Antimonopoly law must be revised: Experts

JAKARTA (JP): Experts called on the government to amend Law No. 5/1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition due to its lack of clarity.

Top economist Faisal Basri, who is a member of the Business Competition Supervisory Commission (KPPU), said on Monday that the revision of some of the articles of the law was needed to allow the commission to work effectively.

"The definition (of some of the articles) is not clear, it confuses us in making a firm decision," Faisal told a seminar on institution building in a global economy.

Legal expert Erman Radjagukguk, who is also deputy Cabinet secretary, said that aside from the lack of clear definition, some articles were almost impossible to implement.

He cited Article 45, which states that the district court had to give its verdict within 30 days on a company's appeal over an objection to a decision by the KPPU.

"It's difficult for judges to give a verdict in such a short time because the cases are not easy," Erman said.

He added at present many of the judges do not have a good understanding of the law.

Erman also said that the definition of "market dominance" by a company and "price fixing," was not clear.

Meanwhile, Mari Pangestu, an economist at the Center for Strategic and International Studies (CSIS) said it was preferable to add further description within the articles than to revise the law.

"Yes, the law has many weaknesses, but it will also take time to amend the law," she said.

"Besides, the image of the country will not be good if we revise too many laws," she added.

According to her, one of the main problems is the clause on the 50 percent market share limit, which was considered too restrictive and may be counter-productive to business in general.

"It may limit a company's ability to expand and compete in the international market," Mari said.

The limitation of market share might also discourage foreign investors particularly if the KPPU failed to provide a good example in dealing with such cases.

Law No. 5, 1999, which took effect on March 1999, was introduced as part of an agreement between the government and the International Monetary Fund.

KPPU was established in July 1999 to be the sole organization tasked with supervising the implementation of the law. But the commission only started work in the middle of last year.

So far, KPPU has handed down two verdicts under the law.

In April, the commission ordered Caltex to terminate its welded steel pipe procurement contract worth US$12.35 million over three years after the commission found evidence of a conspiracy to rig the outcome of the tender.

Second, it ordered that Indomarco, the owner of the Indomaret store chain that has about 470 stores, be prohibited from expanding its Indomaret stores in areas where traditional markets were located.

Elsewhere, Mari said that exception provided by the law, including protection on small and medium enterprises, made the law have no clear focus.

"The protection of small and medium enterprises should be in a separate law, not in this law, " she said, adding that the law would not be effective if it had many goals to achieve.(05)