The urgency of having a national competition law in Indonesia was addressed at the 80s, to respond major economic reforms. At that stage, Indonesia opened itself to globalization and started to promote foreign investment. It was then the idea for a comprehensive competition policy was elevated. Further, the global crisis hampers Indonesia in 1997-1998. Vulnerable economic structure caused by concentrated industries, cracked the backbone of our long-standing and smooth development. The lack of competitive environment caused “the big” to fail.
The competition rules were existed for many years before 1999. In Civil Law, for instance, Article 382 says that for those gain, conduct, or expand their trade or own company or other, by unjust behavior to harm the public or someone, of which the behavior will cause damages to their competitors or competitors of other party because of unjust competition, can be imposed with an imprisonment for one year and four months maximum or to pay fine for nine hundred rupiah. So the concept of competition law did adapted. However, this law did not provide complete arrangement on business competition, since it’s pure criminal.
Comprehensive competition law is systematically introduced by the Law No. 5 Year 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition.
Komisi Pengawas Persaingan Usaha (KPPU) or the Commission is the only institution dealing with competition law in Indonesia. It introduces through the Law No. 5/1999 and the organization forms by the Presidential Decree No. 75 Year 1999. The Law has been formulated under Pancasila and the 1945 Constitution and on the basis of democratic economy by taking into account the balance between interests of the business actors and the public with the purposes to maintain the public interest and public consumers and also to create conducive business climate through the creation of a fair business competition.
KPPU consists of nine Commissioners, including Chairman and Vice Chairman. They elected by the Parliament with recommendation from the President for five years term. The term is renewable for one time. KPPU has three main tasks from the competition law. They enforce the law, provide advice on competition policy, and review merger and acquisition. Since 2008, the Law No. 20 Year 2008 concerning Micro, Small, and Medium-sized Enterprises (MSME) provide this agency with addition task to supervise business partnership between MSME and large-sized enterprises. In doing their jobs, KPPU can received complaint, conduct research and investigation, summon any parties related to investigation, require assistant from police investigator, issue decision, and impose sanction.
KPPU bases in Jakarta Capital but can establish representative office throughout capital cities in Indonesia. Now, KPPU has five representative office that spread through five major islands, namely Medan, Batam, Surabaya, Balikpapan, and Makassar.
For the purpose of implementing the Law Number 5/1999, KPPU have duties that mentioned in Article 35 of the Law (Law No. 5 of 1999) as follows:
- Evaluate agreements that may result in monopolistic practices and/or unfair business competition;
- Evaluate business activities and/or actions of business actors which may result in monopolistic practices and/or unfair business competition;
- Evaluate the existence or nonexistence of misuse of dominant position which may result in monopolistic practices and/or unfair business competition;
- Undertake actions in accordance with the authority of the Commission;
- Provide advice and opinion concerning Government policies related to monopolistic practices and/or unfair business competition;
- Prepare guidelines and/or publications related to this Law;
- Submit periodic reports on the results of the Commission’s work to the President and the People’s Legislative Assembly (DPR).
The authority of KPPU as mentioned in Article 36 of the Law is as follow:
- Receive reports from the public and/or business actors regarding allegations of the existence of monopolistic practices and/or unfair business competition;
- Conduct research concerning the possibility of the existence of business activities and/or actions of business actors which may result in monopolistic practices and/or unfair business competition;
- Conduct investigations and/or examination on allegations of cases of monopolistic practices and/or unfair business competition reported by the public or by business actors or discovered by the Commission as a result of its research;
- Make conclusions regarding the results of its investigations and/or hearings as to whether or not there are any monopolistic practices and/or unfair business competition;
- Summon business actors suspected of having violated the provisions of this Law;
- Summon and invite witnesses, expert witnesses and any person deemed to have knowledge of violations of the provisions of this law;
- Seek the assistance of investigators to invite business actors, witnesses, expert witnesses, or any persons as intended in sub-articles 5 and 6, who are not prepared to appear upon the Commission’s (KPPU’s) invitation;
- Request the statements of Government institutions related to the investigations and/or hearings about business actors who violate the provisions of this law;
- Obtain, examine and/or evaluate letters, documents or other instruments of evidence for investigations and/or hearings;
- Determine and stipulate the existence or non-existence of losses on the parts of business actors or society;
- Announce the Commission’s (KPPU’s) decisions to business actors suspected of having engaged in monopoly practices and/or unfair business competition;
- Impose administrative sanctions on business actors violating the provisions of this law.