On March 26, 2026, the Business Competition Supervisory Commission (KPPU) ruled on Case No. 05/KPPU-I/2025 concerning alleged violations of Article 5 of Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition by 97 online lending/peer-to-peer (P2P) lending providers. These providers were alleged to have jointly established a maximum interest rate cap or economic benefit limit through the Code of Ethics/Code of Conduct of the Indonesian Peer to Peer Lending Association (AFPI), initially set at 0.8% per day and subsequently reduced to 0.4% per day in 2021. KPPU interpreted this agreement as a form of price fixing, taking into consideration the market concentration levels within the online lending industry structure.
Conversely, AFPI and several stakeholders maintained that the cap was intended to protect consumers, prevent predatory lending practices, and establish an industry standard during a period lacking comprehensive regulatory frameworks. The issue is further compounded by the Financial Services Authority’s (OJK) acknowledgment that setting the maximum economic benefit limit via AFPI’s Code of Ethics prior to the issuance of OJK Circular Letter (SEOJK) No. 19/SEOJK.06/2023 was done pursuant to OJK’s guidance at the time. Nevertheless, KPPU determined that no regulation explicitly granted AFPI the authority to set interest rate caps, nor was there substantive oversight or formal approval from OJK. Furthermore, because these directives were not formalized in writing, the arrangement could not automatically be exempted under the state action doctrine.
Assessing the Legal Elements of Horizontal Price Fixing in AFPI’s Interest Rate Caps
Article 5 of Law No. 5 of 1999 fundamentally prohibits business entities from entering into agreements with competitors to fix prices for goods and/or services to be paid by consumers within the same relevant market. In this case, the 97 online lending providers constitute business entities operating and competing within the same market, whereas the provisions regarding maximum interest rate limits were instituted through guidelines applicable to AFPI members. Under this construct, KPPU identified a correlation among competing business entities, a concerted agreement, the determination of maximum interest rate or economic benefit limits, and its application to consumers as a form possessing prima facie characteristics of horizontal price fixing.
Nonetheless, an evaluation of alleged price fixing cannot be based solely on the existence of an agreement; it must also account for the substance, nature, and objective of said agreement. If the provisions of 0.8% and subsequently 0.4% per day were strictly intended as ceiling rates—without requiring all providers to charge uniform interest rates, thereby preserving the autonomy of individual firms to set prices below the cap—the legal qualification of such an arrangement as price fixing becomes significantly more complex and warrants further evidentiary proof.
The Concept and Elements of Price Fixing
According to Commission Regulation (Perkom) No. 4 of 2011, price fixing among competing business entities constitutes a form of collusion, defined as coordination among firms to attain higher profits through agreements regarding prices, production volumes, or market allocation. Price-fixing agreements eliminate the competitive process that would otherwise occur; under competitive conditions, prices tend to be driven toward production costs while output increases, thereby creating market efficiency and consumer welfare benefits. Within the context of Article 5 of Law No. 5 of 1999, prohibited price fixing must fundamentally originate from an agreement between business entities operating within the same relevant market and executed in a concerted manner. Consequently, the existence of an agreement or coordination among competing business entities serves as a critical element in identifying price-fixing practices. Furthermore, price fixing is not restricted to agreements on final prices but extends to price structures or schemes, including agreements concerning profit margins. Therefore, even if the prices offered by individual business entities differ, uniform margins resulting from a concerted agreement can still be categorized as a prohibited form of price fixing.
Analyzing Regulatory Directives and Antitrust Exemptions Under the State Action Doctrine
AFPI fundamentally asserts that the establishment of the maximum interest rate cap was executed pursuant to directives from the Financial Services Authority (OJK). This circumstance gives rise to the question of whether actions taken by business entities based on regulatory policies or directives can still be classified as anti-competitive behavior. This issue intersects with the application of the state action doctrine, which, in principle, permits exemptions for business entities if their conduct constitutes the implementation of a legitimate government policy subject to adequate state supervision. However, in this case, KPPU maintained that the mere existence of OJK directives is insufficient to grant such an exemption. KPPU evaluated that no statutory provisions explicitly authorized AFPI to set maximum interest rate caps, while OJK was also deemed not to have exercised substantive oversight over the specific rate amounts or the underlying rate-setting mechanisms. Consequently, KPPU continues to view the interest rate capping by AFPI as an independent act carried out by business entities, despite AFPI’s defense that the determination was conducted under OJK’s guidance.
