Abuse of market power<\/p>\n
The democratization process in Indonesia, which has
\naccelerated after the fall of former authoritarian president,
\nSoeharto, in May 1998, has now entered the economic sector with
\nthe enforcement last Tuesday of the Antimonopoly Law. While the
\npolitical democratization process and the resultant reform
\nmovement seek to prevent absolute power through checks, balances
\nand free elections, the Antimonopoly Law, through free market
\ncompetition, will discipline the holders of economic power and
\nprevent them from abusing their market dominance.<\/p>\n
Democracy on one side and market economy and fair competition
\non the other are indeed, as most economists say, the two sides of
\nthe same coin. While democracy distributes, decentralizes and
\nchecks political power through free elections, economic power is
\ncontrolled through fair market competition.<\/p>\n
The Antimonopoly Law, enforced after 18 months of preparation,
\nwill strive to make the domestic market, which was previously a
\njungle without clear rules of the game, a level-playing field. It
\nwill, at the very least, serve initially as a deterrent to big
\nbusiness groups from abusing their market power. The big market
\nplayers will no longer be able to trample the smaller ones.<\/p>\n
The Business Competition Supervisory Commission, which started
\nworking with the introduction of the law, will see to it that
\ncompanies which hold more than 50 percent of the national market
\nthrough restrictive business practices, will either lose their
\nbusiness licenses, be fined between Rp 25 billion and Rp 100
\nbillion, or the directors or owners could be jailed for six
\nmonths.<\/p>\n
The law rules against a broad range of anticompetitive
\npractices such as cartels, oligopolies, trusts, merger controls,
\nvertical restraints of competition and abuse of market dominance.
\nTwo or three companies which between them hold more than 75
\npercent of the market for the same product would run afoul of the
\nlaw. Likewise, a dominant market position gained through the
\nownership of majority shares in several companies, operating in
\nthe same line of business, also violates the law.<\/p>\n
It is only natural if the law doesn't yet apply to state-owned
\ncompanies, small-scale businessmen or cooperatives whose
\nbusinesses such as telecommunications and other basic utilities
\nare aimed for the benefit of the public.<\/p>\n
One should not, however, see the law as an antibig businesses
\ndrive. Big conglomerates are here to stay as long as they uphold
\nfair competition. In fact, the law allows a company to hold more
\nthan 50 percent of the market as long as the market dominance was
\ngained through healthy competition.<\/p>\n
But the task of the commission will be quite challenging. The
\nrapidly developing business practices, the broad definition of
\nwhat is considered restrictive or dishonest business practice and
\nthe vast grey areas between them will make complaints on abuse of
\nmarket power or monopoly a very complex case to handle. What will
\nmake the job even more formidable is the fact that the commission
\nwill deal mostly with big businesses, including international
\nones, which are often skilled in finding loopholes in laws to
\nmaximize profits and can afford to hire high-caliber lawyers.<\/p>\n
Fortunately, though, the commission has been designed from the
\noutset as an independent body. Moreover, integrity and technical
\ncompetence have been stipulated as the most important criteria
\nfor the commission members so as to be less susceptible to
\ncollusion and bribes offered by big businesses.<\/p>\n
The effectiveness of the law will indeed depend largely on the
\ncommission as its decision is legally binding and also on the
\nSupreme Court which handles appeals. Given the widely-criticized
\nperformance of the Commercial Court which enforced the
\nBankruptcy Law -- another important commercial legislation -- the
\ngovernment should see to it that the commission is adequately
\nfunded and staffed with highly competent investigators.<\/p>\n
Being an entirely new body in charge of enforcing completely
\nnew legislation against 'powerful' big conglomerates, the
\ncommission should naturally be allowed to grow on the job. But
\ngiven the low public trust in law enforcement, the commission
\ndoes not have the luxury of a long learning process by trial and
\nerror. Its top priority therefore is to establish credibility in
\nits handling of the first few cases of complaints. The commission
\nalso should have a clear sense of priority, zeroing in on cases
\nthat adversely affect the public's interests and the efficiency
\nof the economy.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/abuse-of-market-power-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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