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General framework

Legal framework

What is the legal framework in your jurisdiction covering the behaviour of dominant firms?

Law 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition (Indonesian Competition Law, ICL) is the primary legislation covering the behaviour of dominant firms.

While many competition law regimes rely on the concepts of market dominance or dominant position, the ICL only employs the term ‘dominant position’ in articles 1(4) and 25 and in the title of Chapter V, which contains article 25. However, the concept of dominant position appears in several more articles: article 4 (prohibiting oligopolies), article 13 (prohibiting oligopsonies), article 15 (prohibiting exclusive agreements), article 17 (prohibiting monopolies), article 18 (prohibiting monopsonies), article 19 (prohibiting market control), article 20 (prohibiting predatory pricing), and in the articles that comprise the remainder of Chapter V: article 26 (prohibiting interlocking directorships), article 27 (prohibiting cross-ownership) and article 28 (regarding mergers, consolidations and acquisitions) (together, dominance-related articles).

Under ICL, the Commission for the Supervision of Business Competition (KPPU) has delegated authority to issue regulations (Guidelines) to implement the ICL.

Definition of dominance

How is dominance defined in the legislation and case law? What elements are taken into account when assessing dominance?

ICL article 1(5) defines a business actor as a person or entity, established and domiciled, or that engages in activities, in Indonesia, that individually or with others by agreement engages in business activities.

ICL provides two definitions of dominance. Article 1(4) provides that a business actor will occupy a dominant position if it has: no substantial competitor in the relevant market; or the strongest position of its competitors in the relevant market as judged by its financial capacity, access to supplies or sales and ability to adjust the supply or demand levels to certain goods or services.

Article 25(2) provides that a business actor or a group of business actors, will occupy a dominant position if it: controls at least 50 per cent of the market for a good or service; or together with two or three business actors, or two or three groups of business actors, controls at least 75 per cent of the market for a good or service.

Articles 1(4) and 25(2) should, if possible, be read together, rather than as inconsistent definitions. It should be noted here that the ICL is frequently ambiguous - the interpretive tension between these two sub-articles provides but one example.

In assessing market dominance, the KPPU will consider all market structure elements, such as market share, barrier to entry, and rivals’ positions. The ICL does not specifically recognise different dominance types.

Purpose of legislation

Is the purpose of the legislation and the underlying dominance standard strictly economic, or does it protect other interests?

The object of the ICL is not strictly economic, although economics plays a very important role in the interpretation and application of the dominance provisions. In KPPU hearings, business actors increasingly call economists as expert witnesses. Most, if not all, proceedings will involve the calling of such witnesses, whose evidence is often of high importance to the matter’s outcome.

While many other competition legal regimes have a single object, the ICL has several, including:

  • safeguarding the ‘public interest’, increasing national economic efficiency and enhancing consumer welfare;
  • creating a business climate conducive to business opportunities (including small and medium-sized enterprises);
  • preventing monopolistic and unfair business practices; and
  • ‘creating effectiveness and efficiency in the carrying out of business activities’.

Sector-specific dominance rules

Are there sector-specific dominance rules, distinct from the generally applicable dominance provisions?

The provisions prohibiting abuses of dominant position and the dominance-related articles apply to all business sectors. However, the central government has also issued sector-specific regulations. The KPPU plays a significant role in enforcing such regulations and providing sound competition policy recommendations tailored to specific sectors.

The ICL takes precedence over sector-specific regulation to the extent of any inconsistency. As the agency primarily responsible for enforcing competition law, the KPPU works together with other regulators and government agencies in dealing with specific sectors, and to ensure that all competition regulations are drafted and enforced consistently.

For instance, in handling competition in the banking and finance industry, the KPPU works closely with the Financial Services Authority and the central bank, Bank Indonesia. In respect of the oil and gas industry, the KPPU works closely with the Upstream Oil and Gas Special Task Force. As for the telecommunications industry, the KPPU works closely with the Indonesian Regulatory Telecommunications Agency.

