A number of recent developments illustrate the challenges the
Indonesian competition authority, the KPPU, faces in seeking to
achieve compliance with competition law norms in a country with
more than 500 local and provincial governments governing people
living on 922 permanently inhabited islands speaking 700 different
languages.
Each of the 500 governments in Indonesia are responsible for
substantial public procurement exercises, including the
construction of schools, hospitals, public transport
infrastructure, municipal buildings, flood drainage projects and
other international aid sponsored programs. Fighting bid rigging in
public procurement, and corrupt complicity with bid rigging conduct
by government officials, continues to be the single top priority of
the KPPU. The latest cases concern bid rigging and discriminatory
practices in connection with the establishment of a new
semitraditional market in East Java Province and a hospital in
Southeast Sumatera. The conduct in the former case was facilitated
by an industry association and in addition to enforcement
activities, the KPPU recommended a number of new initiatives to
better supervise the creation of industry associations.
In recent years the KPPU has also made more tentative steps into
running cases against international companies based on economic,
and often more contentious, theories of harm (rather than per se
cases). In this vein, the KPPU has made a ruling against a major
Western energy company in relation to conduct concerning an export
pipeline FEED project that the KPPU regarded as
discriminatory.
Until recent years, merger administration in Indonesia was also
complicated by the lack of secondary legislation imposing reporting
requirements. Nevertheless, the KPPU did manage to take a small
number of merger enforcement matters (e.g., against an
international supermarket chain). However, merger filing
requirements (of a rather peculiar post-closing nature) were
introduced in 2010 and since that time approximately 80 cases have
been processed. As occurs in most jurisdictions, the vast majority
of mergers have been approved in Indonesia. While the KPPU's
analytical approach to mergers is still developing, it appears that
the organization is quickly attaining credibility in this
area.
Indonesia has quickly developed a credible competition regime.
While there are some very substantial challenges to effectively
permeating awareness of and compliance with competition law
throughout the economy, the KPPU appears to be engaged with the
task. We expect to see a continuing maturity of the types of
analysis being undertaken by the KPPU and at some point a
broadening focus away from just public sector bid rigging.
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