COMPETITION MERGER REVIEW FOR CROSS-BORDER MERGERS AND ACQUISITIONS IN INDONESIA

- Zulheri

Full Text: PDF



DOI: http://dx.doi.org/10.15742/ilrev.v7n3.374

Abstract


This article aimed at expressing ideas on a legal construction of competition merger review (CMR) on Cross-border Mergers and Acquisitions (CBM&A) that have Indonesian legal dimension. The problem has been triggered by the lack of CMR guidelines for CBM&A to nurture a fair and sustainable business competition (FSBC). Consequently, the existing guideline is inadequate for reviewing CBM&A proposals which have a multi-jurisdiction dimension character. As a result, merging (gigantic) companies doing business in Indonesia have enormous opportunities to engage in anti-competitive behavior in the domestic market. In its turn, it brings the impact of reducing competition itself whereby national companies become easily marginalized and find themselves in a vulnerable situation. To seek solutions to this problem, this research has been conducted through a normative approach, starting from the formulation of the problem up to an in-depth analysis and drawing conclusions. In order to achieve the said purpose, a literature study was conducted to explore and collect related law information on CBM&A, including CMR methods, namely: Market Dominance Test, Substantial Lessening of Competition/SLC Test, Public Interest Test, and four hybrid Tests: i) Hybrid Test One=SIEC Test; ii) Hybrid Test Two; iii) Hybrid Test Three; and Hybrid Test Four). Out of these seven methods of CMR, I consider to choose the SLC Test as the method for reviewing CBM&A proposal. At the end, this study concludes as follows: 1) there is an urgent need for CMR in the methods of SLC Test for cross-border merger and acquisition proposals in order to fill the absence of a merger review guideline that contains a multi-jurisdiction dimension and to nurture a fair and sustainable business competition in Indonesia; 2) the substantive norms for constructing CMR in the methods of SLC Test for CBM&A transactions in Indonesia should take into account the national law regime: company law, merger law, investment law including the existing public interest. In addition to that, the principles of certainty, efficiency, transparency, and proportionality should also be considered. Thus, I recommend to enact a SLC Test Guideline in order to strengthen the legal review of CBM&A proposals for supporting FSBC, to maintain dynamic, secure, and stable national economy and development.

Keywords


cross-border mergers & acquisitions; competition merger review; substantial lessening of competition test

References


Legal Documents

ASEAN. ASEAN Regional Guidelines on Competition Policy, 2010.

European Commission. Cross-border Regulations 2008. S.I. No. 157/2008.

European Commission. Decision No. CMP/M.2220 – General

Electric/Honeywell. Decision of 03/07/2001.

European Commission. Directive on cross-border mergers of limited liability companies. Directive 2005/56/EC.

Indonesia, Peraturan Pemerintah tentang Penggabungan atau Peleburan Badan Usaha dan Pengambilalihan Saham Perusahaan yang dapat mengakibatkan terjadinya Praktik Monopoli dan Persaingan Usaha Tidak Sehat (Government Regulation on the Mergers and Business Consolidations), PP No. 57 tahun 2010, LN No. 89 tahun 2010 TLN No. 5144 (Government Regulation No. 57 of 2010, SG No. 89 of 2010)

Indonesia. The 1945 Constitution of the Republic of Indonesia and its Amendment.

Indonesia. Undang-undang tentang Larangan Praktek Monopoli dan Persaingan Usaha Tidak Sehat (Law on the Prohibition of the Monopolistic Practices and Unfair Business). UU No. 5 tahun 1999 LN No. 33 tahun 1999, TLN No. 3817 (Law No. 5 of 1999, SG No. 33 of 1999)

Indonesia. Undang-undang tentang Perseroan Terbatas (Law on the Limited Liability Company). UU No. 40 tahun 2007, LN No. 106 tahun 2007 TLN No. 4756 (Law No. 40 of 2007, SG No. 106 of 2007).

Indonesia. Undang-undang tentang Wajib Daftar Perusahaan (Law on the Mandatory Company Regustration). UU No. 3 tahun 1982, LN No. 7 Tahun 1982, TLN No. 3214 (Law No. 3 of 1982, SG No. 7 of 1982)

Treaty establishing the European Economic Community, Rome, 25 March 1957.

United Kingdom. 2002 Enterprise Act.

Books

Angwin, Duncan. Mergers and Acquisitions. Chicester: Wiley Publishing, 2007.