Exemptions from the dominance rules

To whom do the dominance rules apply? Are any entities exempt?

The dominance provisions apply to business actors (which again ICL article 1(5) defined as persons or entities, legal or otherwise, established and domiciled, or that engage in activities, in Indonesia, that individually or with others by agreement engage in business activities in the economic sphere).

The ICL also applies to state-owned enterprises (SOEs) and institutions formed or appointed by the government. Article 51 provides that SOEs and such institutions may only maintain a monopoly or other competitive advantage if: their activities relate to the production or marketing of goods or services that affect the livelihood of society at large and involve branches of production of strategic importance to the state; and the matter has been specifically provided for by law.

Article 51 Guidelines stipulate that SOEs granted monopoly rights shall not abuse those rights.

Public entities, which are defined as government bodies or agencies, local, central or national, that have in the public interest been delegated duties, functions, or powers by law or regulation, are exempted from the ICL. However, if a public entity regulates competition-related matters and the KPPU determines that this may breach the ICL or create anticompetitive effects, the KPPU may recommend or order that the entity issue an amending regulation so as to comply with the ICL.

ICL article 50 exempts cooperatives, which ‘specifically serve their members’, and ‘small-scale’ business actors.

Transition from non-dominant to dominant

Does the legislation only provide for the behaviour of firms that are already dominant?

The ICL provides for the behaviour of firms that are already dominant, and behaviour through which a non-dominant company becomes dominant. Article 25 and the dominance-related articles may apply to practices that have as their object or effect the creation or establishment of a dominant company. For instance, if a business actor is found to breach article 19 (prohibiting market control), this may indicate to the KPPU that the business actor has become a dominant company.

Collective dominance

Is collective dominance covered by the legislation? How is it defined in the legislation and case law?

Collective dominance is covered by both sub-articles 25(2)(a) and (b). Two or three business actors or two or three groups of business actors will only be regarded as together controlling a certain percentage of a relevant market if they employ the same strategies or policies in that market. For example, two independent business actors who employ the same pricing policies will be deemed to collectively control the sum of the percentages of the market they individually control. This control may be considered as collective dominance, and deemed so even in the absence of an explicit agreement between the business actors.

Dominant purchasers

Does the legislation apply to dominant purchasers? Are there any differences compared with the application of the law to dominant suppliers?

The ICL applies to dominant purchasers. Article 18 prohibits monopsonies, by providing that a business actor is prohibited from ‘controlling the acquisition of supplies’ or acting as the sole buyer of a good or service in a relevant market, if this would involve ‘monopolistic’ practices or result in unfair business competition in the relevant market.

The ICL treats dominant suppliers similarly. Article 17 prohibits monopolies, by providing that a business actor is prohibited from ‘controlling the production or marketing’ of a good or service in a relevant market, if this would involve monopolistic practices or result in unfair business competition.

Market definition and share-based dominance thresholds

How are relevant product and geographic markets defined? Are there market-share thresholds at which a company will be presumed to be dominant or not dominant?

The ICL’s definition of the ‘relevant market’ is roughly consistent with the definition of ‘market’ adopted by several regimes regulating competition in other jurisdictions.

The ‘relevant market’ is a range of products marketed in a given geographical area. This composite definition contemplates a market defined by both its location (geographical element) and its range of products (product element).

The geographical element refers to an area in which business actors actually sell their products or, more broadly, an area in which such products are available or to which such products are capable of being distributed. The product element consists of a range of products that are the same, of the same type, or can be substituted for one another. Products are regarded as substitutes for one another when consumer opinion is that the products are sufficiently similar in function, size, use, price, or other key characteristic. Products may also be so regarded when supplier opinion is that a new supplier of a competing product is sufficiently able to bring that product to the relevant market.

The ICL’s definition of the ‘relevant market’ does not differ for merger control purposes.

