Background
A healthy business competition industry is the main foundation for the creation of a fair and efficient economic development. However, one of the major challenges frequently encountered in the economy is monopoly practices and unhealthy business competition, which can harm the market and hinder healthy competition. Practices such as monopolies, oligopolies, price-fixing, production restrictions, price discrimination, and other anti-competitive actions often lead to the abuse of dominant positions by certain business actors, ultimately harming consumers and other businesses. To address this issue, an independent body with the authority to monitor and address such violations is required to create a more competitive market.
To tackle this issue, Indonesia established the Commission for the Supervision of Business Competition (KPPU), an independent agency tasked with overseeing and enforcing laws related to monopoly practices and unhealthy business competition. KPPU plays a vital role in ensuring the sustainability of a healthy market and ensuring protection for consumers and businesses competing fairly. As stipulated in Article 30 of Law No. 5 of 1999 on the Prohibition of Monopoly Practices and Unfair Business Competition (“UU 5/1999”), KPPU was created to foster a competitive business climate, which will, in turn, bring positive benefits to consumers and the economy as a whole. With the authority vested in it, KPPU plays an important role in ensuring that the Indonesian market remains healthy and fair for all parties involved.
However, despite the supervision, a major question often arises: how is the legal process for handling allegations of monopoly practices or unfair business competition carried out by KPPU? An effective and transparent legal process for handling these cases is expected to provide an answer to this question. Therefore, it is essential to understand how KPPU handles alleged violations during the legal process, from the acceptance of reports to the delivery of rulings.
Discussion
The regulation governing the legal process for handling cases of monopoly practices and unfair business competition by KPPU is set forth in Peraturan Komisi Pengawas Persaingan Usaha Nomor 2 Tahun 2023 (Regulation No. 2 of 2023) on Procedures for Handling Cases of Monopoly Practices and Unfair Business Competition (Perkom 2/2023). This regulation serves as the implementing regulation for UU 5/1999 and replaces the previous regulation, Perkom 1/2019. Perkom 2/2023 provides detailed steps that KPPU must follow in handling alleged violations in the market. With this regulation, KPPU has clear guidelines for verifying reports, clarifications, investigations, and the Commission’s hearings, ensuring that the handling of cases is transparent, efficient, and in accordance with applicable law. The stages that must be followed include the following:
- Receipt of Reports and/or Commission Initiatives
The legal process for handling cases at KPPU begins with the receipt of reports submitted by the public, business actors, or other parties who feel aggrieved. This report must contain complete information about the alleged violation, including the identity of the complainant and the reported party, a detailed description of the monopoly practice or unfair business competition, and evidence supporting the claims. As explained in Article 1, Item 4 of Perkom 2/2023, the report is a statement of the alleged violation submitted to KPPU, regardless of whether there is a claim for damages. Furthermore, according to Article 22 of Perkom 2/2023, reports can be submitted to KPPU’s Central Office or Regional Offices, either directly or via electronic media.
In addition to reports submitted by the public or business actors, KPPU can also initiate proceedings based on its own initiative. A Commission Initiative is the stage where KPPU conducts an investigation into suspected monopoly practices or unfair business competition based on economic studies, monitoring of business actors, surveillance of mergers or acquisitions that have not been reported, and various other findings that may trigger suspicion of violations. The legal basis for this initiative is found in Article 23 of Perkom 2/2023, which grants KPPU the authority to initiate proceedings based on sources other than reports. This initiative ensures that potential violations are quickly identified and processed, even if there is no official report from external parties.
It is important to note that under Article 20, Paragraph (4) of Perkom 2/2023, once a report has been submitted to KPPU, it cannot be withdrawn by the complainant. At this stage, the identity of the complainant is guaranteed confidentiality as per Article 20, Paragraph (5) of Perkom 2/2023, to provide a sense of security to the complainant who might fear retaliation. However, if the report includes a claim for compensation, the Commission will not keep the complainant’s identity confidential, in accordance with Article 21, Paragraph (2). After receiving the report, KPPU will immediately clarify to check the administrative completeness and the accuracy of the information provided, as outlined in Article 24 Perkom 2/2023 and/or Article 27, Paragraph (1) in the case of Commission initiatives, to proceed with an initial investigation.
