Overview

Twenty years have now elapsed since the introduction of Law No. 5 of 1999 on the Prohibition of Monopolistic and Unfair Business Competition Practices (“Antitrust Law”) and in recent years a number of antitrust cases have been settled by the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha – “KPPU”) through the implementation of the various case-handling procedures which are set out under Regulation of KPPU No. 1 of 2010 on Procedures for the Settlement of Cases (“Regulation 1/2010”).

However, the ongoing rapid development in business models and practices, as well as a number of different approaches which have now been adopted by the KPPU, mean that the case-handling procedures which were originally set out under Regulation 1/2010 are already considered obsolete and were thus recently updated through the issuance of Regulation of the KPPU No. 1 of 2019 on Procedures for the Settlement of Monopolistic Practices and Unfair Business Competition Cases (“Regulation 1/2019”).

This edition of Indonesian Law Digest (ILD) will compare and discuss the differences between Regulation 1/2019 and Regulation 1/2010 in terms of case-handling procedures and will also highlight the various key innovations which have now been introduced by the KPPU. Our analysis has been broken down into the following sections:

1. Case Sources:

1. Complaints; and
2. KPPU Initiatives.

2. Legal Proceedings:

1. Investigations;
2. Preliminary Examinations;
3. Advanced Examinations;
4. Types of Evidence;
5. Decisions; and
6. Enforcement of Decisions,

3. Matrix Comparison.

 

1. Case Sources

When handling cases or allegations relating to violations of the Antitrust Law (“Violations”), the KPPU has to rely on two available case sources, specifically: A) Complaints; and B) KPPU Initiatives.[1] There are differences between these two sources of antitrust cases, as will be explained and analyzed in the following two sections.

 

1. Complaints

The KPPU may proceed to investigate antitrust cases based on complaints which are filed by either of the following parties (“Complainants”) who happen to be in possession of relevant knowledge, whether they are demanding redress or not:[2]

1. Individuals; or
2. Legal entities.

 

1. Submission of Complaints

Complaints must be submitted to the KPPU and designated to the Head of the KPPU, while the following criteria must also be met:[3]

1. Must be submitted in the Indonesian language;
2. Must be submitted through the following channels:[4]

1. KPPU headquarters;
2. Regional KPPU offices; or
3. Online applications.

3. Must be signed by Complainants;
4. Must contain the following information at the minimum:

1. Identities of both Complainants and businesses and/or other related parties which are involved in cases (collectively referred to as “Defendants”), although the identities of all Complainants must be kept confidential;[5]
2. A clear description of allegations relating to Violations; and
3. Evidence (alat bukti) which supports the case’s allegations.

 

Regulation 1/2019 differs from Regulation 1/2010, which only allowed complaints to be filed via regional KPPU offices.[6] Moreover, Regulation 1/2010 specifically stated that Complainants could not withdraw their complaints, while Regulation 1/2019 remains silent on this matter.[7]

 

2. Clarification of Complaints

In a manner similar to Regulation 1/2010, after complaints have been duly submitted, the relevant task units under the Directorate of Investigation of the Law Enforcement Deputy of the KPPU (“Task Units”)[8] will clarify the following aspects in relation to the complaints:[9]

1. Administrative completeness of complaints;
2. Validity of the identities of Complainants, Defendants and any possible witnesses;
3. Conformity between submitted evidence and the Violation allegation; and
4. Absolute competence of the KPPU in relation to the case.

 

There are a number of thresholds that must be met by Clarification Reports before antitrust cases are able to proceed to legal proceedings, i.e., the investigation phase, namely:[10]

1. Complaints must be deemed administratively complete;
2. Allegation on Violations must be clear;
3. There must be conformity regarding the absolute competence of the KPPU; and
4. There must be one piece of evidence to back up the relevant allegations at the minimum.