As above, ICL article 25(2) provides that a business actor, or a group of business actors, will occupy a dominant position if it: controls at least 50 per cent of the market for a good or service; or together with two or three business actors, or two or three groups of business actors, controls at least 75 per cent of the market for a good or service.

Abuse of dominance

Definition of abuse of dominance

How is abuse of dominance defined and identified? What conduct is subject to a per se prohibition?

ICL article 25(1) prohibits entities from using a dominant position directly or indirectly to: set trading terms, with the aim of preventing or barring consumers from obtaining goods or services on a competitive basis, with regard to price or quality; limit markets or technological innovation; or bar potential competitors from entering the relevant market.

Although it is not apparent from the text of the prohibition, it is KPPU policy to follow an effects-based approach. This means that an activity of a business actor in a dominant position will only be considered an abuse if it involves monopolistic practices or results in unfair business competition in the relevant market. It will not be considered an abuse of dominance if it contributes to the success of the business by efficiency improvements or innovations, as opposed to the exclusion of competitors.

The test for whether there has been an abuse of a dominant position is objective. No anticompetitive intent is required, although its existence may be of importance in determining whether there has been an abuse.

Price fixing (article 5) and exclusive dealing (article 15) are prohibited per se, regardless of whether they have an anticompetitive effect on the market.

Exploitative and exclusionary practices

Does the concept of abuse cover both exploitative and exclusionary practices?

The concept of abuse covers both exploitative and exclusionary practices. ICL article 17 (prohibiting monopolies) has frequently been used by the KPPU to capture allegations of exploitative practices conducted by dominant firms, while articles 19 (prohibiting market control) and 25 (prohibiting abuses of a dominant position) have been used to capture allegations of exclusionary practices.

Link between dominance and abuse

What link must be shown between dominance and abuse? May conduct by a dominant company also be abusive if it occurs on an adjacent market to the dominated market?

ICL article 25 prohibits a business actor from abusing its dominant position, either directly or indirectly. No direct causal link between the abuse and dominant position is required.

A business actor’s conduct may also be abusive, even if the conduct occurs in a market adjacent to the dominated market. For example, article 15(2) prohibits tying and bundling, by prohibiting a business actor from entering into an agreement with another business actor that provides that the business actor receiving a good or service must be willing to buy another good or service from the business actor that supplied the original good or service.

Defences

What defences may be raised to allegations of abuse of dominance? When exclusionary intent is shown, are defences an option?

The ICL does not provide any defences. However, most of the provisions prohibiting abuses are subject to the rule of reason, such that an activity of a business actor in a dominant position will only be considered an abuse if it involves monopolistic practices or results in unfair business competition in the relevant market.

There is limited guidance on how the KPPU will determine whether an agreement (or instance of coordination) involves monopolistic practices or results in unfair competition. However, KPPU guidelines do provide a list of factors, which the KPPU considers in determining whether the rule of reason will save a breach of the prohibition on cartel agreements.

Specifically, the KPPU will likely consider a breach of a prohibition saved by the rule of reason if that breach:

  • caused no decrease in the production or delivery of products, whether goods or services, in the relevant market, nor any increase in those products’ prices;
  • was not committed to reduce competition in the relevant market, but instead to provide an improved product;
  • was committed by a business actor which did not control over 50 per cent of the market;
  • caused the market to operate more efficiently; or
  • was reasonably necessary for the business actor in the circumstances.

Unfortunately, there is no guidance on the weight attached to the individual factors.

Specific forms of abuse

Types of conduct Types of conduct

Indicate to what extent the following types of conduct (questions 14–25) are considered abusive. Mention briefly any leading precedents on, and the relevant tests for, assessing the categories of conduct: Rebate schemes

Rebate schemes may fall within the scope of ICL article 15(3), which prohibits a business actor from entering into an agreement with another business actor concerning the price, or discount on the price, of the good or service, which provides that the business actor receiving the good or service from the supplying business: must be willing to buy another good or service from the supplying business actor; or will not buy the same good or service, or a good or service of the same type from another business actor that is a competitor of the supplying business actor.

