COMPETITION LAW: PROTECTION FOR WHOM?

As a new legislation in Indonesia, the preceding question becomes crucial to be answered since it will determine the course of our competition law. Competition law literatures have identified various stakeholders pertinent to enforcement of the law, they are inter alia: small to medium enterprises (SME), competitors, consumers, regulator, and national interests.

A huge hypermarket chain in Indonesia provides a range of product in its outlet with very low price. Those low prices obtained by putting “pressure” on the purchasing price from its suppliers, especially those who fall on the SME category. Consumers benefit from that practice whilst the suppliers are whining for being treated unfair. Competition law in this regard is not possible to prescribe win-win solution. By take side to one of the stakeholder, the other side will be worsen off. The question remains unanswered, for whom the competition law should protect?

In other case, the mega merger between Boeing and McDonald Douglas (MD) is about to trigger trade war between United States and the European Union bloc. Boeing, an American based company, is one of the significant commercial airplane manufacturers in the world market. MD is also American based company, less significant in commercial airplane but dominates military airplanes contract with US Government. The main competitor for Boeing is Airbus, a European consortium company. The merger between Boeing and MD certainly will undermine Airbus position in the world market. The merger proposal has been approved in US but the European Union, whose national interest is deemed to be threaten, is eager to block the merger proposal. The US then necessitate to deploy a special envoy to lobby the European Union in order to approve the proposal otherwise the US will launch a trade war with Europe. Hence, despite the unsuccessful, competition law plays its role to safeguard the national interest.

There are still plenty of competition cases that can illustrate how the interests of many stakeholders conflicting with each other. This is unavoidable as a consequence of multiple objectives of the competition law aspires to sustain.

In US, competition law in the early XIX century arose as a protection for the SME. Giant corporations in US were considered as jeopardizing the democratic life within the society since it centralized economic decision making only in handful of corporate executives. In the next development, the US emphasized that competition law is a protection for consumers. In the preceding hypermarket case, the US approach is to allow such practice to continue provided that no harm suffered by the consumers. Who win or loose in the market is irrelevant for competition law so long that level of efficiency is accomplished and benefit the consumers. This is the character of Chicago school in competition law that dominated the US since the 80’s decade.

Indonesia who just recently established competition law through the promulgation of the Law No 5 of 1999 still needs to answer those questions. Whether competition law is designed to promote SME so they can develop and become bigger at the expense of consumers’ welfare? Or competition law stands to protect consumers from conducts of the companies that reluctant to innovate and be more efficient at the expense of SME that weak related to capital and management? Not to mention the government interest that is likely to develop a specific industry by restraining competition or the necessity to protect national interest which is frustrated in many competition cases involving foreign parties?

The course of answer for the fundamental question of the competition law definitely will be shown from the KPPU’s performance as an institution mandated to implement the Law No 5 of 1999. The stakeholders that KPPU favors will be reflected in the decisions of the competition cases it handled. In this sense, the function of Commissioners as the final determinant of a case will be very decisive in lay down competition law as the forth cornerstone in national economic policy, beside the monetary, fiscal, and trade policies.

 

FOREWORD

Dear viewer,

Since the promulgation of Law No 5 of 1999 Concerning Prohibition on Monopolistic Practices and Unfair Business Competition (“the Law No 5”) on March 5, 1999 and came into effect six months thereafter, the Law No 5 serves as the main legal source for regulating business competition in Indonesia.

It has increasingly played a vital role which taking into considerations in the daily economic decisions that called by private sectors as well as governmental institutions. Fair competition at present, not only emerges as an economic and legal jargon, but much more than that, as an important business strategy to win the market and as a goal when imposing a public policy.

Unfortunately, there are limited understanding from the stakeholders regarding competition law and particularly the application of Law No 5. There are only handfuls of policy makers, directors, managers, lawyers, economists, professors, and students who really own thorough understanding about competition law in Indonesia. This condition certainly needs to be improved, the efficacy of implementation of competition law in Indonesia largely depends on the concern of its stakeholders. The wider attention given to the Indonesian competition law and policy will strengthen and improve it and concurrently ensure the promotion of fair competition in Indonesia will be achieved in a flawless course.

This blog is only a little effort to broaden the awareness and understanding about Indonesian competition law and policy. It hopes to draw wider perspectives from its audiences which can be synergized for the sustainable development of Indonesian competition law and policy.

Warm regards,


Editor