Can Consumer Protection Objectives Serve as a Basis for an Exemption from Price-Fixing Prohibitions?
Conversely, counterarguments exist regarding the legal standing of OJK directives concerning AFPI’s establishment of maximum economic benefit caps. OJK acknowledged that prior to the issuance of OJK Circular Letter (SEOJK) No. 19/SEOJK.06/2023, the maximum economic benefit provisions codified in AFPI’s Code of Ethics originated from OJK’s guidance during that period. This sequence of events creates a dilemma from a legal certainty perspective, given the chain of actions comprising OJK’s directives, AFPI’s institutionalization of the provisions, and market participants’ compliance—actions that were subsequently evaluated by KPPU as violations of Article 5 of Law No. 5 of 1999. Consequently, the core dilemma encompasses not only the presence or absence of written documentary evidence regarding OJK directives, but also the legal ramifications for market participants acting under the reasonable assumption that such measures formed an integral part of regulatory policy. Nevertheless, from KPPU’s perspective, the primary issue centers on legal authority: specifically, whether OJK possessed statutory authority to grant legitimacy to AFPI to institute interest rate caps that ultimately resulted in horizontal price fixing among competing market entities within the same relevant market.
| Perspective | Argument |
|
KPPU |
Informal directives do not equate to statutory authority to fix prices. |
|
AFPI |
Market participants acted pursuant to regulatory (OJK) directives and for consumer protection purposes. |
| OJK |
Acknowledges that the price-capping measure was previously executed under OJK directives. |
Has KPPU Adequately Proven Anti-Competitive Intent or Effect?
Prior to the implementation of interest rate caps, online lending providers had the potential to impose high borrowing costs on consumers. In this context, AFPI’s capping of maximum economic benefits—initially set at 0.8% per day and subsequently lowered to 0.4% per day—could potentially alleviate the cost burden borne by consumers. From a consumer protection standpoint, such a policy might be viewed as serving a positive objective. However, under competition law, consumer protection objectives do not inherently exempt an agreement or policy from anti-competitive prohibitions. Therefore, further analysis is required to assess whether the caps truly generated consumer welfare benefits, the degree to which these benefits can be quantified, whether the restrictions were necessary to achieve consumer protection goals, and whether alternative policy mechanisms could achieve comparable objectives with a lesser restrictive effect on market competition. Furthermore, consideration must be given to whether the benefits accrued by consumers outweighed the potential negative impacts on competition. Consequently, asserting that interest rate caps are intended to protect consumers cannot rely solely on policy objectives; it must be substantiated by empirical proof regarding economic impacts and tangible consumer benefits.
Regulatory Challenges and Divergent Interpretations of Interest Rate Capping
The regulation of interest rate caps under the AFPI Code of Conduct reflects a sharp divergence in legal perspectives between sectoral regulators and competition authorities. While AFPI and OJK view the cap as a good-faith implementation of Article 17(1) of POJK No. 77/2016 designed to curb predatory lending and protect consumers rather than secure excessive collusive profits under Perkom No. 4/2011, KPPU interprets the arrangement as an illegal price-fixing agreement due to the absence of formal, written statutory authority and substantive oversight.
This clash between AFPI’s reliance on informal regulatory directives and KPPU’s strict enforcement of legal authority underscores a critical conflict between regulatory governance and antitrust compliance. Ultimately, determining market liability requires judicial proceedings to objectively separate administrative oversight deficiencies from anti-competitive intent, evaluating the policy through its underlying objectives, statutory backing, and actual impact on consumer welfare and market competition.
Reference
Author: Faiq Maulana, S.H.
Editor: Robby Simamora, S.H.,M.H.