Fair competition law must be enacted on time: Official

JAKARTA (JP): Vice cabinet secretary Erman Rajagukguk has urged the country's next government to implement the antimonopoly and unfair competition law in the first quarter of next year, as scheduled, in order to ensure fair business practices.

"I hope the next government will enforce the law in early March," he said at an economic law seminar jointly sponsored by the University of Indonesia law school and the Ministry of Trade and Industry.

He however said that businesspeople required a six-month transition period after enforcement of the law to adjust their businesses to the laws' provisions.

The antimonopoly and unfair competition law, passed in February by the House of Representatives and ratified on March 5 by President B.J. Habibie, prohibits a single company 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$12.8 million) and six-month jail terms for company executives.

Erman said Indonesia desperately needed the law to improve its domestic business environment and enable competition to be based on efficiency and fair play.

He said private businesses in the country had developed during the past three decades amid unfair market competition.

"Those who were close to the power elite enjoyed special privileges to dominate the market," he said.

Erman said the situation had led to the emergence of conglomerations and a small group of powerful business executives devoid of true entrepreneurship skills.

He said the government needed to cease such inequities by enforcing the antimonopoly and unfair competition law.

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

An oligopoly occurs when a few large producers of similar commodities dominate the market.

An evaluation on whether instances of unfair competition were committed by any parties would be carried out by an independent commission to be formed by the government and approved by the House of Representatives prior to full enforcement of the law.

Erman said a company with a 50 percent market share would not necessarily be penalized if the independent commission determined that the company was operating efficiently and did not abuse its dominant position to restrict other competitors from entering the market.

"However, such a case may be very rare," he said. (udi)