastructure and real estate holding structures, where balance‑sheet value dwarfs annual sales. Conversely, high‑volume, low‑margin trading or distribution businesses are more often caught by the turnover test. Because either test alone triggers reportability, a complete thresholds assessment must run both calculations rather than stopping at the first that appears to fall short.

When both tests apply

Only one of the two value tests needs to be met for a transaction to be reportable, but a prudent analysis always computes both. The reason is evidential: if the KPPU later reviews a transaction that was not notified, the authority can rely on whichever test is satisfied. A deal team that only checked turnover, and overlooked a group whose assets cleared the asset threshold, will have limited defence to a late‑filing finding. The safest discipline is to treat the thresholds as a pair and to document both calculations in the deal file.

Worked numerical example, domestic and foreign targets

Consider an illustrative acquisition where an acquirer takes 60% of the shares in an Indonesian operating company, giving it control. The target itself is modest, but it is owned by a multinational group with substantial global sales and a sizeable asset base. When the acquirer’s group figures and the target’s group figures are aggregated after closing, the combined consolidated turnover clears the sales threshold. Even though the Indonesian target is small, the transaction is reportable because the group‑level merger notification thresholds Indonesia test is met.

Now take a second illustrative scenario: a foreign acquirer buys a foreign target, and neither has Indonesian subsidiaries. Their combined group turnover and assets comfortably exceed the value thresholds on a worldwide basis. The value test is therefore met. But reportability still depends on whether the transaction produces a local effect in Indonesia, the subject of the dedicated section below. If the foreign target has meaningful Indonesian sales or customers, the deal may be caught; if it has none, the value thresholds alone will not create an Indonesian filing obligation.

Group aggregation and related‑party rules, when to aggregate and when you don’t

Group aggregation is the mechanism that gives the merger notification thresholds Indonesia regime its true reach. The KPPU rules require the financial figures of the transacting entities to be combined with those of the broader business group under common control. Without a disciplined understanding of what counts as a “group”, deal teams routinely under‑ or over‑estimate reportability. This section explains the aggregation concept, the affiliation carve‑out and a practical approach to building the aggregation matrix.

Definition of “group” for aggregation

For aggregation purposes, a “group” comprises the entities that are ultimately controlled by, or under common control with, the parties to the transaction. Control is assessed functionally, through shareholding that confers decisive influence, and through the ability to determine management and commercial policy. The relevant reference point is the ultimate controlling parent and the chain of entities beneath it. When you perform a thresholds test, you aggregate up to the ultimate parent and then down across all controlled subsidiaries, not merely the immediate buyer and seller.

Minority shareholdings and attribution

Minority stakes require careful handling. A minority shareholding that does not confer control generally does not bring an entity into the acquirer’s group for aggregation, but the position changes where contractual or governance rights deliver effective control notwithstanding a sub‑majority stake. Attribution therefore turns on substance, not just the percentage held. Veto rights over strategic decisions, board control, or shareholder agreements that confer decisive influence can all result in an entity being treated as part of the group even where the headline shareholding looks like a passive investment.

The affiliation carve‑out is the mirror image of aggregation. Transactions between entities that are affiliated, because they are under common control, are generally not reportable, since no genuine change in market structure occurs. Establishing the affiliation relationship with documentary support (ownership charts, shareholder agreements and control analysis) is often the cleanest route to confirming a transaction is exempt.

Practical checklist for acquirers

• Map the control chain. Prepare an ownership chart from the transacting entities up to the ultimate controlling parent and down across all controlled subsidiaries.
• Identify the group’s audited figures. Obtain the most recent consolidated audited financial statements for both ultimate parents.
• Test for affiliation first. If buyer and seller are under common control, confirm the exemption before running the value tests.
• Scrutinise minority and governance rights. Attribute entities where control exists in substance, regardless of the nominal percentage.
• Document the matrix. Retain a clear working that shows how each entity was included in or excluded from the aggregated figures.

Foreign‑to‑foreign mergers and the local‑effect test for merger notification thresholds Indonesia

One of the most frequently asked questions in cross‑border practice is whether foreign‑to‑foreign mergers need to be notified in Indonesia. The short answer is: they can be, but generally only where the transaction produces a local effect within the Indonesian market. The local‑effect consideration operates alongside the value thresholds. A foreign‑to‑foreign deal that clears the worldwide value thresholds is still only caught if it has a genuine connection to competition in Indonesia.

Legal standard for local effect

The underlying question is whether the transaction has, or is capable of having, an effect on competition or the market in Indonesia. This reflects the general reach of Law No.5/1999, which is concerned with monopolistic practices and unfair competition affecting the Indonesian economy. In the merger context, the KPPU examines whether the combining businesses have activity that touches Indonesian customers, Indonesian production, or Indonesian supply and distribution channels. The approach is broadly consistent with the effects‑based doctrines used in comparative competition systems, where regulators may assert jurisdiction over foreign transactions that affect their domestic markets.