Bektashi, Farid. “Structural Link for the Detection of Collective Dominance: Analysis of Case Law under the EC Merger Regulation.” Master Thesis, Sweden, Lund University, May 2007.

Guzman, Andrew T. “International Competition Law.” In Research Handbook in International Economic Law, edited by Andrew T. Guzman and Alan O. Sykes, 418. Cheltenham: Edward Elgar, 2007.

Guzman, Andrew T. and Alan O. Sykes. Research Handbook in International Economic Law. Cheltenham: Edwar Elgar Publishing, 2008.

Hanlon, Pat. Global Airline: Competition in Transnational Industry. 2nd ed. Burlington, MA: Butterworth-Heinemann, 1999.

Komisi Pengawas Persaingan Usaha. Annual Report on Competition Policy Development in Indonesia. Jakarta: KPPU, 2011.

Prechal, Sacha and Magdalena E. de Leeuw. “Transparency: a General Principle of EU Law?” in General Principles of EC Law in a Process of Development. Ulf Bernitz, Joakim Nergelius, Cecilia Cardner, Xavier Groussot. Austin: Wolters Kluwer, 2008.

Rowley, J. W. and D. I. Baker, eds. International Merger: The Antitrust Process, 2nd ed. London: Sweet and Maxwell, 1996.

Solis, Elena. “Re The Concentration between MCI WorldCom and Sprint Corporation (case COMP/M.1741 before the Commission of the European Communities (2003/790/EC).” In Antitrust Report. Part IV. Elena Solis, Eds. London: Sweet & Maxwell, 2004.

UK Office of Fair Trading. Merger: Substantive Assessment Guidance. London: Office of Fair Trading, 2003.

Williamson, James R. Federal Antitrust Policy during the Kennedy-Johnson Years. Westport: Greenwood Press, 1995.

Articles

Babic, Boris. “SIEC vs. Dominance test: SIEC: Croatian and EU Perspective ”, presentation, 2nd Conference on Merger Control: Recent Trend in EU and Croatian Competition Law, University of Zagreb Faculty of Economics and Business, December 14, 2010.

Baker, Donald. “Antitrust Merger Review in an Era of Escalating Cross-border Transactions and Effects.” Wisconsin International Law Journal 18 (2000): 577.

Baker, Donald. “Antitrust Merger Review in an Era of Escalating Cross-Border Transactions and Effects.” Wisconsin International Law Journal 18 (2000): 577-589.

Bode, Mariana and Oliver Budzinski. “Competing Ways Towards International Antitrust: the WTO versus the ICN.” Marburg Papers on Economics, no. 03-2005. Available at https://papers.ssrn.com/sol3/papers.cfm?abstract-id=888682.

Brodley, J. F. “The Economic Goals of Antitrust: Efficiency, Consumer Welfare, and Technological Progress.” New York University Law Review 62 (1987): 1020-1053.

Chen, Yea-Mow and Chun-Tien Lin. “Performance of Cross-Border Mergers and Acquisitions (M&A’s) by Chinese Firms.” Available at: http:// www.rcie-cnorg/conference/2010/papers/chen-ym.pdf.

Coate, Malcolm B. and Shawn W. Ulrik. “Transparency at the Federal Trade Commission: The Horizontal Merger Review Process 1996-2003.” Antitrust Law Journal 73, no.2 (2006): 531-570.

Crampton, Paul and Milos Barutciski. “Trade Distorting Private Restrain; A practical Agenda for future Action.” Southwestern Journal of Law and Trade in the America 6 (1999): 3

De la Mano, Miguel “The competitive effects of efficiencies in European merger control.” European Commission Enterprise Papers No 11/2002.

Doern, G. Bruce. “Towards an International Antitrust Authority? Key Factor in the Internationalization of Competition Policy.” Governance 9, issue 3 (July, 1996): 265-286.

Ehlermann, Claus-Dieter. “The International Dimension of Competition Policy.” Fordham International Law Journal 17, no.833 (1994): 833-845.

Fackelmann, Christian R., “Dynamic Efficiency Consideration in EC Merger Controls: An Intractable subject or a Promising Change for Innovation“, Working Paper (L) 90/06, the University of Oxford, Center for Competition Law and Policy.

Fox, Eleanor, “Merger in Global Market: GE/Honeywell and the Future of Merger Control.” University of Pennsylvania Journal of International Economic Law 23, no. 3 (2002): 457-468.