 

However, if complaints are deemed incomplete, then Complainants will be given 14 business days in which to complete them. Previously, a shorter window of 10 business days was set.[11] Failure to submit complete complaints will lead to complaints being dropped.[12] If complaints are deemed complete, then the KPPU will notify the Complainants within 14 business days.[13]

 

2. KPPU Initiatives

In contrast to the submission of complaints, as outlined above, legal proceedings may also be initiated solely by the KPPU, which may choose to investigate alleged Violations without the need for any complaints to be submitted.[14] However, the investigation phase may only be initiated once approvals or directive have been offered by the Head and/or Vice of the KPPU during official KPPU meetings.[15]

Meanwhile, data and information on Violations, as required for investigations which are based on KPPU initiatives, may be collected from the following sources, which exclude the results of any supervision:[16]

1. Results of reviews;
2. Findings which come to light during the examination process, be they preliminary, advanced or additional examinations;
3. Focus Group Discussions (Rapat Dengar Pendapat – “RDP”), as organized by the KPPU;
4. Insufficient complaints;
5. News stories in the media; and/or
6. Other accountable data or information.

 

Data and information on Violations will then be validated and analyzed by Task Units in relation to the following aspects:[17]

1. Identification of businesses and related parties;
2. Identification of the market in question; and
3. Engagement in conduct deemed to involve unfair competition.

 

Task Units should report research developments to the Head of the KPPU every 14 business days and should also submit summaries of any research which is undertaken into Violations at coordination meetings.[18] The results of any such research should be incorporated into an official Research Report, which must fulfill the following criteria in order for it to be rolled over to the investigation phase:[19]

1. The KPPU must have absolute competence as regards the case;
2. There must be valid descriptions of data and/or information relating to Violations;
3. There must be clarity as regards allegations of violated articles under the Antitrust Law; and
4. There must be one piece of evidence at the minimum.

 

As a substantial change under the new regulation, since supervision in the form of the monitoring of businesses in order to collect data and information relating to Violations is no longer recognized under Regulation 1/2019, then the market-share criteria (50% for a single business or 75% for more than one business) which have to be met for the inclusion of businesses onto the official List of Under-Supervision Businesses (Daftar Pelaku Usaha dalam Pengawasan) has also now become irrelevant.[20]

Nevertheless, during a recent Hukumonline interview with KPPU officials, it was confirmed that the exclusion of the market-share threshold has now been implemented in order to broaden the scope of KPPU supervision. Thus, KPPU supervision will now no longer be limited by the abovementioned market-share thresholds.[21]

 

2. Legal Proceedings

Legal proceedings which are conducted by the KPPU encompass the following stages: A) Investigations; B) Preliminary Examinations; C) Advanced Examinations; D) Evidence; E) Decisions; and F) Enforcement of Decisions.

 

1. Investigations

With an adequate Clarification Report deriving from complaints as the relevant source or a Research Report deriving from research conducted on the initiative of the KPPU in hand, investigators working for Task Units (“Investigators”) should then commence the investigation phase, which should last for 60 days at the maximum. However, this period may be extended based on a decision of a coordination meeting.[22]

In essence, investigations are conducted in order to obtain adequate evidence, achieve clarity and formulate holistic descriptions in relation to allegations of Violations.[23] In line with these three purposes, Investigators are authorized to implement the following measures, which should later be incorporated into an official Minutes of Investigation (Berita Acara Penyelidikan):[24]

1. Summoning and questioning of Complainants, Defendants, witnesses and experts, on condition that all summonses must be received by the summoned parties at least three business days prior to the relevant examination and that all summoned parties must handover documents necessary for the investigation;[25]
2. Obtaining of documents relating to antitrust cases;
3. Obtaining of data relating to the assets and turnovers of Defendants;[26] and/or
4. Undertaking of field examinations and analyses of the results of field examinations.

 

If summoned parties refuse to be examined or provide information or if they hinder the investigation and/or examination process, then the relevant investigators have the authority to change the status of any legal proceedings to that of criminal proceedings.[27]

After an investigation process has been completed, the results of the relevant investigation should be written up in an official Investigation Report, which should contain the following information at the minimum:[28]

1. Identities of the alleged Defendants;
2. Description of Violations; and
3. A minimum of two pieces of evidence.

 

If an official Investigation Report does not produce any results in accordance with the abovementioned criteria, then the process will be dropped before subsequently being recorded on the official List of Dropped Investigations.[29] On the other hand, if an Investigation Report meets the criteria listed above, then the Prosecution Investigators (“Prosecutors”) should then prepare a Violation Allegation Report which should contain the following information at the minimum:[30]

1. Identities of the alleged Defendants, witnesses and/or experts;
2. Articles under the Antitrust Law which are alleged to have been violated;
3. Evidence; and
4. Analysis which affirms the violation of articles under the Antitrust Law.

