Indonesia’s antitrust landscape is governed primarily by Law No. 5 of 1999, known as the “Competition Law,” as amended, which aims to create a fair and competitive business environment. Enforcement is carried out by the Commission for the Supervision of Business Competition (“KPPU”), an independent agency responsible for regulating and supervising competition in the country.

Key Objectives of the Competition Law

The primary objectives of Indonesia’s Competition Law include preventing monopolistic practices and ensuring business competition remains fair and transparent. Activities such as price fixing, market allocation, oligopoly, monopsony and cartel formation are expressly prohibited.

Enforcement and Investigation

The KPPU is empowered to initiate investigations based on complaints or its own findings. The investigation process usually involves data collection, market studies, and hearings. The KPPU may impose fines or sanctions if a violation is confirmed.

Investigations and Related Procedures: A Closer Look

An antitrust investigation by the KPPU can be initiated in several ways:

1. Public Complaints: Any member of the public or a business entity can file a complaint with evidences of anti-competitive behavior.
2. KPPU’s Own Initiatives: The KPPU can also start an investigation based on its own findings or market studies or referral by Government bodies and sector regulators.

Preliminary Examination

Once the KPPU initiates an investigation, it conducts a preliminary examination to determine whether there is a prima facie case of antitrust violation. This phase involves gathering documents, interviewing witnesses, and collecting other forms of evidences.

In-Depth Investigation

If the preliminary examination suggests a violation, an in-depth investigation commences. This stage may involve:

1. Data Scrutiny: Detailed analysis of financial data, market share, and other relevant metrics.
2. Stakeholder Interviews: Conversations with employees, competitors, and other stakeholders to gather additional evidences.
3. Market Studies: In-depth studies of the market conditions, consumer behavior, and economic factors influencing competition.

Hearings

After the in-depth investigation, the KPPU typically conducts hearings where both the accused and the complainant can present their cases. Legal representation is strongly recommended during these hearings.

Here are some key aspects of the hearings:

Format and Procedure

1. Opening Statement: Both parties usually begin with opening statements that summarize their case.
2. Presentation of Evidence: Evidences collected during the investigation phase are formally submitted and reviewed. This may include documents, emails, financial records, and other forms of material evidences.
3. Witness Testimonies: Witnesses, including employees, competitors, and industry experts, may be called upon to testify. Their testimonies can provide valuable insights into the alleged antitrust violations.
4. Cross-Examination: The KPPU and the accused have the opportunity to cross-examine the other’s witnesses. This is a critical phase and usually requires skilled legal counsel to extract or counter critical pieces of evidences.
5. Expert Opinions: Economic and industry experts might be invited to provide opinions that can substantiate or refute claims made during the hearing.
6. Final Arguments: The KPPU and accused submit their final arguments, summarizing the evidences and testimonies presented, and making a final plea for their case.

Legal Representation

Given the complexity of antitrust law and the high stakes involved, legal representation is strongly recommended. A lawyer experienced in competition law can guide the process, from submitting evidences to questioning witnesses and making final arguments.

Duration

The duration of the hearings can vary widely depending on the complexity of the case and the number of witnesses and experts involved. Some hearings can conclude in a matter of days, while others may stretch over several weeks or even months.

Decision and Ruling

After the hearings conclude, the KPPU will deliberate and issue its decision, usually within a specified time frame. The decision will outline whether an antitrust violation has occurred, the reasoning behind the decision, and any penalties imposed.

Public and Media Access

Typically, antitrust hearings are open to the public and the media unless there are confidentiality concerns that necessitate a closed-door hearing.

Understanding the intricacies of the hearing process is crucial for anyone facing antitrust proceedings in Indonesia, and having a qualified and experienced lawyer by your side can be invaluable.

Decision and Penalties

Based on the hearings and the evidences presented, the KPPU makes a final decision. If a violation is confirmed, penalties can range from fines to ordering to annul agreement, paying compensation, stop specific activities depending on the severity and impact of the anti-competitive behavior.

Decision

Once the hearings conclude, the KPPU panel deliberates on the matter and arrives at a decision. This usually occurs within a specific time frame mandated by law, i.e. 30 days from the end of the hearing. The KPPU’s decision will identify violations, explicitly stating whether or not antitrust laws were violated, and detail which specific provisions were breached. It will also provide comprehensive reasoning behind the decision, citing evidences, witness testimonies, and other pertinent information gathered during the investigation and hearings. Finally, the decision will contain judgments on whether the accused parties are guilty or not guilty of the alleged violations.

