Changes to Competition Law under Omnibus Law

As a follow up to the previously issued newsflash dated November 5, 2020 on the general overview of the Job Creation Law or what is publicly known as the Omnibus Law (link here), this newsflash covers further discussion of the notable amendments to Law No. 5 of 1999 dated March 5, 1999 on Prohibitions on Monopolistic Practices and Unfair Business Competition (the “Competition Law”) under the Omnibus Law.

The amendments to the Competition Law may impose several implications and challenges in the antitrust sector.

This newsflash will focus on the following key provisions.

  • Change of Appeal Procedure (the “Objection”) to the Commercial Court

Previously, the Objection procedure for a decision rendered by the Indonesian Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or “KPPU“) needed to be submitted to the District Court. The Omnibus Law now requires business actors to submit the Objection to the Commercial Court. Accordingly, the authority of the District Court to examine and decide upon Objection to the KPPU decisions regarding business competition and/or antitrust cases as provided under Article 44 of the amended Competition Law is now transferred to the Commercial Court.

In addition to the change in jurisdiction, the Omnibus Law also repeals the maximum 30-day deadline in issuing a decision at the Objection and cassation stage. As a result, both the Commercial Court and Supreme Court are free to issue a decision without any time limit.

With this change of authority taking place, the Commercial Court now has an absolute competence to examine, adjudicate, and decide the following matters: Bankruptcy and Suspension of Debt Payment Obligations (Penundaan Kewajiban Pembayaran Utang or PKPU), Bank Liquidations by the Indonesian Deposit Insurance Company (Lembaga Penjamin Simpanan or LPS), Intellectual Property, and recently, Business Competition.

The Omnibus Law provides that further procedures for the examination on the Commercial Court and the Supreme Court shall refer to the prevailing laws and regulations. In this case, the Objection procedures in the Commercial Court will still refers to the Supreme Court Regulation No. 3 of 2019 dated August 20, 2019 on Procedure for Appeal against Decisions of the KPPU (“SC Reg. 3/2019”). It is worth noting that SC Reg. 3/2019 stipulates Objection procedures in the District Court. Therefore, this may cause some confusion in the future with regard to the procedures to be implemented in the Commercial Court. We expect that the Supreme Court will issue a circular letter on the Objection procedure in the Commercial Court in the near future.

  • Removal of Maximum Administrative Fines of Rp25 Billion

The most significant change to the Competition Law lies in the removal of the capped fee on fines of Rp25 billion under Article 47 of the amended Competition Law. Following the adjustment under this article, KPPU may now have a power to impose even higher administrative fines for violation of the Competition Law. This provision is subject to a Government Regulation which will set out further provisions on the criteria, type, amount of fine, and procedures of sanction imposition.

  • Limitation of Criminal Sanctions Imposition

The Competition Law previously stipulates criminal sanctions for violating several articles under the Competition Law. In practice, though, criminal sanction has never been exercised in Indonesia towards violation of the Competition Law. The Omnibus Law now stipulates that only a violation of Article 41 of the Competition Law (refusal of providing evidence or hindering the investigation process) may be subject to criminal sanction. The form of criminal sanction for violating this provision is subject to a fine of up to Rp5 billion or substituted with criminal confinement for no longer than 1 (one) year.

Meanwhile, any violation of the other articles previously mentioned in Article 48 of the Competition Law, such as prohibited agreements, prohibited activities, and dominant position are only subject to administrative sanctions provided under the Omnibus Law.

  • Removal of Additional Criminal Sanctions

The Omnibus Law also removes the provision on additional criminal sanctions as previously provided under Article 49 of the Competition Law, such as (i) revocation of business licenses; (ii) prohibition of business actors proven to have violated this law from filling the position of director or commissioner for at least 2 (two) years and no longer than 5 (five) years; or (iii) order to cease certain activities or actions causing losses to other parties. The Omnibus Law now does not recognize additional criminal sanctions for any violation of the Competition Law.

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November 24, 2020

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