On 1 July the Indonesian competition authority – Komisi Pengawas Persaingan Usaha (KPPU) – reformed its organizational structure in order to gear up for more efficient enforcement. As part of the organisational reform, KPPU established the Directorate of Economics, the Directorate of Competition Policy, and the Directorate of Competition Advocacy and Partnership (Small Medium Enterprise/SME) under the Deputy of Research and Advocacy. KPPU's Directorate of Merger & Acquisition and the Directorate of Partnership (Small Medium Enterprise/SME) Supervision were also restructured under the Deputy of Law Enforcement.
A few months earlier, in April, KPPU issued Regulation No. 1 of 2019 on Monopolistic and Unfair Business Practices Case Handling Procedure (New Regulation). Commentaries by stakeholders are split between the good and the bad of the New Regulation and how it will change the landscape of competition law enforcement in Indonesia.
Restoring the possibility of obtaining a commitment decision
The most interesting part of the New Regulation is how it restored a procedure similar to the 'commitment decision' under European Union competition law.
Although it is actually not an entirely new feature — the previous KPPU Regulation No. 1 of 2006 on Case Handling Procedure already had this commitment procedure, which was subsequently removed in 2010. It shows that the current KPPU leadership is keen to use a variety of tools to restore effective competition in the market in an efficient manner, rather than merely increasing fines.
Qualification of evidence
After KPPU was closely scrutinized by the courts, practitioners, and academics in the past on how it looks at pieces of evidence, the New Regulation lays out a framework of how the evidence should be submitted and/or presented in the proceedings before it. Circumstantial evidence is now clearly defined as "leads" (petunjuk), a form of admissible evidence. Throughout the history of competition law enforcement in Indonesia, courts had been split on whether to allow circumstantial evidence because this is not conventionally recognized under Indonesian laws.
It's not flawless
The New Regulation removed a number of "rights of defense" of the companies subject to a KPPU proceeding, which were previously provided in the KPPU Regulation No. 1 of 2010 on Case Handling Procedure, although some of those rights were retained in different sections of the New Regulation.
The New Regulation is also ambiguous on 'site visit.' Under the New Regulation, it is still unclear whether the KPPU Investigators could use the 'site visit' provision to conduct an unannounced inspection or whether that provision can only be relied on by the Panel of KPPU Commissioners to clarify matters being examined in a hearing.
Although only published in April, this New Regulation was actually promulgated on 4 February 2019 and has been in effect since then. Therefore, all ongoing investigations which started earlier this year should have applied the New Regulation.
The new KPPU leadership is progressing towards fully reforming its organisation. In the pipeline, we have the draft amendment of the Competition Law itself, which failed to be finalized before the general election, and will invite even more commentaries with the newly elected Congress, as well as the draft amendment of the Supreme Court Regulation on Appeal Procedure.
Come what may, we expect more antitrust enforcement actions by the current KPPU leadership.