Indonesian Competition Authority pushes boundaries of investigation powers in new cartel decision

Indonesian Competition Authority pushes boundaries of investigation powers in new cartel decision

06 March 2017

On 20 February 2017, the KPPU—Komisi Pengawas Persaingan Usaha, the Indonesian Competition Authority—decided that two Indonesian subsidiaries of Japanese motorcycle manufacturers conspired in a cartel to fix the sales price of 110-125 cc automatic-transmission scooters. This adds to the KPPU's long list of cartel enforcement, which follows their 2015 mission statement to eradicate cartel activities.

Controversial authority

The recent KPPU cartel decision is not without controversy. One of the implicating emails collected and used by the KPPU as evidence is claimed to have been collected during an informal KPPU visit to one of the defendants' premises: Thus, arguably it was unlawfully obtained and cannot be used as evidence. According to the applicable laws, the KPPU does not have the authority to conduct dawn raids, searches or evidence forfeiture at business premises. An appeal is on the horizon.
 
In re
cent months, discussions regarding the amendment to the Indonesian Competition Law have become more intense and a draft of the amendment was escalated to be part of the National Priority Legislation Program at the House of Representatives. The draft includes a proposal to entrust the KPPU with authority to conduct dawn raids, searches and evidence forfeiture at business premises. Normally, only detectives (penyidik) from the Police Department, the Attorney General Office or PPNS (Penyidik Pegawai Negeri Sipil) are authorized to conduct the afore-mentioned activities. In contrast, KPPU officials do not qualify as detective (penyidik) according to the current laws.

Trends and developments

2015 is the first year during which the KPPU received more non-tender related complaints than tender related complaints. However, the high work load remains—the composition of tender related cases is still higher than non-tender related cases. Critics have highlighted that more advocacy and awareness-raising activities are required to build a more compliant business culture.
 
Since its first decision finding a violation of merger control rules in 2014, the KPPU has gained confidence and issued more failure to file decisions. This includes an entirely offshore acquisition between two South Korean entities in 2016, whereby its late notification to the KPPU resulted in a fine of IDR 2 billion (around USD 150,000).
 
Recently, the KPPU identified certain sectors  as targets for enforcement including logistics, shipping, healthcare, internet, online taxis, and consumer goods. The KPPU has equipped itself with a market monitoring team, which screens the press and other sources for possible antitrust violations that could be detrimental to consumer welfare.
 
For companies doing business in or with Indonesia, these recent activities by the KPPU highlight the increasing risks associated with anti-competitive activities in Indonesia.

Contacts :

Chalid Heyder - Partner Indonesia : chalid.heyder@dnfp.com

Dyah Paramita - Senior Associate Indonesia : dyah.paramita@dnfp.com

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