In addition, the practice may also violate ICL articles 19, which prohibits specified forms of market control, and 25, which generally prohibits abuses of a dominant position, if it prevents actual or potential competitors from supplying the same products or prevents consumers from obtaining similar products that are competitive in price or quality.

The ICL does not distinguish between retroactive and incremental rebates.

In Arta Boga Cemerlang (ABC) (2005), the KPPU determined that ABC breached article 25 by engaging in exclusionary practices towards its competitors and entering into agreements with its wholesalers and grocers, which provided: a 2 per cent discount would be given, if they agreed to sell ABC’s batteries; and an additional 2 per cent discount would be given, if they agreed not to sell ABC’s competitor’s products.

In Telkom (2005), the Supreme Court determined that Telkom breached article 15(3)(b) by providing exclusive rebates to hotels and offices on the condition that these hotels and offices would not use international telecommunications services offered by Indosat, a competitor. With its dominance in the public switched telephone network market, Telkom thereby also abused its dominant position, in contravention of article 25.

The ICL permits dominant business actors to employ rebate schemes for certain commercial reasons, such as achieving economies of scale or assisting in product launches. Again, the KPPU applies the rule of reason, and will not consider a rebate scheme abusive if it contributes to the business’ success by way of efficiency improvements or innovations, as opposed to competitor exclusion.

Tying and bundling

ICL article 15(2), as above, prohibits a business actor from entering into an agreement with another business actor that provides that the business actor receiving a good or service must be willing to buy another good or service from the business actor that supplied the original good or service. Article 15(3) prohibits a business actor from entering into an agreement with another business actor concerning the price, or discount on the price, of the good or service, which provides that the business actor receiving the good or service form the supplying business actor will not buy the same good or service or a good or service of the same type from another business actor that is a competitor of the supplying business actor.

Exclusive dealing

ICL article 15(1) prohibits a business actor from entering into an agreement with another business actor that provides that the business actor receiving a good or service is required to either supply or not supply that good or service to a specified party or place.

Even though article 15(1) is formulated as a per se prohibition, KPPU adopts a rule of reason upon enforcement, such that a business actor will only be found to have breached the article if their conduct has involved monopolistic practices or resulted in unfair business competition in the relevant market.

In Semen Gresik (2008), the Supreme Court determined that Semen Gresik breached article 15(1) by entering into agreements with distributors that specified the price at which those distributors would sell its product and the identities of those parties it would sell to, and prohibited the distributors from selling other cement brands.

In Angkasa Pura I (2014), which concerned ground-handling services for non-scheduled commercial flights at Bali’s Ngurah Rai International Airport, Angkasa Pura I allegedly gave Execujet exclusive rights to provide certain services at the Airport’s General Aviation Terminal. The KPPU fined Execujet 2 billion rupiah and Angkasa Pura I 5 billion rupiah. Angkasa Pura I was also ordered to revoke its exclusive agreement with Execujet. Angkasa Pura I’s appeals to the Central Jakarta District Court and the Supreme Court were both denied.

Predatory pricing

ICL article 20 prohibits predatory pricing by prohibiting business actors from selling a good or service at a loss or an otherwise very low price, with the intention of eliminating competitors from the relevant market, if this would involve monopolistic practices or result in unfair business competition.

Although the KPPU is yet to determine any predatory pricing allegations, it has released Guidelines 6 of 2011 on Predatory Pricing, which suggest that a business actor has engaged in predatory pricing if it has, among other things, set prices that are unreasonably low, such that they are, for example, below cost; however, a business actor will not have engaged in predatory pricing if it is unable to recoup the losses caused by such low prices.

