Antimonopoly law needs revision

By Syamsul Maarif

JAKARTA (JP): Indonesia's new antimonopoly law will offer a better business environment when it takes effect on March 5, 2000.

Law No. 5/1999, which was approved by the House of Representatives (DPR) on March 5, will prohibit any agreements resulting in monopolistic practices and unfair competition, such as oligopoly, price setting, area division, boycotting, cartels, trusts, oligopsony, vertical integration and closed agreements.

Activities that result in monopolistic practices, including monopolies, monopsonies, market controls and conspiracies, are also prohibited. The holding of a dominant market position is prohibited as well, especially when a business agent uses its position to block the entry of a new business agent.

The law also deals with management and shareholders of business agents. Thus, assuming dual position in a company having the same market is prohibited and owning majority shares in a number of similar companies is banned. This is particularly true if such ownership results in controlling over 50 percent of the market shares.

Moreover, mergers, consolidation and acquisition are also prohibited if they result in monopolistic practices and unfair competition. All these are designed to ensure fairness in Indonesian business.

But will the law be effective? It depends on many things.

One of them is the enforcement mechanism. From this perspective, the law is not promising. One reason relates to the role of the Supervisory Commission on Business Competition.

As an institution, the commission could be trusted because it is independent and accountable to the president and its members are appointed and discharged by the president at the approval of the DPR. The involvement of the DPR will guarantee that the members are free from the influence of the government. The commission is also designed to be an active institution. It has the authority to investigate business agents without any written permission when a violation is believed to have been committed.

The problem is that the commission does not have the authority to enforce its decision by itself. It needs approval from a district court in order to enforce its ruling. This could result in a long process of execution.

Furthermore, the law does not establish any time limit for the court to pass its decision on a request of execution. The time limit applies only for examination of a case based on an objection made by the party involved.

The concern is that things could happen during the process of approval from the court. The court, for example, might ask the commission to provide more information before making a decision. This could make the execution of the commission's ruling a long process. A more simple process of execution should be established, especially for the execution of the commission's decision accepted by the parties.

The second reason relates to investigation. The law stipulates that a party shall be considered as having accepted the commission's ruling when it does not file an objection within 14 days after receiving the notification of the ruling. If the party does not comply with the said ruling, the commission will refer it to an investigator.

The problem is that Article 44 of the law does not stipulate how long such an investigation should last. Neither does the article mention the status of and what to do with the results of the investigation. These points are not clear.

One should remember that the second investigation is different from the first investigation. The first investigation is purported to gather facts for the ruling. The second investigation, on the other hand, is purported to find out the failure of the party in complying with the said ruling. The law does not have any reference to govern the result of the second investigation. The absence of such a reference encourages the party involved to delay compliance with or disregard the ruling of the commission.

The third reason relates to sanctions. Under the current system, a business agent may avoid severe sanctions especially penalty measures by accepting the ruling of the commission but trying to delay compliance with the ruling. This is discouraging especially because the commission does not have the power to impose penalty measures. It is merely entitled to impose administrative measures.

A penalty measure might be imposed only by a district court and this might occur if the party involved submits an objection during the permitted time. In the meantime, the commission does have the authority on its own to submit a report to a district court.

In other words, an examination by the court might be conducted only if the party involved submits an objection against the ruling of the commission. This is unfortunate because tougher sanctions such as imprisonment and revocation of a business license fall under the authority of a district court.

Do we need to revoke the law? The answer is no. What we need is revisions especially on certain aspects of enforcement mechanisms.

Thus, the commission should have the authority to directly enforce its ruling, especially the one accepted by the parties involved. Time limits should be established for the completion of investigations so that compliance with rulings will not be delayed.

Finally, we need to provide the commission with the authority to impose tougher sanctions on business agents violating the law. Imposing sanctions such as revocation of business licenses should be in the commission's power. Under the current system, only the court may revoke a business license.

The writer is an economic and business law analyst based in Jakarta.