Draft Guidelines to Interpretation of Article 50 (d) of Law No. 5 of 1999

The Commission for the Supervision of Business Competition (‘KPPU’) is currently circulating a Draft Regulation on Guidelines to Interpreting Article 50 (d) of Law No. 5 of 1999 on the Exception Towards Supplier Agreements, which defines what is meant by ‘supplier’ of a good or service, and discusses when the re-supply of a good or service contravenes Law No. 5 of 1999, also known as the ‘Anti-Monopoly Law’.

The definition of ‘supplier’ set out by the Draft is congruent with that provided in Article 1 (4) of Minister of Trade Regulation No. 11/M-DAG/PER/3/2006 on [Supplier or Distributor Registration Certificate]. Those supplier or distributor agreements that are exempt from the scope of the Anti-Monopoly Law must meet the following requirements: (1) supplier acts on behalf of the producer; (2) supplier does not own or otherwise control the good or service; (3) supplier does not bear either the risks or profit-generating potential inherent in trade of the good or service being distributed. Thus, the supplier must be paid in the form of a salary, and not be involved in any profit division from proceeding exchanges of the good or service they supply (i.e., must not have further commercial interests in the product beyond their role as a supplier).

Additionally, the Draft KPPU Guidelines emphasize the provision made in Article 50 (d) of the Anti-Monopoly Law: suppliers may not re-supply a good or service using a lower price than that which is agreed upon in distribution contracts (e.g., cut the price to be artificially low in order to hinder competitors). 

To illustrate what is meant by a sanction-worthy violation of Article 50 (d) of the Anti-Monopoly Law, four case examples of supplier situations that are not exempt from the Law’s scope are provided in Chapter IV, Section C of this Draft.

Ahmad Junaidi, the Head of the Public Relation Bureau of KPPU, informed hukumonline on 6 April 2010 that the KPPU is currently receptive to inputs from citizens on this Draft Regulation, and that it will be issued in its final form in the beginning of May 2010.