Antimonopoly law must target cooperatives

JAKARTA (JP): Cooperatives and small businesses should not be exempted from the newly approved antimonopoly law, because the special treatment could discourage attempts to create a competitive environment, according to some analysts.

Economist Sri Mulyani Indrawati said here on Wednesday the antimonopoly and unfair competition law should cover all business activities to ensure fairness.

"Excluding certain parties or activities from the law will only ruin our goal to create a competitive market," she said at a seminar on the antimonopoly law and its impact on small and medium enterprises, organized by the Asia Foundation.

Mangara Tambunan, of the Bogor Institute of Agriculture's Center for Economic and Social Studies, said that with the introduction of the antimonopoly law, cooperatives and small businesses would no longer need the government's protection.

"Implementing an antimonopoly law effectively is enough to protect small businesses and cooperatives," he said.

Mangara said that exempting certain businesses from the law would only encourage them to develop monopolies and practice unfair competition in the future.

"They may not have monopolies right now, but who knows? If they get bigger they could benefit from the loophole," he said.

By giving excessive protection, he said, the government could also ruin the competitiveness of small businesses and cooperatives.

"The cooperatives and small businesses will fall asleep while enjoying their exclusive rights. They will not be able to compete in the real competitive market when the government lifts its protection of them," Mangara said.

The antimonopoly and unfair competition law, passed by the House of Representatives in February and ratified by President B.J. Habibie on March 5, prohibits companies from holding more than a 50 percent share of the domestic market.

Companies breaching the law are liable to a maximum fine of Rp 100 billion (US$11.76 million) and six-month jail terms for company executives.

The law stipulates that small scale enterprises are exempt from the restrictions.

Cooperatives are also excluded from the new antimonopoly law if they produce and distribute goods for consumption only by cooperative members and not the general public.

Sri said the antimonopoly law could not be effective if it only applied to certain activities.

"Besides, it is hard to determine whether the cooperatives only serve their members, and are not also trading their goods to the public," she said.

Meanwhile, the secretary-general of the Ministry of Industry and Trade, Muchtar, said the exemptions were needed to protect small businesses and cooperatives because the business climate was still not conducive for them.

However, the law stipulates that a company will not be penalized if an independent commission finds the company's market share was gained through efficient operations and the company does not use its dominant position to restrict new entrants to the market.

The independent commission -- the Business Competition Supervisory Commission -- will oversee the implementation of the law. Its members will be appointed by the president with the House's approval.

Sri said the members of the commission should be experts in business, because they will have to investigate all kinds of practices capable of creating unfair competition.

"Many companies are now using sophisticated ways to bar their competitors from entering the market. They, for example, use mergers or vertical integration to dissolve their competitors. The commission members should be familiar with such kind of practices," she said. (gis)