Indonesia Merger Control: Thresholds Explained – What You Need to Know About Market Power Limits

In Indonesia’s evolving economic landscape, merger control plays a pivotal role in safeguarding competitive markets. As conglomerates expand and market consolidation accelerates, the Financial Services Authority (OJK) and the Ministry of Law and Human Rights enforce stringent merger thresholds designed to prevent the emergence of monopolies. Understanding these thresholds is essential not only for businesses navigating regulatory approval but also for policymakers ensuring fair market dynamics.

Set against rising concentrations in key sectors like banking, telecommunications, and e-commerce, Indonesia’s merger control framework hinges on precise numerical indicators—turnover, interim market share, and revenue benchmarks—that determine when regulatory scrutiny becomes mandatory.

Merger thresholds act as gatekeepers: transactions below certain benchmarks typically avoid full scrutiny, but those crossing critical limits trigger mandatory notification and review. The OJK defines these thresholds based on quantitative market presence, requiring companies to disclose mergers where aggregated pre- or post-transaction market shares exceed predefined levels.

According to recent OJK guidance, a merger must be reported if the combined entity’s turnover in the relevant sector surpasses IDR 5 trillion (approximately USD 330,000), exceeding 10% of the national market—this “top threshold” serves as the primary trigger.

The Interplay of Turnover, Market Share, and Revenue Thresholds

To clarify how Indonesia measures market power, regulators evaluate three core indicators: turnover, market share, and revenue. While no single figure uniformly determines approval, their combined weight dictates regulatory obligations.

Turnover Threshold: The Foundation of Merger Scrutiny

Turnover—the total revenue generated by a company over a baseline period—forms the first line of assessment.

Transactions exceeding IDR 5 trillion in turnover signal significant market presence. This threshold ensures only theoretically large players undergo full evaluation. “Turnover reflects economic clout,” explains Dr.

Budi Santoso, an economist at Gadjah Mada University. “A firm with over 5 trillion IDR in annual sales wields real market influence, requiring transparency to prevent unchecked consolidation.” This turnover benchmark aligns with Indonesia’s approach to preventing dominant firms from distorting competition through sheer scale.

Market Share Threshold: Protecting Competitive Balance

Market share—calculated as a firm’s share relative to domestic or regional competitors—provides a direct gauge of competitive tension.

When a merger causes either party’s combined share to exceed 10% nationally, regulators treat it as high-risk. Yet, sector-specific nuances matter: in tightly contested markets such as mobile telecommunications (where Telkomsel, XL Willcom, and Smartpost dominate), even lower combined shares may prompt review. “Market concentration isn’t always measured solely by size,” notes regulatory expert Siti Aminah.

“A merger between two mid-sized players near a 10% aggregate share in a fragmented sector could still reduce competition significantly.”

Revenue-Based Triggers: An Additional Layer of Oversight

Revenue thresholds offer a complementary measure, particularly relevant in sectors with high intangible value like fintech or digital platforms. Transactions where aggregate revenue exceeds IDR 5 trillion act as a backstop, ensuring even minority consolidations that might otherwise evade turnover norms are scrutinized. The OJK emphasizes that revenue-based criteria complement turnover by capturing firms with strong profitability despite moderate turnover—critical in fast-evolving industries where cash flow matters as much as sales volume.

Despite these clear benchmarks, regulatory interpretation remains dynamic. Market conditions shift, new entrants disrupt sectors, and data transparency varies. More precisely, a merger does not automatically trigger review if total turnover across all merging entities falls below threshold—even if combined market share in a narrow niche exceeds 10%.

Conversely, a smaller deal with outsized competitive impact may still warrant intervention. This calibrated, multi-factor approach balances proactive competition enforcement with facilitating legitimate business growth.

Practical Implications for Businesses and Regulators

For firms considering mergers, early assessment against these thresholds is non-negotiable. “Businesses must conduct realistic threshold analyses before seeking approval—this prevents costly delays or rejection,” advises legal counsel Ahmad Fauzi.

“A merger just below turnover limits might still require filing; crossing thresholds demands proactive engagement.” Regulators, equipped with detailed market data and economic modeling, use these benchmarks to prioritize high-risk cases, ensuring efficient use of enforcement resources. Moreover, transparency remains key. Under OJK Regulation No.

21/2021, parties must disclose not only direct turnover but also indirect revenue streams, cross-segment activities, and anticipated synergies. This comprehensive reporting enables regulators to evaluate potential market dominance beyond surface-level metrics. h2>Navigating Indonesia’s Merger Landscape: Strategic Insight Understanding Indonesia’s merger thresholds is no longer optional—it’s central to strategic business planning in a market where concentration trends directly impact competitiveness.

The rules, clear in principle but nuanced in application, equip both regulators and market participants to preserve healthy competition without stifling innovation. As Indonesia continues to integrate more deeply into regional and global economies, robust merger control grounded in well-defined thresholds stands as a cornerstone of sustainable market development. In practice, businesses that map their transaction impacts against turnover, market share, and revenue thresholds from day one position themselves for timely compliance and fewer regulatory hurdles.

Meanwhile, the OJK’s structured framework ensures that only truly dominant consolidations face scrutiny—protecting consumer choice, encouraging fair entry, and maintaining equilibrium in Indonesia’s evolving marketplace. Ultimately, Indonesia’s merger control system reflects a sophisticated balance: rigorous enough to deter anti-competitive behavior, yet flexible enough to accommodate dynamic market realities. For any entity contemplating transformation through consolidation, mastering these thresholds isn’t just a legal requirement—it’s a strategic imperative.