Price or margin squeezes

Price or margin squeezes may be prohibited by ICL article 14, which is concerned with vertical integration. A business actor may not enter into an agreement with another business actor with the purpose of controlling the production of a number of products that are included in a chain of production of certain goods or services, where ‘each link in that chain is the end product of the production process or of the further processing’. The links in the purported production chain may ‘relate directly or indirectly to each other’. The prohibition only applies where the relevant agreement involves monopolistic practices or results in unfair business competition in the relevant market.

Refusals to deal and denied access to essential facilities

ICL article 10 prohibits refusals to deal or boycotts, by prohibiting a business actor from entering into an agreement with a competing business actor that:

  • could prevent other business actors from engaging in the same business activity, either in a relevant domestic or international market; or
  • provides that the competing business actor will not sell a specified good or service of any other business actor, if such an agreement would:
  • result, or potentially result, in a loss to that other business actor; or
  • limit the other business actor’s ability to sell the specified good or service in the relevant market.

The ICL also recognises a unilateral refusal to deal with a competitor as an abuse of dominance, subject to the rule of reason.

The KPPU treats both the agreements and the threat of such agreements as breaching the prohibitions, as the latter may still induce actions by consumers or suppliers that are harmful to competition.

Predatory product design or a failure to disclose new technology

The ICL does not address predatory product design or failures to disclose new technology.

Price discrimination

ICL article 19(d) prohibits price discrimination by providing that a business actor is prohibited from entering into an agreement that results in a purchaser being required to pay a price for a good or service that is different to the price paid by another purchaser.

The rule of reason prevails, such that, in practice, KPPU will not pursue a business actor for price discrimination where the setting of a different price for different purchasers: does not involve monopolistic practices or results in unfair business competition in the relevant market; or is otherwise reasonable in circumstances, for example, if based on a difference in quantities ordered or payment terms.

The KPPU will pursue a business actor if, however, the discrimination is premised on non-economic bases including, for example, the purchaser’s ethnicity, race or social status.

Exploitative prices or terms of supply

Exploitative prices or terms of supply may violate ICL articles 17, which prohibits abuses of monopoly power, and 25, which generally prohibits abuses of a dominant position.

In Temasek (2008), the Supreme Court determined that Telkomsel, the largest GSM provider in Indonesia, had breached ICL article 17. Telkomsel’s tariffs were determined to be exploitative of consumers. Specifically, it was determined that Telkomsel’s pricing strategy caused other GSM providers to increase their tariffs, leading to higher tariffs overall in the mobile phone industry. After comparing the costs of production, prices of the same products and profitability rates in neighbouring countries, the Court concluded that Telkomsel’s tariffs were excessive.

Abuse of administrative or government process

The ICL does not specifically address abuses of administrative or government process.

Mergers and acquisitions as exclusionary practices

ICL article 28 and Government Regulation 57 of 2010 on Mergers and Acquisitions (GR 57/2010) prohibit business actors from conducting mergers and acquisitions where this would involve monopolistic practices or result in unfair business competition in the relevant market. If a merger or acquisition breaches article 28 or GR 57/2010, KPPU may terminate the agreement.

KPPU recommends that where business actors perceive a risk of falling afoul of ICL article 28 or GR 57/2010, they may consult with KPPU prior to closing. Notification after transaction close is only mandatory if: there is a change of control in the target company; the combined assets of the parties exceed 2.5 trillion rupiah (or 20 trillion rupiah if both parties are banks); or the combined annual sales of the parties exceed 5 trillion rupiah.

Other abuses

There are no other types of abuses prohibited by the ICL.

Enforcement proceedings

Enforcement authorities

Which authorities are responsible for enforcement of the dominance rules and what powers of investigation do they have?

The KPPU, the District Courts, the Supreme Court, the police and the Public Prosecutor’s Office are charged with enforcing the ICL. Of these, the KPPU plays the most important role. The police assist with investigations and the Public Prosecutor’s Office becomes involved when there is the (rare) prospect of criminal charges. The District Courts and Supreme Court handle appeals against KPPU determinations.

