• The KPPU wishes to tailor amendments to accommodate all parties
  • Indonesian businesses still not ready for criminal sanctions on antitrust breaches

Indonesia’s Commission for the Supervision of Business Competition (KPPU) has asked parliament not to criminalize elements of amended competition law, according to KPPU commissioner and ex-chairman Nawir Messi.

Amendments to Law No. 5 of 1999 on Competition are under review in the Indonesian parliament to beef up the KPPU’s enforcement authority.

Commission VI of the parliament, which is in charge of investments, industries and business competition, is demanding relatively harsh sanctions for cartel and other anti-competitive conducts in the amended law, including hefty financial fines and criminal sanctions, Messi told PaRR.

The KPPU want to table a revised draft that will not meet with too much resistance and pushback from other stakeholders however, according to Messi. This is so that the new amendment can be passed into law more quickly, he added.

Criminalization may not be the best solution to deter anti-competitive practices in Indonesia at the moment due to the general unfamiliarity of small and medium business owners with competition law, Messi explained. Criminal sanctions have not proven very effective in European countries where they have been adopted but where the number of enforcement cases remains low, he said.

Many smaller businesses come under the KPPU’s scrutiny for unwittingly breaking competition rules simply for following the actions or recommendations given by their larger industry peers, Messi noted.

Indonesia is also still riddled with government policies that run contrary to the essence of the competition law, such as the flight ticket price floor and import restrictions that have caused commodity prices to shoot up, Messi added.

“We do not want to harshly punish businesspeople that are struggling to make ends meet who think they are simply following rules imposed by the government,” Messi said.

Criminal sanctions could be applicable to “hardcore” cartels a few years down the line when the market is mature enough in compliance with the law, he noted.

In the latest draft amendment, parliament has ratified an increase in antitrust fines from IDR 25b (USD 1.8m) to IDR 1tn, adopted of a pre-merger control regime, and given the KPPU authority to conduct dawn raids and to grant leniency.

Commission VI is currently holding discussions with the ministries of justice and human rights, trade, finance, and agriculture, as well as the attorney general, the national police, the chamber of commerce and various trade associations to gather feedback on the draft.

KPPU chairman Syarkawi Rauf and several members of parliament visited Germany in early October to learn about how to conduct raids and confiscate relevant documents.

Commission VI members have shown their commitment to making the amendment work, Messi noted. He added that he was hoping for the amendment to be passed into law early next year.