Legal Updates for July 2020

Notification Procedure Simplified, and Asset Notification Clarified

The new Indonesian merger regulation, 2019 Merger Regulation, requires businesses to notify their asset transactions to the Indonesia Competition Commission or the KPPU. However, the lack of clarity on various technical aspects for the notification has caused different interpretations to emerge. This prompts businesses to informally consult with KPPU to obtain its confirmation, which is impractical and time-consuming.

At the end of July 2020, KPPU held a public webinar to discuss asset acquisitions from a merger control perspective, as part of its effort to clarify the scope of the asset acquisition notification. At the webinar, KPPU clarified the asset acquisition exemptions, as well as simplified the merger notification procedure.

Exempted Asset Acquisitions - KPPU confirmed that an asset acquisition that satisfies one of the following criteria would not trigger a mandatory notification post-acquisition to KPPU:

(i) The value of the asset acquisition is below the transaction value threshold. Businesses that have an asset acquisition valued at less than IDR 250 billion (for businesses in non-banking industries) or IDR 2.5 trillion (for businesses in the banking industry) do not need to notify KPPU of such asset acquisition.

(ii) The asset acquisition is not part of the ordinary course of business.

(iii) The acquired asset is intended for a specific use.

(iv) The use of the acquired asset is unrelated to the acquirer's business activities.

Simplified Notification Procedure - KPPU also simplified the merger notification procedure for eligible transactions to expedite the notification procedure.

KPPU confirmed that the exemption and the simplification of notification procedure would be covered in the implementing guidelines for the 2019 Merger. The guidelines, which are currently being finalised by KPPU, will be released in due course.

Government Cuts Red Tape to Pave the Way for Covid-19 Vaccine

As seen from the many regulations issued since the declaration of COVID-19 as a public health emergency, the Indonesian government has been rolling out various measures to protect the country and its citizens. Most recently, the government issued Presidential Regulation No. 77 of 2020 on the Procedures to Implement Patents by the Government ("New Regulation"), which is the implementing regulation of Law No. 13 of 2016 on Patents.

In the past, the procedure to implement patents by the government was governed by Government Regulation No. 27 of 2004 (“Regulation No. 27 of 2004”) as mandated by the old patent law (Law No. 14 of 2001 on Patent). Pursuant to Regulation No. 27 of 2004, the government then issued Presidential Regulation No. 76 of 2012 on the Implementation of Patent by the Government for Antiviral and Anti-Retroviral Medicines, which was enacted to meet the urgent demand and need for antiviral and anti-retroviral medicines to treat HIV/AIDS and Hepatitis B.

In light of the current pandemic, the New Regulation aims to eliminate bureaucratic red tapes to ensure that when a COVID-19 vaccine becomes available, the government can immediately implement the patent.  Under the New Regulation, the government can implement a patent if the patent relates to Indonesia's national defence and security or in the event of an urgent public needs, which includes the need for pharmaceutical or biotechnological products that may potentially be expensive or necessary to treat diseases that can adversely affect the general rate of mortality.

Regional Shipping Update: Philippine Shipping Law Developments in 2nd Quarter of 2020

This Second Quarter 2020 issue of the Regional Shipping Update of Rajah & Tann Asia’s Shipping & International Trade Practice provides a summary of the following key shipping law developments in the Philippines:

  • Supreme Court Issues Rules of Procedure for Admiralty Cases
  • Department of Transportation Creates the Shippers’ Protection Office
  • Heirs of Licuanan v. Singa Ship Management, Inc.: A Seafarer’s Heirs are Entitled to Death Benefits for Work-related Illness Even if Death Occurs After the Term of Contract
OJK Continues Tightening its Grip on Public Companies: New Rule on Affiliated Party and Conflict of Interest Transaction

On 1 July 2020, Indonesia's Financial Services Authority, the OJK, issued a new regulation on affiliated party and conflict of interest transaction, OJK Regulation No. 42/POJK.04/2020. This regulation revokes and replaces the existing regulation on the same matter, OJK Regulation No. IX.E.1 and will apply from 21 October 2020.

This regulation is another step by the OJK in tightening the rules for issuers and public companies, after previously issuing new regulations on material transactions, trustee agreement and most recently, private placements for equity-linked debt and/or sukuk issuance.

Unprecedented Administrative Fines Over IDR 25 Billion Imposed by the KPPU

On 2 July 2020, the Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha or "KPPU") imposed a record-breaking administrative fine of IDR 30 billion on PT Solusi Transportasi Indonesia ("STI"), the Indonesian entity of Grab. The KPPU also imposed an IDR 19 billion administrative fine to PT Teknologi Pengangkutan Indonesia ("TPI"), a provider of transportation rental service that has entered into a cooperation with Grab for the provision of partner drivers.

Both administrative fines were imposed based on the allegation that STI and TPI had engaged in discriminatory practices through, among others, the implementation of priority order, and tying practice. The KPPU started its review of the allegation last year, and while the tying allegation was dismissed, the KPPU still found that the discrimination is a breach of Articles 14 and 19(d) of the Competition Law (Law No. 5 of 1999). The KPPU viewed that the parties intended to dominate or control the market for the supply of technology-based transportation rental services application in Indonesia as their cooperation had resulted in the declining number of partner drivers as well as orders received by non-TPI partner drivers. The KPPU also found that Grab had discriminated non-TPI partner drivers by prioritising orders and imposing more favourable partnering terms to TPI partner drivers.