 

• Case Consolidation

Regulation 1/2019 introduces a new option for investigators who are now allowed to consolidate the examination of antitrust cases during their investigation phases into single cases, on condition that:[31]

1. The antitrust cases in question occurred within the same jurisdiction;
2. The results of the relevant investigations reveal that the allegations of Violations were committed by the same Defendants; or
3. The antitrust cases in question are interrelated, even though the Defendants are different.

 

2. Preliminary Examinations

Subsequent to the investigation phase, an official KPPU Panel, which should comprise three members of the KPPU, should organize a preliminary examination to be conducted in examination chambers in KPPU offices or at other locations. This preliminary examination phase should last for 30 business days at the maximum after the relevant first hearing at which the Defendants are present.[32] Summonses should be delivered by the KPPU Panel to Defendants and must be received by Defendants at least three business days prior to the date of examination.[33]

During a preliminary examination (at which the Defendants should be present) the Prosecutors will read and/or deliver the Violation Allegation Report to the Defendants and, in response, the Defendants are entitled to offer a reply to the Violation Allegation Report through the presentation of evidence.[34]

However, if Defendants fail to comply with a summons, then the KPPU Panel will redeliver the summons up to a maximum of two times. If, after that, Defendants still fail to attend the relevant preliminary examination proceedings, then the KPPU Panel has the authority to hand down the following decisions:[35]

1. Decision on whether Violations have occurred or not; or
2. Rejection of the Violation Allegation Report.

 

1. Behavioral Remedy

Soon after the reading and/or delivery of a Violation Allegation Report by Prosecutors, the KPPU Panel may offer the option for the Defendants to implement a behavioral remedy (perubahan perilaku), on condition that all of the relevant Defendants declare themselves willing to adjust their conduct in accordance with the Antitrust Law. However, the following aspects must be taken into consideration by the KPPU Panel:[36]

1. Types and times of Violations; and
2. Incurred losses.

 

Although this is considered to be a groundbreaking option under the new framework of Regulation 1/2019, no further details are provided regarding the thresholds which apply as regards the abovementioned aspects. In order to seek confirmation regarding this issue, Hukumonline conducted a recent interview with KPPU officials who asserted that the thresholds and relevant factors as regards the granting of the behavioral remedy option should be based on the judgment of the KPPU Panel.[37]

If Defendants agree to adjust their business conduct through the implementation of a behavioral remedy after the KPPU Panel has offered the behavioral remedy option, then the Defendants must formalize their commitment through the signing of a so-called Behavioral Remedy Integrity Pact (“Integrity Pact”), which should contain the following information at the minimum:[38]

1. Statements from the Defendants stating that they:

1. Admit and accept the Violation Allegation Report;
2. Will not engage in any further antitrust behavior, as outlined in the Violation Allegation Report; and
3. Will report on the performance of the Integrity Pact.

2. Signatures of the Defendants.

 

The KPPU will then subsequently supervise the behavior of the Defendants for a period of 60 business days after the signing of the Integrity Pact.[39] In cases where a Defendant breaches the Integrity Pact during the supervision period, then Task Units will report to a coordinating meeting and the case will then ultimately advance to the examination phase.[40]

 

2. Preliminary Examination Decisions

The preliminary examination process can result in the following:[41]

1. Stipulation of behavioral remedy which comprises an Integrity Pact and a Supervisory Report on Behavioral Remedy;[42]
2. Decision to continue to the advanced examination stage; or
3. Decision of the KPPU Panel to undertake a process of deliberation in order to render a decision if all Defendants accept the Allegation Violation Report and refuse to present forms of evidence in order to defend against the allegations made within said report.

