House OKs antimonopoly and unfair competition bill

House OKs antimonopoly and unfair competition bill

JAKARTA (JP): Individual companies holding more than 50
percent of the domestic market run the risk of maximum Rp 100
billion (US$11.76 million) fines and jail terms for executives
under the antimonopoly law passed by the legislature on Thursday.

Designed to promote fair market competition, the law also bans
two or three companies from holding 75 percent of the market
between them.

"This law is not aimed at stamping out big businesses but to
make the market a level playing field," Minister of Trade and
Industry Rahardi Ramelan said at the House plenary session which
enacted the bill.

The antimonopoly law -- the first piece of legislation
proposed at the House's initiative in more than 30 years -- will
come into force 18 months after its ratification by President
B.J. Habibie.

Also declared illegal is a company holding a market share of
50 percent when the majority shareholder also controls other
firms active in the same sector.

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

Oligopoly occurs when a few large producers of similar
products dominate the market; a monopsony is a situation where
there is a single consumer of the goods produced.

The law's enforcement will be overseen by the independent
Business Competition Supervisory Commission, whose members will
be appointed by the President following prior approval from the
House.

Rahardi stated the law would not be the sole determinant in
deciding whether a company held a monopoly because its practices
would also be used as a yardstick.

"Any practices meant to restrict new entries to the market
will be considered anticompetitive."

A company would not necessarily be sanctioned if the
independent commission determined the 50 percent market share was
founded on efficiency and the company did not abuse its dominant
position to restrict new market entrants, Rahardi said.

The commission will have the authority to evaluate business
agreements and activities for indications of monopolistic
practices, and to take action against violators.

"If one company or a group of companies holds a market share
of more than 50 percent, then it could be suspect and considered
to have a monopoly," Rahardi said. "But the final verdict will
depend on the independent commission's investigations of the
behavior of these companies."

Under the law, which also regulates mergers and acquisitions,
a market share will be determined by sales value rather than
volume.

Notably exempt from the law are the production and marketing
of goods and services vital to public welfare and state
companies.

Rahardi said the law would help create healthy competition in
the production sector, enabling consumers to get high quality
products at "competitive... prices".

Rambe Kamarul Zaman, head of the House's special commission in
charge of deliberating the antimonopoly bill, said the scope of
the draft legislation was expanded to cover not only monopolistic
or cartel-like practices, but also all other deals that could
hamper fair competition. (gis)