The KPPU is comprised of Boards of Commissioners and a Secretariat. The Commissioners determine matters, after conducting hearings, while the Secretariat investigates and prosecutes. KPPU Regulation 1 of 2010 on Case Handling Procedures established an adversarial system between the accused business actor and the KPPU’s Secretariat. The KPPU will erect a ‘Chinese wall’ between the Commissioners and the Secretariat and between units of the Secretariat, as necessary.

The KPPU may: commence an investigation after receiving a report or complaint, or on its own initiative; and summons business actors, individuals (including government officials) or experts as witnesses. Should a party resist a summons, the KPPU may request police assistance.

The KPPU may initiate criminal proceedings if: a party does not cooperate with its investigation by, for example, not attending a hearing despite being summonsed or refusing to provide documents despite being subpoenaed; and a business actor fails to comply with a final and binding KPPU determination after it has exhausted all available legal challenges.

The KPPU has no power to conduct criminal investigations or impose criminal sanctions. Such authority rests with the police, the Public Prosecutor’s Office and the courts.

Sanctions and remedies

What sanctions and remedies may the authorities impose? May individuals be fined or sanctioned?

The ICL provides for three categories of sanctions: administrative, basic criminal and additional criminal.

Administrative sanctions

The KPPU is authorised by ICL article 47 to impose on business actors that have violated ICL, administrative sanctions, including:

  • an annulment of a range of prohibited agreements;
  • an order to cease prohibited forms of vertical integration;
  • an order to cease activities proven to have involved monopolistic practices or resulted in unfair business competition in the relevant market, or other harm;
  • an order to cease abuse of a dominant position;
  • an order preventing a prohibited contemplated merger or consolidation of business actors, or acquisition of shares;
  • an order for the payment of compensation; and
  • a fine of between 1 billion rupiah and 25 billion rupiah.

All sanctions are final. There is no provision for interim measures.

Administrative sanctions are imposed in accordance with the KPPU Guidelines, which are helpful in determining compensation payable by, and fines imposed by the KPPU on, business actors that have violated the ICL.

As for compensation, the Guidelines provide that the amount of compensation payable will be the amount of actual loss or damage suffered by the party claiming such loss or damage, less an amount that appropriately reflects the presence of any mitigating factors, including a business actor’s cooperation with the KPPU, unintentional violation of the ICL, acts of contrition and the likelihood of the business actor going bankrupt.

Basic criminal sanctions

The ICL provides that business actors that have violated specified ICL articles will be fined between 1 billion rupiah and 100 billion rupiah, or imprisoned for up to six months.

Additional criminal sanctions

The ICL provides that should a basic criminal sanction be imposed, additional criminal sanctions may be imposed in the form of: a revocation of the business actor’s business licence; a prohibition on the business actor being a director or commissioner for between two and five years; and an order requiring the cessation of certain activities by the business actor that causes loss to another.

The highest recorded fine is 25 billion rupiah. The KPPU frequently imposes similarly severe fines in cases involving serious breaches of article 25 or the other dominance-related articles.

Enforcement process

Can the competition enforcers impose sanctions directly or must they petition a court or other authority?

The KPPU is authorised to determine alleged ICL breaches after conducting an investigation and hearings. A business actor may wish to appeal a KPPU determination to the relevant District Court and then the Supreme Court. Only after appeals are exhausted, and the KPPU obtains a court order, are KPPU sanctions applied to the business actor.

Enforcement record

What is the recent enforcement record in your jurisdiction?

The KPPU has seen a steady increase in enforcement in the past five years. In 2016 there were 17 determinations and seven ongoing investigations, while in 2015 the KPPU issued 18 determinations.

