31
Aug2021
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The Latest Sanctions for Monopoly Practice

Economic growth is one of the driving factors for the welfare of the nation. In connection to this, it is become Government’s duty to create a healthy business competition climate to provide equal opportunities for every businessman to participate in the production and marketing process of goods and/or services in Indonesia. The issuance of Law No. 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition (“Law 5/1999”) is expected to enforce the rule of law and equal protection for businesses.

Since the enactment of Law No. 11 of 2020 concerning Job Creation (“Job Creation Law”), several provisions in Law 5/1999 have been changed. Broadly speaking, things that changed in the prohibition of monopoly practice post Job Creation Law enacted includes 3 (three) aspects, as follows:

  1. The procedure to submit objections to the Decision of Indonesian Competition Commission (in Indonesia: Komisi Pengawas Persaingan Usaha (“KPPU”) is no longer to be file at District Court (in Bahasa: Pengadilan Negeri) but to Commercial Court (in Bahasa: Pengadilan Niaga);
  2. Changes in the provision of administrative sanctions and criminal sanctions; and
  3. Revocation of additional criminal sanctions which previously stipulated in the provisions of Article 49 Law 5/1999.

Previously, SIP Law Firm has published an article that discuss concerning point 1, which can be found in our website under an article titled, “Pengadilan Negeri Tak Lagi Terima Keberatan Terhadap Putusan KPPU”.

Therefore, on this occasion, we intended to focus on overview the changes of point 2 and point 3. Detail information shall be noted as follows:

The Latest Monopoly Practice Administrative Sanctions Provisions

Administrative Sanctions Provisions
Law 5/1999 Job Creation Law
 

Article 47 paragraph (2)

 

 

 

Administrative sanctions as intended in paragraph (1) may be in the form of the following:

a.    stipulation on the annulment of agreements as intended in Article 4 up to and including Article 13, Article 15, and Article 16; and/or

b.    order to businessman to cease vertical integration as intended in Article 14; and/or

c.     order to businessman to cease activities proven to have caused monopolistic practices and or unfair business competition and or being harmful to society; and/or

d.   ordering businessman to cease the abuse of dominant position; and/or

e.    stipulation on the annulment of mergers and consolidations of business entities and acquisition of shares as intended in Article 28; and/or

f.     stipulation on the payment of compensation for losses; and/or

g.    imposition of a fine of not less than Rp 1.000.000.000,- (one billion rupiah) and not more than Rp 25.000.000.000,- (twenty-five billion rupiah).

 

Article 47 paragraph (2) is amended through the provision of Article 118 Job Creation Law

 

Administrative sanctions as intended in paragraph (1) may be in the form of the following:

a.    stipulation on the annulment of agreements as intended in Article 4, Article 5, Article 6, Article 7, Article 8, Article 9, Article 10, Article 11, Article 12, Article 13, Article 15, and Article 16;

b.    order to businessman to cease vertical integration as intended in Article 14;

c.     order to businessman to cease activities proven to have caused monopolistic practices and or unfair business competition and/or being harmful to society as intended in Article 17, Article 18, Article 19, Article 20, Article 21, Article 22, Article 23, Article 24, Article 26, and Article 27;

d.   ordering businessman to cease the abuse of dominant position as intended in Article 25;

e.    stipulation on the annulment of mergers and consolidations of business entities and acquisition of shares as intended in Artcile 28;

f.     stipulation on the payment of compensation and losses; and/or

g.    imposition of a fine of not less than Rp 1.000.000.000,- (one billion rupiah) and not more than Rp. 25.000.000.000,- (twenty-five billion rupiah).

 

 

Referring to the latest provision of Article 47 paragraph (2) post Job Creation Law mentioned above, it is known that there is a change in the amount of administrative sanctions fine for monopoly practices. Previously, there was legal certainty for businessmen regarding the maximum amount of fines, which was stipulated for Rp. 25.000.000.000,- (twenty-five billion Rupiah) but now has been revoked.

Furthermore, on February 02 2021, Government Regulation No. 44 of 2021 concerning the Implementation of Prohibition of Monopolistic Practices and Unfair Business Competition (“GR 44/2021”), which regulates further concerning the administrative sanctions in the form of fines.

Referring to the provision of Article 12 paragraph (1) GR 44/2021, the minimum fine of Rp. 1.000.000.000,- (one billion Rupiah) is a basic fine, and the imposition of administrative sanctions in the form of fines by KPPU carried out based on the following provisions:

  1. maximum 50% (fifty percent) of the net profit obtained by the businessman in the Relevant Market during the period of violation; or
  2. maximum 10% (ten percent) of total sales in the Relevant Market during period of violation.

Based on the description above, it is known that the Rp 1.000.000.000,- (one billion Rupiah) is the amount of the basic fine, but there is a possibility for a businessman to be fined more than Rp. 25.000.000.000,- (twenty-five billion rupiah) depending on the amount of net profit or the sales the businessman made during the period of violation.

 

Criminal Sanctions to Monopoly Practices

Principal Criminal Sanction
Law 5/1999 Job Creation Law
The Principal Criminal Sanction is stipulated in Article 48 paragraph 1, paragraph 2, and paragraph 3.

 

The actions that can be imposed with the criminal sanction of fine or the criminal sanction of imprisonment as a replacement of fine are as follows:

a.    Making prohibited agreements as intended in Chapter III e.g oligopoly, cartels, etc (Article 4 – Article 16);

b.    Conduct prohibited activities as intended in Chapter IV e.g monopoly, monopsony, etc (Article 17 – Article 24);

c.     Become the dominant position as intended in Article 25 – Article 28; and

d.   Violate the provision of Article 41 concerning the obligation for businessman to be cooperative when KPPU conducts an inspection.

 

The provision of Article 48 Law 5/1999 were amended through Article 118 Job Creation Law.

 

As result of the changes is that the violation of monopoly practices that may be subject to criminal sanctions of fine or criminal sanction of imprisonment as a replacement of fine is only the act of violation of Article 41 concerning the obligation for the businessman to be cooperative when KPPU conducts an inspection.

 

Article 48 paragraph (3)

 

 

Violation of the provision of Article 41 of this Law shall be subject to a fine of not less than Rp. 1.000.000.000,- (one billion rupiah) and not more than Rp. 5.000.000.000,- (five billion rupiah) or the criminal sanction of imprisonment as replacement of fine for no longer than 3 (three) months.

 

Article 48 of 5/1999 were amended through Article 118 of Job Creation Law.

 

Violation of the provision of Article 41 shall be subject to a fine of not more than Rp. 5.000.000.000,- (five billion rupiah) or the criminal sanction of imprisonment as replacement of fine for no longer than 1 (one) year.

 

Furthermore, because of the revocation of Article 49 Law 5/1999, the additional criminal sanctions are now unenforceable. The categories for ‘additional criminal sanctions’ are:

  1. Revocation of business licenses; or
  2. Prohibition of business actors proven to have violated this law from filling the position of director or commissioner for at least 2 (two) years and no longer than 5 (five) years; and
  3. Order to cease certain activities or actions causing losses to other parties.

 

 

DISCLAIMER:

Any information contained in this Article is provided for informational purposes only and should not be construed as legal advice on any subject matter.  You should not act or refrain from acting on the basis of any content included in this Legal Update without seeking legal or other professional advice.  This document is copyright protected. No part of this document may be disclosed, distributed, reproduced or transmitted in any form or by any means, including photocopying and recording or stored in a retrieval system of any nature without the prior written consent of SIP Law Firm.

 

 

 

 

 

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