Practical indicators, customers, production and distribution

In applying the local‑effect analysis to the merger notification thresholds Indonesia assessment, deal teams should look for concrete connections, including:

• Indonesian sales. Does either party sell goods or services to customers located in Indonesia, directly or through distributors?
• Indonesian assets or operations. Does either party own subsidiaries, branches, production facilities or other assets in Indonesia?
• Supply chain presence. Does either party source materials from, or supply inputs into, Indonesian production?
• Market overlap. Do the parties compete, or operate in vertically related markets, that serve Indonesian demand?

The stronger and more direct these connections, the more clearly the transaction is caught. Marginal or purely incidental contact, occasional passive sales with no sustained Indonesian presence, sits closer to the jurisdictional boundary and warrants a careful, documented assessment, ideally confirmed with Indonesian counsel.

Three worked examples

(a) Pure foreign‑to‑foreign with Indonesian customers. Two overseas manufacturers merge; neither has Indonesian subsidiaries, but both make significant export sales to Indonesian industrial buyers, and their group figures exceed the value thresholds. Here a local effect may be present through sustained Indonesian sales, and the transaction may be reportable, a position that should be confirmed with counsel given the fact‑sensitivity of the analysis.

(b) Foreign target with an Indonesian branch. A foreign acquirer buys a foreign target that operates through an Indonesian branch or subsidiary with local revenue and assets. The Indonesian nexus is direct and unambiguous, and where the value thresholds are met at group level, notification is likely required.

(c) No Indonesian nexus. A foreign acquirer buys a foreign target that has no Indonesian sales, no Indonesian assets and no Indonesian supply‑chain presence. Although the parties’ worldwide figures exceed the value thresholds, the local‑effect requirement is not met and there is unlikely to be an Indonesian filing obligation. The absence of nexus should nonetheless be analysed and recorded so the no‑filing decision is defensible.

Filing mechanics, notification, required documents and timelines

Once the merger notification thresholds Indonesia analysis concludes that a filing is required, attention turns to the mechanics. Indonesian merger notification is made to the KPPU, and in practice submissions are increasingly handled through the KPPU’s electronic notification channels. The filing is substantive: the KPPU expects a complete evidentiary package allowing it to understand the parties, the transaction, the markets affected and the competitive impact in Indonesia.

Preparing the notification

Preparation should begin well before closing, even though the formal notification is a post‑closing step, because assembling the documentary package takes time. Core materials typically include the corporate and ownership details of the parties, the transaction documents evidencing the change of control, the audited financial statements supporting the turnover and assets calculations, and a description of the relevant Indonesian markets, market shares and the competitive rationale for the deal. The aggregation matrix and the thresholds working prepared during the reportability assessment feed directly into the filing. Many parties also use the KPPU’s voluntary pre‑notification consultation to test their reportability conclusion before the formal filing.

Common documentary pitfalls

The most frequent problems are incomplete financial information, particularly where group figures are hard to assemble across multiple jurisdictions, inconsistent figures between the narrative and the supporting statements, and an underdeveloped Indonesian market analysis. Currency conversions that are not documented, ownership charts that stop short of the ultimate parent, and a failure to explain the local effect in a foreign‑to‑foreign deal all cause delay. Consistency between the text, the tables and the annexes is essential; a single mismatch in the turnover figure can prompt follow‑up questions that extend the review.

Timeline from filing to decision

Indonesian notification operates principally on a post‑merger basis, with the obligation to notify arising within a statutory period measured from the legally effective date of the transaction, as set out in the applicable KPPU rules. Because the clock runs from effectiveness, deal teams must diarise the filing deadline against the specific closing mechanics of the transaction and ensure the notification is lodged inside the window. After the notification is accepted as complete, the KPPU conducts its assessment and issues its findings; where competition concerns arise, the review can extend and may lead to conditions or remedies. Practitioners should confirm the current notification period and review timeframes with the KPPU or counsel, as these are set by regulation.

Sanctions, remedies and likely KPPU outcomes if filing is missed

Failing to notify a reportable transaction exposes the parties to administrative sanctions. Under the Indonesian regime, late notification or non‑notification can attract financial penalties, and in serious cases the KPPU can pursue remedies that address the competitive harm itself. The maximum penalty levels were revised by the 2020–2023 reforms, moving away from the previous fixed daily‑penalty cap toward penalties calculated with reference to factors including the parties’ turnover, within limits set by the applicable regulations. Understanding the downside is central to any merger notification thresholds Indonesia risk assessment, because the cost of a missed filing can materially exceed the cost of making the notification in the first place.