George, Barbara Crutchfield, et. al., “Increasing Extraterritorial Intrusion of European Union Authority in US merger business and competition practice: US Multinational business underestimate the strength of the European Commission from G.E.-Honeywell to Microsoft”, Connecticut Journal of International Law 19, issue 3 (2004): 571-617.

Gisburg, Douglas H. and Scott H. Angstreich. “A Multinational Merger Review: Lesson from Our Federalism.” Antitrust Law Journal 68, no. 1 (2000): 219-237.

Goldstein, Kevin B. “Reviewing Cross-border Mergers and Acquisitions for Competition and National Security: A Comparative Look at how the United State, Europe, and China separate security concern from competition concerns in reviewing acquisitions by foreign entities.” Tsinghua China Law Review 3 (2011): 218-256.

Hertanto, Ari Wahyudi. “Determining Quorum of Attendance and Decision Making in the General Meeting of Shareholders based on Court Stipulation Due to the Neglectful Absence of the Majority Foreign Shareholder in a joint Venture Company (A Foreign Capital Investment Analysis).” Indonesia Law Review 2, no. 3 (2012): 257-281. doi: http://dx.doi.org/10.15742/ilrev.v2n3.21

–––. “Implementation of Mandatory Enterprise Registration (Wajib Daftar Perusahaan – WDP) Following the Effectiveness of Law No. 40 Year 2007 concerning Limited Liability Companies in the Era of Regional Autonomy.” Indonesia Law Review 3, no. 2 (2014): 215-225. http://dx.doi.org/10.15742/ilrev.v4n2.109

Holbrook, Done. “International Merger Control Convergence: Resolving Multi-Jurisdictional Review Problems.” UCLA Journal of International Law and Foreign Affairs 7, (2002): 345.

Hölscher, Jens and Johannes Stephan. “Merger Control and Competition Policy in Central East Europe in view of EU Accession.” European Association for Comparative Economic Studies, ACE Project Nr. P97-8020-R Working Paper.

Hunt, W. Adam. “Business Implication of Divergences in Multi-jurisdictional Merger Review by International Competition Enforcement Agencies.” Northwestern Journal of International Law and Business 28, no. 147 (2007-2008): 147-170.

Kang, Nam-Hoon and Sara Johansson. “Cross-Border Mergers and Acquisitions: Their Role in Industrial Globalisation.” OECD Science, Technology and Industry Working Papers, 2000,01, OECD Publishing, Paris. http://dx.doi.org/10.1787/137157251088.

Kokkoris, I. “Do Merger Simulation and Critical Loss Analysis Differ under the SLC and Dominance Test?” European Competition Law Review 27, no. 5 (2006): 249-260.

Kolasky, W. J. and A. R. Dick. “The Merger Guidelines and the Integration of Efficiencies into Antitrust Review of Horizontal Mergers.” Antitrust Journal 71 (2003): 207-251.

Li, Xi and Yong Wang. “A Model of China’s State Capitalism.” Working Paper, available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2061521.

Matsusaka, John G. “Takeover Motives during the Conglomerate Merger Wave.” RAND Journal of Economics 24, no. 3 (1993): 357-379.

Mortis, Jrsy. Mergers and Acquisitions Motives.” Working Paper Tolouse School of Economics. http://economics.soc.uoc.gr/wpa/docs/0730.pdf

OECD. “Procedural Fairness and Transparency.” OECD Competition Committee, Paris, 2012.

–––. “Roundtable on the Standard for Merger Review, with a Particular Emphasis on Country Experience with the Change of Merger Review Standard from the Dominance Test to the SLC/SIEC Test.” OECD Working Party No. 3 on Co-operation and Enforcement, 29 May 2009.

Pickering Pacific. “ASEAN 6 – M&A Deals: A Pickering Pacific study of trends in M&A deals in six major ASEAN countries for 2010.” http://www.pickeringpacific.com/wp-content/uploads/2016/12/ASEAN-6-Report-2010.pdf.

Robinson, William I. “The Crisis of Global Capitalism: Cyclical, Structural or Systemic?”, Falea Center for Global and International Studies, 2010. http://www.soc.ucsb.edu/faculty/robinson/Assets/pdf/thecrisis.pdf

Röller, Lars-Hendrik and Miguel de la Mano. “The Impact of the New Substantive Test in European Merger Control.” European Commission Working Paper, Januar 22, 2006.

