Draft Bill on the Amendment to the Anti-Trust Law: KADIN Addresses Six Issues

Indonesian Version

  
Ricky Pratomo, ANT/Fathan Qorib
 

 

In line with the 2016 National Legislative Program, the House of Representatives is currently discussing the Draft Bill on the Amendment to Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Practices (“Draft Bill”). The Indonesian Chamber of Commerce and Industry (Kamar Dagang dan Industri – “KADIN”) however considers several of the provisions which are set out in the Draft Bill to be excessively burdensome for entrepreneurs as they grapple with the day-to-day running of their businesses. Against this background, Suryani S. Motik, KADIN’s Deputy Chairperson for Corporate-Social-Responsibility Affairs, has addressed at least six issues which are set out in the Draft Bill that she believes are in need of further discussion.
 
The first issue concerns the imposition of fines. Ms. Motik has argued that the imposition of fines relating to violations or business-license revocations, in amounts which range from 5% to 30% of total sales, will end up having a highly negative effect upon entrepreneurs.
 
“Such a provision places a heavy burden upon business activities, therefore the government should elaborate in greater detail upon the types of violations that it is talking about here, as well as the percentages concerned, as regards the imposition of any fines. By way of comparison, international standards usually only mandate for the imposition of fines which are two to three times the amount of any excess profits which are generated as a result of any violations. This is far less than the fines [which are set out in the Draft Bill],” Ms. Motik asserted last Friday.
 
Ms. Motik then went on to draw attention to a second issue, namely the article on the filing of appeals against decisions which are made by the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha – “KPPU”). During any such appeal, the applicant is required to pay 10% of the total of any fines which have been imposed. Ms. Motik believes that this obligation is highly disadvantageous, as no further provision has been set out in the Draft Regulation addressing a mechanism which applies in cases where entrepreneurs are found to be innocent of the initial charges made against them.
 
“This article violates the presumption of innocence principle. Furthermore, it does not set out any obligation for the KPPU to repay the appeal fee if a decision is made which is ultimately in the entrepreneur’s favor,” Ms. Motik stated.
 
Ms. Motik also addressed the issue of non-compliance with KPPU decisions, and emphasized that the imposition of fines of up to IDR 2 trillion or two years of imprisonment (pidana kurungan) in cases where entrepreneurs are found to be in non-compliance with KPPU decisions was highly problematic. Ms. Motik went on to urge the government to further clarify this provision, while taking into account the wide variety of business sizes and operations across Indonesia. Ms. Motik also suggested that the government could alternatively simply follow the existing execution procedures, which are undertaken through local district courts.
 
Ms. Motik went on to address the issue of KPPU notification in cases involving mergers and acquisitions. According to Ms. Motik, the shift from a “post-notification” mechanism to a “pre-notification” mechanism should be further harmonized with related regulations, while the pre-notification requirement should only apply to companies which have monopoly potential, in light of the fact that mergers and acquisitions have become a common business strategy.
 
Ms. Motik also described a number of other provisions that she considered to be ambiguous and which could be prone to misuse. By way of example, Ms. Motik referred to an article which stipulates the imposition of six months’ imprisonment or IDR 5 billion in fines upon any party who either directly or indirectly prevents, precludes or hampers an investigation or investigator.
 
In spite of these areas of contention however, KADIN is generally of the belief that the KPPU’s authority should be strengthened, on the provision that clear mechanisms relating to how this authority is to be implemented are set out so that it will not be misused by any irresponsible parties. In line with this goal, Kadin also believes that the Draft Bill should regulate the KPPU’s responsibilities so as to take into account any cases involving the misuse of authority which have not yet been incorporated therein.
 
(cd/sp)