At a glance: automotive industry disputes in Indonesia

Disputes

What competition and antitrust issues are specific to, or particularly relevant for, the automotive industry? Is follow-on litigation significant in competition cases?

The KPPU is the competition authority of Indonesia. Through its multi-faceted role, it can monitor, supervise, investigate, prosecute and enforce any violations related to the Indonesian Competition Law. 

The KPPU has investigated and decided on several past cases in relation to the automotive industry, namely the tyre cartel case and the automatic scooter cartel case investigated in 2014 and 2015 respectively. It continued to have a heightened interest in the automotive industry – as with any competition authority around the world – as it has previously investigated the distribution schemes in the motorcycle industry, and recently investigated the exclusivity arrangement in the distribution of automotive lubricants. Therefore, both the horizontal (between competitors) and vertical (with suppliers or distributors) market competition in the automotive industry are under the KPPU’s scrutiny.

In several instances, the KPPU raised concerns regarding the association meetings in the automotive industry, especially when there is a potential exchange of information on production capacity and plans.

There was a follow-on litigation in relation to the scooter cartel case; however, the Supreme Court of the Republic of Indonesia upheld lower court’s decision that the case is inadmissible. However, this was the first follow-on litigation, and business owners must remain vigilant.

What kind of disputes have been experienced in the automotive industry, and how are they usually resolved? Are there any quick solutions along the supply chain available?

Issues in the automotive industry commonly arise due to contractual, as well as product liability issues, involving either the manufacturers, consumers or dealers. Alternative dispute resolution seemed to be the preferred mechanism for resolving consumer disputes in the automotive industry. Litigation or arbitration appear to not be the first choice in resolving issues as there is very limited case file history in the public case repository. 

From the consumer protection perspective, issues relating to the use of automotive products can also be resolved by the Consumer Dispute Settlement Agency.

Indonesia recognised the interim injunctions procedure for intellectual property and civil cases, but a full lawsuit shall be lodged with the court, as an injunction cannot be sought independently under the procedural law.

What is the process for dealing with distressed suppliers in the automotive industry?

Current prevailing regulations in Indonesia are silent on the process for dealing with distressed suppliers in the automotive industry. Commercial discussions, as well as negotiations, are common and are undertaken to either mitigate or resolve issues surrounding the distressed suppliers. Should commercial discussions be deemed ineffective, the aggrieved party may pursue a legal remedy by following general dispute mechanisms, preceded by filing warning letters, right up to submitting a claim either to the relevant court or arbitration body as the preferred forum under the agreement.

Are intellectual property disputes significant in the automotive industry? If so, how effectively is industrial intellectual property protected? Are intellectual property disputes easily resolved?

The legal framework of intellectual property (IP) protection in Indonesia has been established, comprising the protection of trademark, copyright, patent, industrial design, geographical indication and trade secrets, as well as a layout design of an integrated circuit. The regulations govern the rights and obligations of the IP owners, as well as procedures for registration up to dispute resolution mechanism. In addition, Indonesia has a designated authority for matters relating to IP, namely the Directorate General of IP of the Ministry of Law and Human Rights (DGIP).

In general, IP disputes can be resolved either through litigation in court or alternative dispute resolution. For the in-court litigation process, IP disputes on trademark, copyright as well as patent infringement need to be filed to the relevant commercial court, while disputes on trade secrets must be filed to the relevant district court in Indonesia. Within the past three years, there are certain trademark infringement cases in the automotive industry in the context of intellectual property (IP) disputes. Whether you are suing or being sued due to trademark infringement, the issues are settled in the commercial courts that are only available in certain major cities in Indonesia, namely Jakarta, Semarang, Surabaya, Medan and Makassar. 

With respect to alternative dispute resolution, the DGIP has concluded a memorandum of understanding (MOU) with the World Intellectual Property Organisation on the Provision of Alternative Dispute Resolution Services to Parties Involved in Cases Filed with the DGIP (MOU) in May 2014.  Such MOU was concluded as Indonesia deemed that alternative IP dispute resolutions in Indonesia need to be improved. Prior to the MOU, since 2012 Indonesia has an IP Arbitration and Mediation Agency (BAMHKI). However, the Supreme Court Directory does not disclose the statistics on registration of the BAMHKI award at the district court for enforcement purposes. In addition, through arbitration proceedings, parties could also resolve IP disputes through negotiation or mediation, as well as conciliation between the disputed parties.