- Clarification and Investigation
After the report is received, the first step is clarification. The purpose of clarification is to ensure the completeness of the report, verify the identities of the complainant and the reported party, and determine whether the alleged violation is in line with the provisions of UU 5/1999 and whether the evidence provided meets the necessary standards. If the report is deemed valid and meets the requirements, the case can proceed to the investigation stage.
Under Article 34 of Perkom 2/2023, KPPU has the authority to investigate suspected violations based on public reports, findings of its own, or other accountable sources. The investigation aims to gather sufficient evidence, as required by Article 42 of UU 5/1999, which includes the involvement of witnesses, experts, examination of documents, and statements from business actors.
- Court Comission
If the investigation results show sufficient evidence, the case will move on to the commission assembly hearing stage. At this stage, KPPU will present the report of the alleged violation before the commission assembly, which will preside over the hearing and decide whether the violation truly occurred. The reported party will be given the opportunity to provide responses, submit evidence, and present a defense. This process, as regulated in Article 61 of Perkom 2/2023, aims to provide the reported party the chance to clarify and defend themselves before a ruling is made.
After the hearing, the commission assembly will decide whether a violation occurred, and if so, impose administrative sanctions in accordance with Article 47 of UU 5/1999. Sanctions can include fines, orders to cease the offending practices, or directives to amend the violating company’s policies.
- Behavioral Change and Further Investigation
A crucial step in the handling of competition cases is the behavioral change phase. Behavioral change can be proposed by the reported party or through the commission assembly if the reported party is found guilty of violating the law. KPPU may provide the reported party with an opportunity to adjust their policies or practices that are deemed to harm business competition. Article 81 of Perkom 2/2023 stipulates that the reported party who admits to the violation and is willing to make changes can be given a certain period to adjust their actions, monitored by KPPU. However, this opportunity is only available during the investigation or preliminary examination stages, and if the case progresses to a further examination stage, the opportunity for behavioral change is no longer available. If the behavioral change is agreed upon, an integrity pact will be signed as outlined in Article 93, Paragraph (3) of Perkom 2/2023.
- Implementation of Rulings and Monitoring
After the further investigation is conducted, as per Article 101 of Perkom 2/2023, the commission assembly will deliberate in private to assess, analyze, and conclude the case based on sufficient evidence. Once the ruling is made, its implementation is the final step in the legal process. KPPU plays a role in monitoring the implementation of the ruling, ensuring that the reported party fulfills the obligations set by the commission assembly. If the reported party fails to comply or faces obstacles in the execution, KPPU has the authority to take further action, such as recommending the prosecution of the case in criminal court, as stipulated in Article 48 of UU 5/1999.
Article 107 of Perkom 2/2023 also governs that the reported party must implement the Commission’s ruling and submit an implementation report to KPPU within 30 days from the date the ruling is received. If there is neglect in carrying out the ruling, KPPU can continuously monitor the implementation to ensure compliance, as regulated in Article 107, Paragraph (2).
- Legal Remedies
After the commission assembly delivers its ruling, business actors who are dissatisfied with the decision may file an objection with the Commercial Court within 14 working days from the receipt of the ruling. This is regulated in Article 19, Paragraph (1) of Government Regulation No. 44/2021. If there is still dissatisfaction with the Commercial Court ruling, it may be taken to the Supreme Court for cassation within another 14 working days as per Article 20 of PP 44/2021.
Conclusion
The handling of monopoly and unfair business competition cases by KPPU is a structured legal process carried out with strict adherence to the law. Starting from the acceptance of reports, administrative verification, clarification, investigation, and hearings in the commission assembly, each stage is conducted with clear legal foundations. KPPU not only ensures that violations are detected and punished fairly, but also provides the reported party an opportunity to defend themselves through a transparent process. With a transparent and legally robust mechanism, KPPU plays a crucial role in maintaining healthy business competition in Indonesia, which supports better economic growth and benefits consumers and businesses competing fairly.