Antimonopoly commission to be formed in October

JAKARTA (JP): An independent supervisory commission which will oversee the implementation of the newly introduced antimonopoly law will be formed before the change in the current government, a senior official said here on Wednesday.

Secretary general of the Ministry of Industry and Trade Muchtar said the government would soon submit the names of the Business Competition Supervisory Commission (KPPU) members to the House of Representatives for approval.

"We expect the establishment of the commission will be approved by the President in October at the latest so that regulations for the implementation of the law could soon be formulated," he told a seminar on the newly introduced antimonopoly law.

According to the new law, the commission will have the authority to monitor business agreements and activities in the country and will also have the power to probe the deals if there are indications of monopolistic practices.

Muchtar declined to reveal the names of the proposed commission members, but confirmed that several business people would be included in the commission.

"Of course, because it's an independent commission, all businessmen must give up their positions as commissioners, directors or executives in their companies while serving the commission during the five-year period," he said.

He said it was very important that the commission was established this year because it should finish the guidelines regulation before the law itself became effective on March next year.

The current cabinet will end as soon as the new president, which will be elected during the general meeting of the People's Consultative Assembly some time in November.

The Antimonopoly and Unfair Competition Law 5/1999, passed by the House of Representatives in February, is the country's first legislation to directly deal with monopolistic and other unfair business practices.

The law, for example, prohibits an individual company from holding more than 50 percent of the domestic market and two or three companies from holding 75 percent of the market between them. A market share is determined by sales value rather than volume.

The law, which regulates mergers and acquisitions, also prohibits vertical restrictions on competition and any deals or contracts allowing for oligopolies, monopsonies, price fixing, cartels, trusts and geographical designations of markets between suppliers.

Oligopoly occurs when a few large producers of similar products dominate the market; a monopsony is a situation where there is a single consumer of the goods produced.

Notably exempt from the law is the production and marketing of goods and services vital to public welfare and state companies.

Business individuals or companies founded guilty of violating the law will face between Rp 1 billion (US$133,333) and Rp 100 billion fines and between three and six months jail terms.

Muchtar said the final verdict on an allegation of unfair competition conducted by a particular company would depend on the commission's investigations of the company's behavior.

"Beware that any practices meant to restrict new entries to the market will also be considered anticompetitive," he said.

Muchtar said whether the law could be successfully applied would very much depend on the way the commission exercised their rights and responsibilities. (cst)