Ross, Thomas W. and Andy Baziliauskas. “Lessening of Competition in Mergers under the Competition Act: Unilateral and Interdependence Effects.” Canadian Business Law Journal 33 (2000): 373

Rowley, J. W. and A. Neil Campbell. “Multi-jurisdiction Merger Review: Is it time for a common form filing treaty?” Policy Direction for Global Merger Review 9, no. 12 (1998).

Saputro, Perdana A. “Article 27 of Competition Law and What Lies Beneath.” Indonesia Law Review 1, no. 3 (2011): 318-333. http://dx.doi.org/10.15742/ilrev.v1n3.59

Saraswaty, Beena. “Cross-border Mergers and Acquisitions in India: Extent, Nature and Structure.” CDS Working Paper, No. 434, 2010.

Singh, Ajit. “Competition and Competition Policy in Emerging Market: International and Developmental Dimensions”, G-24 Discussion Paper series, no. 18, 2002.

Snelders, R. & Dolmans, M.. “Cross-border merger in Company Law and Competition Law: Removing the Final Barriers”, in Tasjschrift voor Europees en Economische Rech, 49e jaargang, no.9, September 2002.

Sya’bani, Apri. “Minority Shareholder Protection in the Indonesian Capital Market.” Indonesia Law Review 4, no. 1 (2014): 114-142. doi: http://dx.doi.org/10.15742/ilrev.v4n1.96

Tavuyanago, Simbarashe. “Public Interest Consideration and Their Impact on Merger Regulation in South Africa.” Global Journal of Human Social Science: E Economic 15, issue 7 (2015).

Tay, Abigail and Gerard Willman. “Why (no) Global Competition Policy is a tough choice.” The Quarterly Review of Economic and Finance 45, issue 2-3 (2005): 312-324.

Tempo Interaktif, “EU widens Billiton-Rio Tinto antitrust probe into acquisition deal.” Tempo, July 5, 2008.

Tepperman, Andrew; Sanderson, Margaret, “Innovation and Dynamic Efficiencies in Merger Review”, Final Report, CRA International, April 9, 2009.

Trossman, Jeffrey. “Merger Review under the Competition Act: the Meaning of “Substantial Lessening of Competition.” University of Toronto Faculty of Law Review 48 (1990): 117.

Tumbuan & Partners. “Indonesia.” Merger & Acquisitions Law Guide 2013/14, LexisNexis the 1st Annual Guide to Practicing M&A Law in Asia, http://www.lexisnexis.jp/pdf/MALawGuide2013.pdf.

Wang, Xiaoqiong. “National Security Review of Foreign Mergers and Acquisitions in China: Progress and Reform.” Indiana University Research Center for Chinese Politics & Business Working Paper No. 20, Feb 1, 2012.

WTO. “Information Note on the Impact of Cross-border Mergers and Acquisitions on domestic companies, particularly small and medium sized enterprises”, Note by Secretariat, Working Group on the Interaction between Trade and Competition Policy, doc. Number (01-4653), September 28, 2001.

Zulheri. “Regulating the Global Competition Regime to Promoting a Sustainable Global Justice in Competition.” unpublished paper, Post Graduate Degree Program, Andalas University, Padang, December 2011.

Websites

ASEAN. “Overview of Competition Policy.” http://www.asean.org/asean-economic-community/sectoral-bodies-under-the-purview-of aem/competition policy. Accessed 8 July 2016.

Bech-Bruun & Lexidale, “Study on the application of the Cross-border Merger Directive,” http://ec.europa.eu/internal_market/company/docs/mergers/131007_study-cross-border-merger-directive_en.pdf. Accessed 8 July 2016.

Mahinka, Stephen Paul & Griffen, Michael C.. “Implication of the DOJ/FTC Revised Merger guidelines on FERC’s Merger Analysis”, presenttion, October 14, 2010. available at: https://www.morganlewis.com/pubs/webcast_dojftc_merger_guidelines_14oct10.pdf . Accessed 8 July 2016.

Pati, Suchismita. “Merger Control under Competition Act.” Lex Warrier. http://lex-warrier.in/2013/09/merger-control-competition-act/. Accessed 8 July 2016.

Varney, A. “Procedural Fairness.” September 12, 2009, available at: http://www.justice.gov/atr/public/speeches/249974/htm. Accessed 8 July 2016.




ISSN: 2356-2129