Corporate & Securities Jakarta Client Alert March 2016 KPPU Gave Warning to Planned Cable TV Cartel In a recent case, despite there being strong evidence of cartel, i.e., a written agreement, the Business Competition Supervisory Commission ("KPPU") did not launch a formal investigation because the cartel had not been implemented yet. Because there was good faith shown by checking with KPPU about an agreement, KPPU chose not to take enforcement action. According to the KPPU press release of 23 March 2016, the Indonesian Regional Broadcasting Commission (Komisi Penyiaran Indonesia Daerah - KPID) in Riau on 19 September 2015 facilitated 19 cable subscription broadcast operators in Pekanbaru (Riau) area to agree on, among other things, minimum subscription fees, market service division, restriction to advertise to potential subscribers outside the operators' home market service and a requirement to have a recommendation from the Indonesian Cable TV Association (ICTA) Province of Riau. KPID Riau on its own initiative asked for an opinion from KPPU on the agreement between the broadcast operators. KPPU obviously was of the view that the agreement constituted price-fixing (Article 5), cartel (Article 9) and market division arrangement (Article 11) between competitors, all of which potentially violate the Anti-Monopoly Law. Therefore, KPPU is of the view that KPID Riau should not have acted as a facilitator for such behavior, which potentially violates the Anti-Monopoly Law, and suggested that KPID Riau and ICTA Riau annul the agreement. Given that the agreement has not been implemented yet and considering the good faith of KPID Riau to check with the KPPU on the agreement, KPPU has not yet launched a formal investigation into the agreement among the broadcast operators. However, KPPU warned that if it finds out that the agreement has not been annulled and has been effectively implemented by the broadcast operators, KPPU will take legal action against the broadcast operators. This case demonstrates that KPPU can be lenient with cartel behavior where the cartel has not been implemented yet. The fact that KPID Riau was not aware of the Anti-Monopoly Law and checked with KPPU about the agreement first was also a factor in KPPU's decision not to take enforcement action. That said, KPPU may have a different attitude if similar cartel activities are carried out by more sophisticated companies, e.g., multinational or large corporations. Note that KPPU still has no formal procedures for consultation that can be utilized by business actors. As in this case, KPPU typically only gives consultation for fellow regulators. www.hhp.co.id For further information please contact Wimbanu Widyatmoko Senior Partner +62 21 2960 8694 firstname.lastname@example.org Mochamad Fachri Partner +62 21 2960 8547 email@example.com Farid Nasution Senior Associate +62 21 2960 8525 firstname.lastname@example.org Hadiputranto, Hadinoto & Partners The Indonesia Stock Exchange Building, Tower II, 21st Floor Sudirman Central Business District Jl. Jenderal Sudirman Kav. 52-53 Jakarta 12190 Indonesia Tel: +62 21 2960 8888 Fax: +62 21 2960 8999 ©2016 Hadiputranto, Hadinoto & Partners. All rights reserved. Hadiputranto, Hadinoto & Partners is a member of Baker & McKenzie International. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. This may qualify as “Attorney Advertising” requiring notice in some jurisdictions. Prior results do not guarantee a similar outcome.