Expert claims antimonopoly law has loopholes

Expert claims antimonopoly law has loopholes

JAKARTA (JP): The newly passed antimonopoly law does not go
far enough in ensuring healthy and fair business competition, an
industrialist and legal experts warned on Monday.

Fransiscus Welirang, a director at food giant PT Indofood
Sukses Makmur, said that lack of clear definition for several key
terms was resulting in business skepticism.

He emphasized that the law failed to define the terms "market
share", "vertical integration" and "efficiency" -- key concepts
to determine whether a company is engaging in monopolistic
practices.

"It is not clear whether the market share is indicated from
sales value or sales volume. It is a crucial point because
similar products have different purchasing value depending on
quality and market segment," he said at an antimonopoly seminar
held by Atmajaya Catholic University's Faculty of Administration
Sciences.

As an example he said local cosmetic Viva recorded the biggest
sales volume in the country, but its sales value was lower than
imported cosmetics such as Lancome or Ultima II.

"The limitation of a market share will be hard to implement
because it is next to impossible to measure market shares
regularly," Fransiscus said.

The antimonopoly law, passed by the House of Representatives
last month, prohibits a company from holding more than 50 percent
of the domestic market share.

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

The law, however, stipulates that a company will not
necessarily be penalized if the independent commission finds that
the extended market share is gained through efficiency, and the
company does not abuse its dominant position to restrict new
market entrants.

The 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.

Lawyer Benny K. Harman, director of the Center for Information
and Economic Law Studies, said the efficacy of the law would
depend largely on the technical competence, integrity and
autonomy of commission members.

"But I am very pessimistic on the independency of the
commission, as the appointment and retirement of members is
largely decided by the President.

"It will be better if the commission is responsible only to
the House not to the President, and they should be appointed for
life so they will not worry about the possibility of not being
reappointed for the next term."

Benny said several articles in the law, especially exemptions
granted to various government regulations, increased the
likelihood of collusion between officials and businesspeople.

He also said that the government's effort to establish the law
was merely a token gesture to comply with an International
Monetary Fund requirement, instead of a genuine effort to create
a healthy business climate.

Wolfgang Kartte, who led a team of seven German experts hired
last year by the government to provide advice on the antimonopoly
bill, said the new law had met international standards on
antitrust law.

Kartte, who served as president of the German Antimonopoly
Board for 16 years, said it would take years to improve the law
in order to prevent monopolies and other unfair competition
practices.

"However, I congratulate Indonesia for successfully
establishing the law because it is badly needed to attract
foreign investors to the country," he said. (gis)