It is unclear from public reports (ie, the 2016 KPPU annual report) what categories of abuse of dominant position receive most attention from the KPPU. However, there does seem to be a clear focus on tender-fixing (which is not necessarily a category of abuse of dominant position), with 46 per cent of reports received by the KPPU relating to tender-fixing in 2015. It is also the most investigated, with 62 per cent of KPPU investigations relating to tender-fixing in 2015.

Contractual consequences

Where a clause in a contract involving a dominant company is inconsistent with the legislation, is the clause (or the entire contract) invalidated?

Contracts entered into by dominant business actors that abuse a dominant position may remain valid until the business actor has exhausted all available legal challenges and the KPPU determination becomes final and binding. Such determinations can require the termination or amendment of the contract, as detailed above.

Private enforcement

To what extent is private enforcement possible? Does the legislation provide a basis for a court or other authority to order a dominant firm to grant access, supply goods or services, conclude a contract or invalidate a provision or contract?

The ICL does not provide a mechanism for private enforcement. However, as mentioned below, compensation may be sought in certain circumstances by parties who have incurred loss as a result of the business actor’s breaches of the ICL.

Damages

Do companies harmed by abusive practices have a claim for damages? Who adjudicates claims and how are damages calculated or assessed?

ICL article 38(2) provides that a party that suffers loss because of a violation of the ICL may file with the KPPU a written report, which contains a complete and clear statement of the alleged violation and the loss. This may then trigger an investigation by the KPPU and an award of compensation to the reporting party in the form of an administrative sanction imposed on the business actor that violated the ICL. The KPPU has yet to award such compensation.

Appeals

To what court may authority decisions finding an abuse be appealed?

KPPU determinations may be appealed to the District Court and later, the Supreme Court. The former may review the facts and the law, while the latter may review the application of law only. Parties wishing to appeal a KPPU determination need to submit an appeal to the District Court within 14 business days after receipt of notice of the determination.

Unilateral conduct

Unilateral conduct by non-dominant firms

Are there any rules applying to the unilateral conduct of non-dominant firms?

The KPPU seeks to apply several of the dominance-related articles to the unilateral conduct of non-dominant firms. For instance, article 19 prohibits business actors, be they dominant firms or otherwise, from engaging in specific activities unilaterally that may lead to monopolistic practices or otherwise unfair business competition such as:

  • preventing other business actors from conducting the same business in the relevant market;
  • preventing consumers of their competitors’ good or service from engaging in a business relationship with such business competitors;
  • restricting the distribution or sales of a good or service in the relevant market; or
  • engaging in discriminatory practices.

Although article 19 does not explicitly require that the relevant business actor occupy a dominant position, in practice, only those business actors in such a position will ordinarily be positioned to breach such provisions and attract KPPU scrutiny.

Update and trends

Update and trends

Updates and trends

New draft ICL

A draft bill to replace the ICL has been under consideration, and in the national legislative programme, or Prolegnas, since 2016. Specifically, the bill would:

  • expand the definition of ‘business actors’, to include those domiciled outside of Indonesia and those who do not conduct activities in Indonesia whose conduct has a negative impact on the Indonesian market;
  • prohibit abuses of a ‘dominant bargaining position’;
  • remove the voluntary pre-merger and acquisition and mandatory post-merger and acquisition notification systems and replace them with a pre-merger and acquisition system, and enlarge the categories of merger and acquisition activities that must be notified to include the acquisition of assets and the establishment of joint ventures;
  • impose financial sanctions of between 5 per cent and 30 per cent of a business actor’s sales value or an M&A transaction value;
  • introduce a leniency programme, which will be especially relevant in cartel cases, under which KPPU could provide immunity or penalty reductions to those who notify KPPU of ICL breaches;
  • provide incentives for ‘changes of behaviour’, such that if a business actor notifies KPPU of an ICL breach and takes action to remedy the breach, this may result in a KPPU investigation not commencing or an ongoing KPPU investigation being terminated;
  • no longer exempt intellectual property licensing and franchising agreements; and
  • direct appeals of KPPU determinations to an administrative court, instead of a district court.