Fri, 03 Sep 1999

German expert defends antimonopoly law

JAKARTA (JP): A German expert, who helped draft the country's newly introduced antimonopoly law, denied on Thursday allegations that the law was aimed at harming the development of successful Indonesian enterprises.

Antimonopoly expert Prof. Kartte said people believed the law would impede the growth of Indonesia's successful enterprises due to a misleading perception of the bill's clause on a 50 percent market share limit.

"It is not true that the new Indonesian antimonopoly law prohibits a 50 percent market share," Kartte said in his speech at a seminar organized by German foundation Gesselschaft fuer Technischen Zussammenarbeit in Jakarta.

He criticized the executives of the Indonesian Chamber of Commerce and Industry (Kadin) for repeatedly stating the law would impede the sound economic development of successful Indonesian enterprises by limiting their market share to 50 percent.

Kartte said the 50 percent market share limit was based on the assumption that a market share of 50 percent would lead a company to a market-dominating position.

"But this assumption can be refuted. The company may for example defend itself by saying that there are already powerful competitors in the market, or the market is fully open to the entrance of other strong competitors," Kartte said.

He said that if a company could not refute the charges that it was dominating the market, the Business Competition Supervisory Commission (KPPU), which supervises the implementation of the law, could not immediately take measures against it.

The KPPU may only take measures against it if there is reason to believe the market-dominating position leads to monopolizing practices or to unfair restrictions of competition, Kartte further explained.

The Antimonopoly and Unfair Competition Law 5/1999, passed by the House of Representatives in February, is the country's first legislation to directly deal with monopolies and other unfair business practices.

The law prohibits an individual company from holding more than 50 percent of the domestic market and two or three companies from holding 75 percent of the market between them. A market share is determined by sales value rather than volume.

Business individuals or companies found guilty of violating the law will face fines between Rp 1 billion (US$133,333) and Rp 100 billion and jail terms between three and six months.

Under the law, the independent KPPU has the authority to monitor business agreements and activities in the country. It also has the power to investigate deals if there are indications of monopolistic practices.

The House of Representatives will select the nine members of the commission based on a government proposal.

Kartte called on the public to stop creating the wrong impression of the law.

"It is unfair to permanently create the wrong impression that the Indonesian government and parliament had lent their support to elaborate a bill that might produce counterproductive economic results.

"As a matter of fact, the Indonesian antimonopoly law also fully reflects the international standard with regard to this specific issue," he said.

Kartte called on the government not to delay the implementation of the law, saying the transitional period until Sept. 5, 2000 was enough for companies to prepare themselves for the law.

"Indonesia being the fourth most populous country in the world needs an efficient competition law reflecting the standards of other industrialized countries if it wants to enhance its role in international trade," he said. (jsk)