The impact of antitrust law<\/p>\n
By Destivano Wibowo<\/p>\n
JAKARTA (JP): The 1999 law on monopoly and unfair business
\ncompetition is now effective, and will mostly affect the trade
\nand industry sectors.<\/p>\n
Relations between manufacturers and distributors, and that
\nbetween distributors and retailers in Indonesia, will also be
\ngreatly influenced.<\/p>\n
Most manufacturers and distributors in Indonesia often wish to
\nrestrict resale methods, but these restrictions raise some major
\nissues under the law. Current practices here show frequent
\npractices now banned under the law among manufacturing companies,
\nsuch as territorial or geographical restrictions.<\/p>\n
Such restrictions from a manufacturer limits the area in which
\nthe distributor can sell. The manufacturers usually demand that
\neach distributor develops and satisfies demand for its products
\nonly in a certain location and its distributor is banned from
\nselling its products outside of the area.<\/p>\n
The aim is to protect small distributors' market -- which
\nsounds harmless except that it contains potential antitrust risk,
\nas it negates competition among distributors selling the same
\nbrand from the same manufactures.<\/p>\n
Such an arrangement is now banned under Article 15 of the law.
\nBut any manufacturer wishing to avoid this restriction can still
\nhave some sort of \"geographical\" arrangement by imposing \"areas
\nof primary responsibility\".<\/p>\n
Under this concept, the distributor is required to do his best
\nin satisfying consumer demand for the manufacturer's products in
\nthe area of primary responsibility, but distributors can still
\nsell the products outside the area.<\/p>\n
The second common type in distributor arrangements is the tie-
\nin arrangement. Manufactures producing more than one product may
\nseek to tie the sales of one product with that of another.
\nThis practice is common among manufacturers with sufficient
\nmarket power, forcing the buyer to take a second product as a
\ncondition of obtaining the desired goods. This aims to boost the
\nsale of slower-moving items.<\/p>\n
But in some cases, consumers find themselves stuck with goods
\nthey do not need. This could reduce competition, and is thus also
\nbanned under Article 15.<\/p>\n
The third common type of distributor agreements is vertical
\nprice fixing. This is an agreement whereby a seller and a buyer
\nagree with respect to the price at which the buyer will resell.<\/p>\n
Price fixing can also involve discounted prices and is also
\nbanned if tied to the following conditions: (a) that the party
\nreceiving goods must agree to buy other goods from the supplying
\nbusiness actor; or (b) that party shall not buy the same or
\nsimilar goods from competing business actors.<\/p>\n
Meanwhile a \"suggested retail price\" or \"recommended retail
\nprice\" from manufacturers is not considered price fixing as it
\ndoes not entail obligations to comply.<\/p>\n
Can a manufacture order its distributor against selling other
\nproducts made by its competitor? Yes, as long as the manufacturer
\ndoes not require the distributor to resell at a specified price
\nlevel or give discounts.<\/p>\n
But if the manufacturer requests the distributor to sell at a
\ncertain price level, then the distributor cannot be banned from
\nselling other manufacturer's competitor products.<\/p>\n
These alternative solutions, however, can create problems if
\nthe seller or manufacturer is dominant or has a significant
\nmarket share.<\/p>\n
In such cases Article 19 of the law would apply; such
\narrangements would be subject to review by the Business
\nCompetition Supervisory Commission.<\/p>\n
Distributor arrangements can create problems if the business
\nactors are insensitive to the issues of antitrust laws. Business
\nparties dealing in the above arrangements should restructure
\ntheir activities in line with the law. By identifying the legal
\nrestrictions, problems can be avoided.<\/p>\n
The writer is the secretary-general of the Association of Anti
\nTrust Lawyers and works with the Lubis Ganie Surowidjojo law firm
\nin Jakarta.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/the-impact-of-antitrust-law-1447893297",
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