Five-Year Performance Of ICC Period IV Members.
Jakarta (4/12) – The Indonesia Competition Commission (ICC) noted that reforms or innovations in law, prevention efforts, and supervision of Micro, Small, and Medium Enterprises (MSMEs) partnerships have become the priorities of the leadership of the Fourth Period ICC Members over the past five years. These priorities were carried out in line with the economic situation faced by the Covid-19 pandemic and the slowdown in the national economy during this period. This statement was conveyed by the Chairman of ICC, Prof. M. Afif Hasbullah, in a hybrid media discussion held today at the ICC Head Office in Jakarta. Furthermore, Afif explained that business actors’ compliance with Law No. 5 Year 1999 and the implementation of ICC Decisions in particular became important notes during the leadership period.
As is known, Members of ICC period IV began carrying out their duties from April 27, 2018 to April 27, 2023, and were extended until the election of ICC Members for the next period. As is known, Commission VI of the House of Representatives has determined the 9 (nine) names of ICC Members and will bring them to the Plenary Session of the House of Representatives tomorrow, December 5, 2023. For this reason, ICC needs to submit its performance report to the public as a form of transparency and accountability for the implementation of the duties of ICC Members for the fourth period.
In general, business competition performance is measured through the Business Competition Index (IPU), which measures stakeholders’ perceptions of the competitiveness, productivity, and efficiency of Indonesia’s economic sectors. The IPU results show that throughout 2018–2022, there was a slightly high level of national competition, followed by encouraging developments. In 2020, IPU had declined from 4.72 to 4.65 due to the worldwide Covid-19 pandemic. As the national economy gradually improved, the IPU figure began to increase, from 4.65 in 2020 to 4.81 in 2021 and 4.87 in 2022. This increase shows that the level of business competition in Indonesia is perceived to be at a high level.
The performance of business competition is formed through the processes of law enforcement and preventive action through policy advocacy. During the last five years, ICC has issued decisions on 105 (one hundred and five) cases and stipulations on 6 (six) cases with changes in behavior. The total fines imposed by all decisions over the past five years reached IDR 459.15 billion. There are two decisions that have the largest fines in this five-year period, namely the case of selling packaged cooking oil in Indonesia (total fine of IDR 71.2 billion) and the case of special rental transportation services (total fine of IDR 49 billion).
Most of these decisions, 42.8%, were cases of late notification of mergers and acquisitions (45 cases). This was followed by tender conspiracy cases (40 cases, or 38.1%), non-tender cases (13 cases, or 12.4%), and MSME partnership cases (7 cases, or 6.7%). The overall project value in the tender conspiracy cases reached a total procurement value of around IDR 5.9 trillion. So it can be said that ICC contributed to preventing state losses as much as the procurement value. Of the 105 decisions issued above, 76, or 72.4%, have permanent legal force. Most of the decisions with permanent legal force have been implemented by the Reported Party, with a total fine collected of IDR 190,085,380,256 (41.4% of the total fines imposed).
Legal Reform or Innovation
Over the past five years, ICC has issued 26 Regulations and 7 Chairman Regulations. In total, there are 33 regulations issued by ICC. The regulations issued regulate a number of matters, ranging from case handling, guidelines for imposing fines, and assessment of corporate actions that result in monopolies to ICC’s work procedures. The issuance of these regulations aims to increase transparency, justice, and legal certainty in the case handling process in accordance with professional, proportional, good, fair, and wise law enforcement in accordance with the principles of expediency, goodness, and equality in law.
There are three important breakthroughs from a number of ICC regulations. First, ICC introduced norms of behavior change, quick examination, and online examination in the law enforcement process. Second, ICC regulates the handling of partnership cases between MSMEs and large business actors. With this regulation, MSMEs get the same opportunity and bargaining position as large business actors. Third, since March 24, 2022, ICC has regulated the Competition Compliance Program. The program aims to increase business actors’ compliance with competition law and encourage business activities to be in line with the norms of fair competition.
ICC does many things in the context of prevention efforts. Earlier, it was mentioned that ICC issued a regulation to promote a compliance program for business actors. Since its introduction in 2022, the program has attracted 43 (forty-three) large companies to register. Most of these companies are from the manufacturing sector (44 percent), while others are from the services (23 percent) and construction (9 percent) sectors. This number is still dominated by state-owned enterprises (SOEs), at 72 percent. The fact that most of these companies (i.e., 80 percent) registered voluntarily shows that the program was positively received by businesses. From the total number of registrants, ICC has issued 7 (seven) stipulations on the registered compliance programs.
In terms of prevention through policy advocacy, during the fourth period, ICC has delivered a total of 112 suggestions and considerations to the government. Mainly to the Central Government, such as the Ministry of Trade, Ministry of Transportation, LKPP, Ministry of BUMN, and Ministry of PUPR. Most of these suggestions and considerations (namely, 63.4 percent) were positively responded to by the government. In line with these policy advocacy efforts, in the last five years, ICC has begun to internalize the Competition Policy Checklist for the central and regional governments to assist them in determining or conducting independent analysis related to the potential existence of policies that conflict with the norms contained in Law Number 5 Year 1999. To complete the program, ICC introduced the ICC Award. The ICC Award is an annual award event for governments at the central and regional levels that have proven to be committed to realizing healthy business competition and partnerships, as well as contributing to the implementation of ICC’s duties and functions.
Then, to internalize business competition as a national culture, ICC has declared the birth date of Law No. 5 of 1999, namely March 5, as Business Competition Day. The first commemoration of Business Competition Day was held on June 11, 2023, which was attended by Coordinating Minister for Political, Legal, and Security Affairs Mahfud MD, becoming the starting point of ICC’s efforts to foster a culture of fair business competition in Indonesia.
MSME partnership supervision
This supervision is one of the duties of ICC, which is carried out through Law Number 20 Year 2008. This partnership supervision is positively beneficial to prevent the control of large business actors over MSMEs that become their partners. This partnership supervision work is a form of support for the Inclusive Partnership Movement for MSMEs to Upgrade, as instructed by President Joko Widodo. Partnerships are needed by various business actors, both with the government and with ICC, which has the authority to supervise the implementation of MSME partnerships.
Since 2019, ICC has been actively monitoring partnerships between MSMEs and large businesses. Over a period of five years, 59 partnership issues in various regions and sectors were successfully resolved by ICC, especially in the oil palm plantation, construction, and transportation sectors. Some of the partnership issues resolved include (i) payment of work from main contractors to sub-contractors in Sumatra and Kalimantan worth IDR 9,189,505,575; (ii) profit sharing of online transportation companies with applicators involving 2,357,357 driver partners; and (iii) plasma partnerships with several oil palm business actors in Jambi, South Sumatra, North Kalimantan, East Kalimantan, West Kalimantan, and Central Kalimantan. Thanks to its role, ICC began to be recognized as a defender of MSME partnerships.
In addition to the various performances above, ICC also recorded various other performances, both in terms of the effectiveness of the implementation of decisions, the execution of fines, and institutions. The effectiveness of the implementation of ICC decisions is measured by the comparison between the number of decisions that have been legally binding and the number of decisions that have not been implemented. ICC data shows that the trend of business actors’ compliance with ICC decisions has continued to increase in the last five years. In 2018, the percentage of permanent legal force decisions that had not been implemented was 58.7%. This year, the percentage has decreased to 51.5%. This means that there is an increase in the percentage of decision implementation, which reaches 7.2%.
Executions of competition fines have also increased in the last five years. In 2018, the amount of fines paid was IDR 364,316,724,995. Five years later, or in 2023, the amount of fines paid amounted to IDR 763,252,764,536. In the last five years, ICC has succeeded in collecting fines amounting to IDR 420,505,622,195. In terms of percentage, it has also increased. In 2018, there were around 69% of fines paid from the total number of fines with permanent legal force. In 2023, the portion will have reached around 72%. This means that the execution process at ICC during this period went well. This was achieved by intensifying cooperation between ICC, law enforcement, and other institutions.
In the institutional dimension, the business competition index for the institutional dimension of ICC has increased. In 2018, the value reached 4.45 and managed to reach a value of 5.23 in 2023. This means that stakeholders’ understanding and awareness of the implementation of competition policy has increased. It is not surprising that, in recent years, competition policy has begun to be integrated into various international trade agreements around the world. To date, there are 17 (seventeen) international agreements completed and still being discussed by the Government of Indonesia, especially ICC, with competition elements in them.
Some Unfinished Tasks
Five years is a short time. There are still many other tasks or ambitions that have not been completed in the last five-year period. For one, major changes or amendments to Law No. 5/1999 have yet to be made. Currently, Indonesia may be the only country in ASEAN with a competition law that has existed for more than 15 years and has not been amended. Earlier countries, such as Thailand, Vietnam, and Singapore, have made fundamental changes.
The use and optimization of e-government have become an inevitable need. The digitalization of workflows and the management of data and information assets to increase supervisory capacity and the bargaining power of the institution is still a need that tends to be overlooked. The use of competition policy issues as part of international diplomacy to increase foreign investment while protecting national interests has also not been optimized. Similarly, the supervision of MSME partnerships requires large resources, both in terms of human and financial resources.
These various tasks need to be balanced with the need for the process of transforming or changing the employment status of the ICC secretariat, which is already in sight, a relatively low budget in the midst of a very large task, and the complexity of supervision and law enforcement facing the challenges of the digital economy, which leads to the need for a special law on digital markets. All are not easy jobs. Hopefully, the transition process will run smoothly and future ICC leaders can complete various tasks so that the ICC can accelerate towards the Golden Indonesia 2045.