Antimonopoly law needs revision<\/p>\n
By Syamsul Maarif<\/p>\n
JAKARTA (JP): Indonesia's new antimonopoly law will offer a
\nbetter business environment when it takes effect on March 5,
\n2000.<\/p>\n
Law No. 5\/1999, which was approved by the House of
\nRepresentatives (DPR) on March 5, will prohibit any agreements
\nresulting in monopolistic practices and unfair competition, such
\nas oligopoly, price setting, area division, boycotting, cartels,
\ntrusts, oligopsony, vertical integration and closed agreements.<\/p>\n
Activities that result in monopolistic practices, including
\nmonopolies, monopsonies, market controls and conspiracies, are
\nalso prohibited. The holding of a dominant market position is
\nprohibited as well, especially when a business agent uses its
\nposition to block the entry of a new business agent.<\/p>\n
The law also deals with management and shareholders of
\nbusiness agents. Thus, assuming dual position in a company having
\nthe same market is prohibited and owning majority shares in a
\nnumber of similar companies is banned. This is particularly true
\nif such ownership results in controlling over 50 percent of the
\nmarket shares.<\/p>\n
Moreover, mergers, consolidation and acquisition are also
\nprohibited if they result in monopolistic practices and unfair
\ncompetition. All these are designed to ensure fairness in
\nIndonesian business.<\/p>\n
But will the law be effective? It depends on many things.<\/p>\n
One of them is the enforcement mechanism. From this
\nperspective, the law is not promising. One reason relates to the
\nrole of the Supervisory Commission on Business Competition.<\/p>\n
As an institution, the commission could be trusted because it
\nis independent and accountable to the president and its members
\nare appointed and discharged by the president at the approval of
\nthe DPR. The involvement of the DPR will guarantee that the
\nmembers are free from the influence of the government. The
\ncommission is also designed to be an active institution. It has
\nthe authority to investigate business agents without any written
\npermission when a violation is believed to have been committed.<\/p>\n
The problem is that the commission does not have the authority
\nto enforce its decision by itself. It needs approval from a
\ndistrict court in order to enforce its ruling. This could result
\nin a long process of execution.<\/p>\n
Furthermore, the law does not establish any time limit for the
\ncourt to pass its decision on a request of execution. The time
\nlimit applies only for examination of a case based on an
\nobjection made by the party involved.<\/p>\n
The concern is that things could happen during the process of
\napproval from the court. The court, for example, might ask the
\ncommission to provide more information before making a decision.
\nThis could make the execution of the commission's ruling a long
\nprocess. A more simple process of execution should be
\nestablished, especially for the execution of the commission's
\ndecision accepted by the parties.<\/p>\n
The second reason relates to investigation. The law stipulates
\nthat a party shall be considered as having accepted the
\ncommission's ruling when it does not file an objection within 14
\ndays after receiving the notification of the ruling. If the party
\ndoes not comply with the said ruling, the commission will refer
\nit to an investigator.<\/p>\n
The problem is that Article 44 of the law does not stipulate
\nhow long such an investigation should last. Neither does the
\narticle mention the status of and what to do with the results of
\nthe investigation. These points are not clear.<\/p>\n
One should remember that the second investigation is different
\nfrom the first investigation. The first investigation is
\npurported to gather facts for the ruling. The second
\ninvestigation, on the other hand, is purported to find out the
\nfailure of the party in complying with the said ruling. The law
\ndoes not have any reference to govern the result of the second
\ninvestigation. The absence of such a reference encourages the
\nparty involved to delay compliance with or disregard the ruling
\nof the commission.<\/p>\n
The third reason relates to sanctions. Under the current
\nsystem, a business agent may avoid severe sanctions especially
\npenalty measures by accepting the ruling of the commission but
\ntrying to delay compliance with the ruling. This is discouraging
\nespecially because the commission does not have the power to
\nimpose penalty measures. It is merely entitled to impose
\nadministrative measures.<\/p>\n
A penalty measure might be imposed only by a district court
\nand this might occur if the party involved submits an objection
\nduring the permitted time. In the meantime, the commission does
\nhave the authority on its own to submit a report to a district
\ncourt.<\/p>\n
In other words, an examination by the court might be conducted
\nonly if the party involved submits an objection against the
\nruling of the commission. This is unfortunate because tougher
\nsanctions such as imprisonment and revocation of a business
\nlicense fall under the authority of a district court.<\/p>\n
Do we need to revoke the law? The answer is no. What we need
\nis revisions especially on certain aspects of enforcement
\nmechanisms.<\/p>\n
Thus, the commission should have the authority to directly
\nenforce its ruling, especially the one accepted by the parties
\ninvolved. Time limits should be established for the completion of
\ninvestigations so that compliance with rulings will not be
\ndelayed.<\/p>\n
Finally, we need to provide the commission with the authority
\nto impose tougher sanctions on business agents violating the law.
\nImposing sanctions such as revocation of business licenses should
\nbe in the commission's power. Under the current system, only the
\ncourt may revoke a business license.<\/p>\n
The writer is an economic and business law analyst based in
\nJakarta.<\/p>",
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