Typical remedies

Where the KPPU identifies a competition concern, remedies generally fall into two categories. Structural remedies address the market structure directly, for example, divestment of overlapping assets or businesses. Behavioural remedies constrain how the combined entity conducts itself, for example, commitments on supply, pricing conduct, or access. In the most serious situations involving transactions that harm competition, the authority’s powers may extend to measures that address the anticompetitive effects of a deal. For acquirers, the prospect of intervention after closing is a strong incentive to assess reportability accurately and to file on time.

How KPPU enforces compliance

The KPPU enforces the regime through its investigative and decision‑making processes under Law No.5/1999 and its implementing regulations. Its decisions are published, and parties affected by a KPPU decision may seek to challenge it before the Commercial Court (Pengadilan Niaga), with a further avenue of cassation to the Supreme Court (Mahkamah Agung). The combination of financial penalties for procedural breaches and substantive remedies for competitive harm means compliance is best treated as a deal‑execution workstream rather than an afterthought. Building the thresholds analysis, aggregation matrix and local‑effect assessment into the transaction timeline is the most effective way to manage enforcement risk.

Practical checklist and worksheets, how to perform a thresholds test

Deal teams should standardise the merger notification thresholds Indonesia assessment into a repeatable worksheet. The following ten‑point sequence captures the essential steps and produces a defensible record of the reportability decision.

1. Confirm the transaction type, merger, consolidation, controlling share acquisition or qualifying asset acquisition.
2. Confirm there is a genuine change of control and no common‑control exemption.
3. Test for affiliation between the parties; if affiliated, document the exemption and stop.
4. Map the full control chain up to each ultimate parent and down across subsidiaries.
5. Obtain the latest audited consolidated financial statements for each group.
6. Calculate aggregated group turnover, eliminating intra‑group sales.
7. Calculate aggregated group assets on a consolidated basis.
8. Compare both figures against the current applicable value thresholds, either being met is sufficient.
9. For foreign‑to‑foreign deals, apply the local‑effect analysis and record the Indonesian nexus.
10. Diarise the post‑closing filing deadline and assemble the documentary package.

Two short worked checks illustrate the output. First, an acquirer taking a controlling 60% stake in an Indonesian target owned by a large group: the aggregation step pulls group turnover over the threshold, the local nexus is plainly present through the Indonesian target, and the worksheet returns “reportable, file within the statutory window”. Second, a foreign‑to‑foreign deal with no Indonesian sales or assets: the value tests are met on worldwide figures, but the local‑effect step returns “no Indonesian nexus”, and the worksheet records a defensible no‑filing conclusion.

Comparison table, turnover versus assets threshold

The table below compares the two value tests that drive the merger notification thresholds Indonesia analysis. Remember that the tests are alternative: either one being satisfied makes a transaction reportable, subject to the local‑effect requirement for foreign‑to‑foreign deals. The specific monetary values are set by KPPU regulation and should be verified as current.

Next steps and when to instruct counsel

The merger notification thresholds Indonesia assessment is deceptively easy to get wrong, because the figures are measured at group level and the local‑effect gateway requires judgement on cross‑border deals. Instruct Indonesian competition counsel at the earliest stage, ideally during due diligence, so the thresholds test, aggregation matrix and local‑effect analysis can be built into the transaction timeline rather than scrambled together after signing. Early advice also allows the documentary package to be assembled in parallel, which is critical given the post‑closing filing deadline runs from the effective date.

Prepare the ownership charts, audited consolidated financial statements and transaction documents before you need them, and keep a clear working of every calculation. For readers choosing between advisers, see the companion guidance on competition matters in Indonesia, including practical guidance on selecting a competition lawyer, the KPPU filing process, and the KPPU remedies and enforcement landscape.

Conclusion

The merger notification thresholds Indonesia regime is cumulative, group‑based and effects‑sensitive: a transaction must involve a qualifying change of control, satisfy either the turnover or the assets test at aggregated group level, and, for foreign‑to‑foreign deals, produce a genuine local effect in the Indonesian market. Each of these conclusions should be grounded in Law No. 5/1999 and the current KPPU regulations and recorded in a defensible deal file. Because Indonesian notification is primarily a post‑closing obligation running from the effective date, the single most important discipline is to assess reportability early and prepare the filing in parallel.

This article is general information and not legal advice; parties should obtain tailored Indonesian competition counsel, and confirm current thresholds and timelines, before relying on any reportability conclusion for a specific transaction.

Sources

1. Komisi Pengawas Persaingan Usaha (KPPU), official site
2. Peraturan.go.id, Indonesian consolidated legislation portal
3. OECD, Competition Law and Policy
4. Perhimpunan Advokat Indonesia (PERADI)
5. Universitas Indonesia, Faculty of Law
6. Mahkamah Agung (Supreme Court of Indonesia)
7. ASEAN Secretariat, competition policy resources