The Komisi Pengawas Persaingan Usaha ("KPPU") (or Indonesian Competition Commission) has been active in investigations over alleged cartels in the food commodities industry. Commodities markets in beef, soybean, rice and corn, amongst others, have been investigated in the past two years and these are still ongoing. KPPU is also starting investigations into the energy, transportation and other industries that have crucial impact on the economy. Two recently-concluded investigations are in the garlic commodities market and sea cargo transportation industry. In both cases, KPPU issued a firm decision that a cartel existed and imposed fines on the reported undertakings involved in the cartels.
Apart from domestic investigations, KPPU also aims to look at competition investigations over foreign transactions or allegations that may affect the Indonesian market. To strengthen its ability to investigate, the KPPU has signed Memorandums of Understanding with government bodies such as the Corruption Eradication Commission, the Indonesian Telecommunication Regulation Body, and in due time, the Ministry of Internal Affairs.
In terms of competition law legislation, KPPU have proposed amendments to the Law No. 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition (Indonesian Competition Law or "ICL"). The amendment proposal is expected to be agreed to by Parliament, as stated by the Chairman of the Committee on Amendment of Law No. 5 recently. Though it has not been amended yet, there has been positive progress during the proceedings up to this moment. For example, Parliament has agreed that the amendments will include a change from a mandatory post-merger notification scheme to a compulsory pre-merger notification scheme, and expansion of the notifiable merger requirement to include establishment of new joint venture and merger by way of assets acquisitions, once the transactions have met the prescribed threshold. In relation to cartel investigations, KPPU will have the authority to apply leniency measures to co-operating parties, and will be empowered to exert more pressure on any relevant party to cooperate in investigations by imposing criminal sanctions for any obstruction.
Parliament has also agreed to expand KPPU's authority to supervise not only the application of the ICL, but to regulate the competition regime of Indonesia as a whole. As a consequence, KPPU is empowered to use products of Law other than the ICL as long as they are relevant to competition. With this development, businesses can expect a stronger and stricter application of the ICL by KPPU in the coming years.
The Indonesia Stock Exchange ("IDX") recently amended Rule No. I-A 2004 on the Listing of Equity Securities other than Shares issued by Listed Companies (the "Previous Rule") through the issuance of IDX Rule No. I-A 2014 (the "Amended Rule"). Effective as of 30 January 2014, the Amended Rule introduces a number of significant changes to the Previous Rule. The changes are wide-ranging and affect the initial listing requirements, the continuing obligations of listed companies and transfers of listing from the Development Board to the Main Board. Some of these changes are highlighted below.
For initial listings, the definition of "free float" has been revised to refer to the portion of shares held by neither the controlling shareholder nor principal shareholders (the previous definition referred to the portion of shares held by the non-controlling shareholders), and there are revised free float requirements for both the Primary Board and Development Board. The new free float measures are intended to increase market liquidity and boost trading activity.
For continuing obligations, one of the controversial changes relates to the maximum number of terms that may be served by independent commissioners and independent directors (previously known as "unaffiliated directors"). The Amended Rule states that independent commissioners and directors may serve a maximum of two consecutive terms in office. Companies have expressed their concerns as to this new limitation, as it would limit the amount of time that an independent commissioner or director could stay in his post. The Chairman of the Financial Services Authority ("OJK") has recently indicated that the OJK would discuss these concerns with the IDX, while emphasising that there is a need for a restriction of terms to maintain the impartiality of the independent commissioners and directors.
In relation to transfer of listings, under the Previous Rule, if a listed company wished to transfer its listing to the Primary Board, it had to submit a transfer request to the IDX, accompanied by the relevant documents to show fulfilment of the transfer requirements. Under the Amended Rule, the IDX has the authority to transfer a listing from the Development Board to the Primary Board without the necessity of a transfer request, based on the IDX’s own assessment of the company’s fulfilment of the transfer requirements.
