In general monopolies are unhealthy for business. However, there are certain circumstances where a State will permit monopolies to exist. The rationale for a legal monopoly is that the activities or the goods and services being provided are strategic in terms of the development and economic success of the relevant nation or the activities or goods and services are important to the maintenance of the broader community. In this respect Indonesia, through Article 51 of the Law on the Prohibition of Monopolistic Practices and Unfair Business Competition (Anti-Monopoly Law), permit certain monopolies to be established and maintained.
To ensure that these monopolies are not abused, the Commission for the Supervision of Business Competition (Komisi Pengawas Persaingan Usaha / KPPU) has issued a set of guidelines. These guidelines are designed to assist the permitted business entities in ensuring that they comply with the KPPU’s interpretation of Article 51. The guidelines, themselves, are attached to KPPU Decision No. 89/KPPU/Kep/III/2009.
Those entities that can operate a monopoly are State Owned Enterprises (Badan Usaha Milik Negara / BUMN) or an authority or institution that has been established and appointed by the government for the purposes envisaged under the provisions of Article 51.
There are three basic points addressed in the guidelines, namely:
-
Restriction of what constitutes the relevant activities with respect to production and / or marketing of goods and services that fall within the importance to the community and strategic exceptions for monopolies;
-
The criteria for Stated Owned Enterprises, authorities, and institutions that are permitted to implement a monopoly or in effect a concentration of the activities noted; and
-
Mechanisms or ranking that are to be use for the government to determine the relevant entities as noted in the guidelines and the law.
In order to enumerate how the interpretation works in practice, Chapter III of the guidelines includes two case examples.
It is worth noting that the KPPU clearly reserves the discretion to amend the guidelines if and when required. The rationale for reserving this discretion is that Article 51 is dependent on both the state of the economy and developments in public administration. Simply, as the economy develops and grows, then it is likely that there will be less need for government approved monopolies.
The guidelines have been in force since 31 March 2009.
In general monopolies are unhealthy for business. However, there are certain circumstances where a State will permit monopolies to exist. The rationale for a legal monopoly is that the activities or the goods and services being provided are strategic in terms of the development and economic success of the relevant nation or the activities or goods and services are important to the maintenance of the broader community. In this respect Indonesia, through Article 51 of the Law on the Prohibition of Monopolistic Practices and Unfair Business Competition (Anti-Monopoly Law), permit certain monopolies to be established and maintained.
To ensure that these monopolies are not abused, the Commission for the Supervision of Business Competition (Komisi Pengawas Persaingan Usaha / KPPU) has issued a set of guidelines. These guidelines are designed to assist the permitted business entities in ensuring that they comply with the KPPU’s interpretation of Article 51. The guidelines, themselves, are attached to KPPU Decision No. 89/KPPU/Kep/III/2009.
Those entities that can operate a monopoly are State Owned Enterprises (Badan Usaha Milik Negara / BUMN) or an authority or institution that has been established and appointed by the government for the purposes envisaged under the provisions of Article 51.
There are three basic points addressed in the guidelines, namely:
-
Restriction of what constitutes the relevant activities with respect to production and / or marketing of goods and services that fall within the importance to the community and strategic exceptions for monopolies;
-
The criteria for Stated Owned Enterprises, authorities, and institutions that are permitted to implement a monopoly or in effect a concentration of the activities noted; and
-
Mechanisms or ranking that are to be use for the government to determine the relevant entities as noted in the guidelines and the law.
In order to enumerate how the interpretation works in practice, Chapter III of the guidelines includes two case examples.
It is worth noting that the KPPU clearly reserves the discretion to amend the guidelines if and when required. The rationale for reserving this discretion is that Article 51 is dependent on both the state of the economy and developments in public administration. Simply, as the economy develops and grows, then it is likely that there will be less need for government approved monopolies.
The guidelines have been in force since 31 March 2009.
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