German expert defends antimonopoly law

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)