Answer ... Cartels in Indonesia are mainly regulated by the Law No. 5 of 1999 on Prohibition of Monopolistic Practices and Unfair Business Competition (the ‘Competition Law’). Chapters 3 and 4 of the Competition Law set out the provisions on restrictive agreements and restrictive conducts, which effectively prohibit collusion irrespective of whether it relates to the price, production or market, or whether it relates to competition in the market or competition for the market (bid rigging).
Other laws and regulations may also apply in regard to restrictive agreements and conduct, as follows:
- Article 382-bis of the Criminal Code, which subject unfair competition to criminal penalties in the form of imprisonment and fine; and
- Article 1365 of the Civil Code, which requires a person to compensate damages that was caused by their unlawful act (tort).
Answer ... The Competition Law applies to all sectors. However, Article 50 exempts the following:
- actions and/or agreements intended to implement applicable laws and regulations;
- agreements related to IP rights, such as licences, patents, trademarks, industrial product designs, integrated electronic circuits, trade secrets and franchise agreements;
- agreements that stipulate technical standards of goods or services that do not inhibit or impede competition;
- agency agreements that do not stipulate any resale price maintenance;
- cooperation agreements for research to improve the living standards of society at large;
- international agreements that have been ratified by the Indonesian government;
- agreements relating to exports of goods or services that do not disrupt domestic needs or supply;
- agreements made by and between small business undertakings; and
- agreements made by and between cooperatives aimed specifically at serving their members.
The Indonesia Competition Commission (‘KPPU’) has issued several guidelines on the exemptions for actions and/or agreements intended to implement laws and regulations, and those relating to IP rights, franchising, and agency. These guidelines elaborate on the basic understanding and the scope of exemption, as well as setting out examples of their application.
Answer ... The KPPU was established in 2000 as the main institution responsible for enforcing the Competition Law. In September 2017 the Indonesian Constitutional Court affirmed that the KPPU is a state auxiliary organ that carries out administrative law enforcement. As an independent institution, the KPPU has judicial authority to:
- conduct investigations and examinations;
- evaluate alleged violations;
- hear and decide cases;
- impose administrative sanctions; and
- provide advice and opinions to inform government policy relating to monopolistic practices and unfair business competition.
Further, in examining a case, the KPPU has the authority to summon undertakings, witnesses and experts, and to obtain, examine and evaluate documents or other instruments of evidence.
Answer ... Since its establishment, the KPPU has decided over 260 cases on cartels, including those relating to bid rigging. Among those cases, in the past three years the KPPU has been actively investigating cartels in the imported cattle, poultry, automotive, logistics and salt industries. At the time of writing, the KPPU is investigating cartel allegations in several industries, such as price fixing in the domestic airline passenger market, and bid-rigging cases in infrastructure ranging from construction to maintenance projects.
One of the key tools adopted by the KPPU – particularly in price-fixing, quota, customer and market allocation cases – is the use of indirect or circumstantial evidence in determining the existence of a cartel either as an addition to the hard evidence gathered by the KPPU or as the ultimate evidence if there is no available hard evidence of a cartel. Undertakings were found guilty in several cartel cases based on indirect or circumstantial evidence. For instance, in Skutik (2016), the KPPU established cartel infringement by using communication and economic evidence. Similarly, in Shipping Liners (2018), the KPPU used communication evidence to determine the existence of a cartel between four shipping companies. Despite some controversy on the use of such evidence, the Supreme Court decision in Tyres (2014) affirmed the use of indirect or circumstantial evidence. The KPPU has further formally adopted the use of indirect evidence in its new case proceeding (see question 3.1).
In the recent bid-rigging case on road reconstructions and bridge maintenance in Central Kalimantan (2018), the KPPU established horizontal collusion by looking at:
- similarities between the parties’ implementation method documents;
- the order of the serial numbers on the bank’s supporting letters;
- similarities in the metadata;
- similarities in the IP addresses; and
- the companies’ borrowing conduct.