 

3. Examination of Complaints with Redress

Despite the fact that Regulation 1/2019 still allows for the filing of complaints with redress, specific examination procedures in this regard are no longer available under Regulation 1/2019.[43]

 

3. Advanced Examinations

Based on a decree issued by a KPPU Panel, legal proceedings should then move to an advanced examination stage which should last for a total of 90 days at the maximum.[44] Advanced examinations should comprise the following activities:[45]

1. Examinations of witnesses, experts and Defendants;
2. Examinations of documentary evidence;
3. Examinations of evidence presented by Prosecutors and Defendants;[46] and/or
4. Delivery of conclusions by Defendants and Prosecutors.

 

4. Types of Evidence

In parallel with the Antitrust Law, Regulation 1/2019 acknowledges five types of evidence, as set out in the following table:[47]

Evidence Type	Details
Witness testimonies	Only testimonies which address things which are directly experienced, seen or heard by witnesses will be admitted as evidence.[48] The following parties cannot be summoned as witnesses:[49] Defendants’ relatives, either by blood or marriage, up to the third degree of separation; Spouses and ex-spouses of Defendants; Minors (i.e., persons younger than 17 years of age); Persons with mental health issues; or Persons who have witnessed and heard the examinations. If absolutely necessary, however, the various parties which are outlined in points (1) to (3) may be summoned but should not swear an oath.[50]
Expert testimonies	Only persons who have special expertise and experiences in relation to the relevant field of expertise can provide such expert testimonies, provided that they are not otherwise prohibited from taking on the role of witnesses.[51]
Documents	The following types of documents which have been legalized by the post office, including printed copies, may be presented as evidence:[52] Notarial deeds; Privately drawn up deeds; Defendants’ business-related data; Official decrees; Digital information and/or documents, including printed copies; and so forth.
Indications (petunjuk)	Indications of any conduct, events or conditions which are in conformity with other forms of evidence or antitrust provisions and which ultimately suggest that Violations have been committed, as well as the identities of the perpetrators.[53] Indications are a hugely debatable issue and loosely encompass indirect evidence and/or circumstantial evidence in the following forms:[54] Economic evidence, including the use of economic formulae to support allegations of Violations; and Communications-related evidence, including the utilization of data and/or documents which indicate exchanges of information between the alleged parties to the Violations.
Testimonies from Defendants	This type of evidence also encompasses Defendants confessions in relation to the committed Violations. It should be noted that once made, confessions cannot be withdrawn, unless for solid and acceptable reasons.[55]

 

• Field Examinations

The KPPU Panel has the authority to organize field examinations in order to examine objects which relate to a given case and thus attempt to clarify any statements and/or evidence which are presented during the relevant legal proceedings.[56]

 

5. Decisions

Within 30 business days of the conclusion of any advanced examination process, the KPPU Panel must hand down a decision on the relevant case, while the KPPU Registrar must deliver an excerpt (kutipan) and a copy of the decision to the Defendants within 14 business days of any decision being rendered.[57]

Defendants are granted the right to file objections against KPPU Panel decisions at local District Courts within 14 business days of receiving copies of the relevant decisions.[58] As a consequence, a panel of judges at a District Court, based on an interlocutory decision, may request that the KPPU Panel undertake an additional examination if this is deemed necessary.[59]

 

6. Enforcement of Decisions

In the event that Defendants refuse to comply with a final-and-binding decision regarding Violations, then the KPPU is authorized to invoke an execution order from the relevant District Court.[60] Further details on such executions are specifically addressed under Regulation 1/2019 and such executions may take the form of the relevant legal actions and other actions which are set out in the table below:[61]

Legal Actions	Other Actions
Civil seizures; and/or Third-party collections.	Persuasive measures; Reprimands; Public media announcements; and/or Blacklisting.

 

However, Regulation 1/2019 no longer incorporates any provisions which specifically address the monitoring of the enforcement of decisions, as was previously the case under Regulation 1/2010. Thus, if Defendants do not file any objections, then they are no longer required to report the enforcement of KPPU Panel decisions for the following 30 days.[62]

 

3. Matrix Comparison

Set out in the table below is a head-to-head comparison between Regulation 1/2019 and Regulation 1/2010: