Tue, 13 Nov 2007
From: The Jakarta Post
By Fadhil Hasan, Jakarta
Since its establishment in June 2000, the Indonesian Business Competition Supervisory Commission (KPPU) has issued a long list of rulings. The binding rulings, which are weakly enforced, are often protested against by companies found guilty by the commission of committing monopolistic practices.

The sort of reactions received by the KPPU vary from supportive to severely hostile. The commission itself needs to respond to the criticism by working harder to prove its competence and credibility to the public.

Many parties also suspect its credibility. The government itself needs to boost the performance of the KPPU for the interests of the public and a fair investment climate here.

It is necessary to delve into the inside of the KPPU in order to evaluate its existence. The KPPU is an independent body which was established to supervise the implementation of the 1999 Anti-Monopoly Practices and Unfair Business Competition Law.

In its position as an independent body, the KPPU is directly answerable to the President and the House of Representatives. Its commissioners, including the chairman and his deputy, are appointed by the President with the House's approval. The commission's role is to formulate and implement regulations and investigate those who are suspected to have violated the 1999 law as well as issue binding decisions and impose sanctions on those who have violated the law. Those who are not satisfied with the commission's ruling have the right to bring the case to the district court.

Basically the commission is assigned to eliminate and prevent "anti-competitive" business practices. It accomplishes this goal through the enforcement of antitrust laws, and investigating other non-merger business practices that may impair competition.

Such non-merger practices include horizontal restraints, involving agreements between direct competitors, and vertical restraints, involving agreements among businesses at different levels in the same industry (such as suppliers and commercial buyers).

Compared to other countries' anti-trust bodies, most notably the United States' Federal Trade Commission, the KPPU is still limited in its authority to protect the Indonesian business climate and consumers in general.

This is because the commission does not have the authority to oversee unfair or deceptive acts or practices in commerce in protection of consumers. Therefore it has no direct function to ensure consumer protection against exploitation from the various industries operating in the country.

The KPPU's main mission is to ensure that businesses in Indonesia are in healthy competition, and is intended to prevent the abuse of a dominant position by certain economic actors. A fairly protected business opportunity will open up opportunities for consumers to obtain unlimited product options, which are theirs by right.

The dynamics of this particular economic activity, which guarantees a balance between the interests of businesses and those of the public will, in the end, increase the public's welfare.

Monopoly and unhealthy business competition, in their various guises and practices, clearly put the consumer at a loss. The nature of monopolistic business practices always maximizes profits for the controlling interest to the detriment of those who have no alternative other than to use the products or services on offer. As such, the existence of the KPPU and actions that were undertaken by the antitrust body are there to put a rein on those who would apply a monopoly in the Indonesian market.

It is natural there are those who question the commission's credibility, for various reasons, including those who want to fight for public interests, or those who just want to protect their business. While all agree in principle that the country needs a credible and competent anti-trust body, in practice there are parties who are not satisfied with the commission's rulings. This is just natural.

Some even have gone so far as to attack the credibility of the antitrust body in an effort to weaken the resolve of the KPPU in order to make the competition watchdog relent and stop its efforts to eliminate unfair business practices in the Indonesian economy.

These critics of the KPPU have asserted that the KPPU's many activities are actually damaging investment and the business climate in Indonesia.

It needs to be remembered, however, that both foreign and domestic investors will only have confidence that their interests are being protected through the enforcement of the law if the KPPU works according to its mission.

Investors will also be able to feel secure in knowing that the government, through one of its most effective bodies, will ensure that business competition will always be kept on a level playing field, and avoid any untoward domination or hegemony by a particular business interest.

As long as the government is able to create political stability and legal certainty in the country, there should be no concern that its stance in ensuring business fairness in Indonesia is counterproductive to foreign investments.

If monopolies, be they in the form of outright control or market domination through cross-ownership, continue, the Indonesian consumer will be continuously put at a loss. In any case, the government must take action in order to protect the rights of the consumer.

The writer is an economist at the Institute for the Development of Economics and Finance (INDEF).



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