New Sanctions and Appeals Procedure Under Indonesian Competition Law

One of the laws amended by Law No. 11 of 2021, dated November 2, 2020 on Job Creation (the “Job Creation Law”) was Law No. 5 of 1999 dated March 5, 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition (the “Competition Law”). Through the enactment of the Job Creation Law, there are several changes to the existing provisions under the Competition Law, among others: changes to the appeals system and sanctions. One of the highlights of those changes is that most of the provisions regarding criminal sanctions—except for those regarding non-compliance during KPPU investigations—were scrapped. In place of this, the government has opted to expand on the administrative sanctions of the law. Furthermore, since the enactment of the Job Creation law, objections to the decisions of the Business Competition Supervisory Commission (the “KPPU”) are now handled by the Commercial Court instead of the District Court.

To provide further clarity on the above changes to the provisions under the Competition Law, the Indonesian Government recently enacted Government Regulation No. 44 of 2021 dated February 2, 2021 on the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition (“GR 44/2021”). The key provisions of GR 44/2021 are as follows:

  • Authority of KPPU

GR 44/2021 reiterated that the KPPU holds the authorities mandated by the Competition Law, which essentially include: receiving reports from the public for suspected monopolistic practices or unfair business competition or conducting their own investigation on the same matter, examining and trying the relevant parties suspected of monopolistic practices or unfair business competition, issuing a verdict on the matter and imposing the party with the appropriate sanction. Although there have been no changes to the authority of the KPPU made by the amended version of the competition law, GR 44/2021 clarifies that in conducting their trial and examination, the KPPU shall form a Commission Tribunal. The Commission Tribunal will be responsible for the entire trial process from the case examination until the issuance of a decision and sanction (if any).

  • Sanction

Violations of various provisions in the Competition Law by Business Actors may be subject to administrative sanctions that will be imposed by the KPPU by taking into account the following criteria:

  1. Degree or impact of the relevant violation conducted by a Business Actor;
  2. Continuity of the Business Actors’ business activities;
  3. Clear assessment and considerations;

Furthermore, type of the administrative sanctions under GR 44/2021 are as follows:

  1. nullification of an agreement;
  2. order to a Business Actor to stop a vertical integration;
  3. order to a Business Actor to stop any actions that are proven to give way to Monopolistic practices, causing unfair business practices and/or are detrimental for the public;
  4. order to a Business Actor to stop the abuse of a dominant position;
  5. nullification of a merger or consolidation of a business entity and an acquisition of shares;
  6. stipulation to pay damages; and/or
  7. imposing a minimum fine of Rp1,000,000,000 (one billion rupiah), by taking into account the provisions of the amount of the fine that is regulated by GR 44/2021.

Concerning the administrative sanction under item (g) above, the KPPU may impose a fine of up to:

  1. 50% (fifty percent) of the net profit obtained by the Business Actor from the Relevant Market throughout the time frame of the violation; or
  2. 10% (ten percent) of the total sales on the Relevant Market throughout the time frame of the violation.

The KPPU’s decision to impose a fine of a certain amount must also be based on the following considerations:

  1. Negative impact caused by such violation;
  2. Period of such violation;
  3. Aggravating and mitigating factors; and/or
  4. The capability of such Business Actors to pay the relevant fine.
  • Objections to KPPU Decisions

Business Actors who disagree with a KPPU decision may file an objection to the Commercial Court within the Business Actors’ domicile. Unlike the appeals procedure in the District Court, the Commercial Court will assess both material and formal aspects of a case. The Commercial Court is also given ample time to inspect the case from 3 (three) to 12 (twelve) months, whereas previously, the District Court had to issue a verdict within 30 (thirty) days after the commencement of the inspection. With more time afforded to the court, they are expected to be more thorough with their investigation so that they may be able to issue a fair verdict. In the event that any party is unsatisfied with the Commercial Court’s verdict, GR 44/2021 enables that party to file for a cassation regarding the verdict to the Supreme Court.

The enactment of GR 44/2021 encourages Business Actors to become more careful in making sure that their actions are compliant with Indonesia’s competition policies, considering the sizeable fines that they may have to pay in the event there is a violation of the provisions under the Competition Law. On the other hand, should Business Actors disagree with a KPPU decision, more legal recourses are now available for them.

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April 16, 2021

Please contact Alfa Dewi Setiawati (asetiawati@aksetlaw.com), Raden Suharsanto Raharjo (rraharjo@aksetlaw.com), Adhitya Ramadhan (aramadhan@aksetlaw.com) or Caleb Sitorus (calebsitorus@aksetlaw.com)  for further information.

 

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