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!
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