Some NotesOn the Development of Competition Law

and Policy in Indonesia

Dr. Syamsul Maarif

Justice, Indonesian Supreme Court

Bali, 15 November 2011

CHALLENGES AHEAD

Enforcement

DEVELOPMENT

2

Institution

3

1. Overview on Indonesian competition law

The Adoption of General Competition Act

4

Economic centralization

increased potency for monopolies

through conglomerates.

People’s confidence to the government were at the bottom

level

Economic crisis in 1998 lead to

massive reform in Indonesia

In 1999, the legal reforms were

implement through the Law on National

Election, on Anti-Corruption, and on Fair Competition

KPPU established as an independent agency (separated

from the government)

5

The Law n. 5/1999

• Oligopoly;• Price Fixing;• RPM;• Market

Division• Boycott;• Cartel;• Trust;• Oligopsony;• Vertical

Integration;• Exclusive

Dealing;• Agreement

with Foreign Parties

Art. 25-29ABUSE OF DOMINANT POSITION

Art. 17-24PROHIBITED ACTIVITIES

Art. 4-16PROHIBITED AGREEMENT

• Monopoly;• Monopsony;• Market

Control;• Predatory

Pricing;• Bid Rigging;• Conspiracy

• Abuse of Dominant Position;

• Interlocking Directorate;

• Cross Ownerships;

• M & A

6

2. Institution

Staffing

0

50

100

150

200

250

300

350

400

450

2000 2002 2004 2006 2008 2010

7

Number of staffs increased due to observed demand and available fund. To date, we accounted for 420 staffs work for KPPU (nation wide), where 108 of which are investigators.

Number of staff

Budget

020406080

100120140160180200

2000 2002 2004 2006 2008 2010

8

The main KPPU’s budget comes from the state budget.

KPPU’s budget is increased 2.500% within 11 years

In billion rupiahs.

9

Performances (cont.)

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 May 2011

0

100

200

300

400

500

600

700

800

900

734 49 65 87

191

498556

707733

801

402

2 4 4 7 7 18 12 27 48 31 340

reports decision

Number of Complaints and Decisions

10

Issued 97 advices and recommendations in ten years (thirteen of which are in 2010)

• Last year recommendation involved with several strategic sector such sugar, rattan, steel, water, transportation, and electricity.

0

2

4

6

8

10

12

14

16

18

2001 2002 2003 2004 20052006 2007 2008 2009 2010

Number of Policy Advices

11

Recommendations by Sector

Policy Recommendation by Sector

5% 13%

9%

16%25%

11%

9%9% 3%

Public Service Trade PolicyEnergy And Mining TelcoTransportation Finance and InvestmentConstruction and Tender AgricultureLabour Policy

12

Effective Rate for AdvocacyPolicy Recommendations & Cumulative of Effective Rate

Year 2001-2011

4

2

10

3

12

5

11

17

14

7

4

50% 50%

63%

53%

45% 44%

51%47%

45% 44% 43%

0

2

4

6

8

10

12

14

16

18

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011(untillJune)

0%

10%

20%

30%

40%

50%

60%

70%

Number of Policy Recommendation ina Year

Cummulative Effective Rate

Target on Year 2012: Effective rate =25%

Policy change is fluctuated shows dynamic response of Government Position toward policy recommendation

Policy Recommendations until June 2011

Total : 89Year 2011 (june) : 4Average in a Year : 8Effective rate : 44 %

13

3. Enforcement

Time to settle competition cases

Quality of KPPU judgment

Fines and damages

MoU with other agencies

14

THE CHALLENGES AHEAD

Regulatory Environment Legal System Level of Economic Development

15

Other Challenges

ChallengesUndefined status

Low budget

Large area

Less authority

Low public awareness

Low government acceptance

Institutional Enforcement

Advocacy

Limited time

Data reliability

16

Challenges in enforcement

Indonesia is the biggest archipelago country in the world (17,508 islands). The law on autonomy and law on local government gave authority to the local government to develop its own territory, except for certain tasks such foreign politic, defense, national monetary, and religion. These potentially cause different economic policies amongst locals, and thus will create different challenges in enforcing competition law and policy.

Representative offices act as the extension of main office to promote competition law and policy to locals, received complaints, and conduct research on local policies. Cases are handled by the main office, but the examination process might be conducted in the region.

thank you!