Penalties

If the decision is against the accused, the penalties could be substantial and wide-ranging, subject to the type and scale of the violation. These may include fines, which can be substantial, running into millions or even billions of Indonesian Rupiah, depending on the severity of the violation and its impact on the market. The KPPU can also issue cease and desist orders, requiring companies to stop specific activities that have been found to be in violation of antitrust laws. In extreme cases, the commission might require the offending company to sell off assets or divisions that contribute to the anticompetitive behavior. Operational limitations may also be imposed, such as restrictions on future business activities or requiring regular reporting to ensure compliance. Additionally, details of the violation, along with the penalties imposed, may be made public, causing reputational damage.

Appeals

The KPPU’s decisions are not final and can be appealed to the commercial court and subsequently to the Supreme Court. However, the appeals process can be time-consuming and costly.

Appeals Process

While the KPPU’s decision is not final, it can be appealed to the commercial court, and further to the Supreme Court. The appeals process can be time-consuming and requires a well-prepared legal strategy.

Companies or individuals who are not satisfied with the decision can take their case to higher judicial authorities.

Commercial Court

The first level of appeal is the commercial court. According to Indonesian antitrust law, the appealing party generally has a set period, usually 14 days, from the time the decision is rendered to file an appeal with the commercial court. The appealing party is required to submit legalized copy of bank guarantee in amount of 20% fine at the maximum if it is imposed to pay fines. The commercial court decision is rendered based on the KPPU decision and its dossiers, and no documentary evidence is allowed to submit or no expert or witness is allowed to cross examine unless for the latter the KPPU fails to comply with point of procedure.  The commercial court has the authority to uphold, reverse, or modify the KPPU’s decision, including any penalties that were imposed.

Supreme Court

If either party is dissatisfied with the commercial court’s decision, they can further appeal to the Supreme Court. The Supreme Court’s focus is usually on points of law rather than facts of the case. This means that the Supreme Court reviews the legal reasoning and principles applied in the earlier decisions to ensure they are in accordance with existing laws and precedents. The Supreme Court has the final say in the matter and can either uphold or overturn the previous rulings.

Timelines and Legal Counsel

Appeals can take considerable time, sometimes extending for several months or even years. The complexity of antitrust issues often requires specialized legal expertise, making it crucial to have experienced counsel to guide you through the appeal process. Legal fees can also accumulate, making the decision to appeal one that should be weighed carefully.

Impact of Appeals

It is worth noting that the process of appeal could have a range of impacts on the company or individual. Apart from the legal implications, there is also the consideration of public perception and market reputation. An ongoing appeal might affect stakeholder trust and could be a factor in business relations and stock performance.

In summary, the appeals process in Indonesian antitrust proceedings is a critical avenue for those who believe that the KPPU’s decisions are unjust. However, it is a complicated and potentially lengthy process.

Confidentiality Measures

During the entire investigation process, measures are usually taken to protect sensitive business information and ensure confidentiality.

Penalties for Violation

Penalties for violations of antitrust law can be severe and hefty fines. These may include fines maximum 50% net value gained during the period violating the antitrust or maximum 10% total sales during the period violating the antitrust.

Legal Defenses and Appeals

Companies accused of antitrust violations have the right to present a legal defense and may appeal decisions to the commercial court and further to the Supreme Court. Legal representation is highly advisable throughout this process due to the complexity of antitrust laws and procedures.

Recent Trends

In recent years, Indonesia has been stepping up its antitrust enforcement, especially in sectors such as technology, healthcare, and natural resources. The KPPU has also started collaborating with international bodies to monitor cross-border anti-competitive practices.

Conclusion

Navigating the complex waters of Indonesia’s antitrust laws is not only crucial, but also increasingly challenging given the evolving regulatory landscape. As the country’s economy grows and diversifies, the role of the KPPU is becoming more significant, marked by a rise in investigations and enforcement activities, especially in emerging sectors like technology, health care, and natural resources.

Companies operating in Indonesia should be particularly vigilant in understanding and complying with the local antitrust regulations to mitigate risks. Failure to do so can result in severe penalties, including substantial fines and, in extreme cases, imprisonment. These not only have immediate financial implications but could also lead to long-term reputational damage, affecting stock prices, stakeholder trust, and future business opportunities.

Moreover, given the option of appeals up to the level of the Supreme Court, legal proceedings can be protracted, further increasing the operational and financial burden on accused organizations. As such, it is highly advisable for companies to seek expert legal counsel well-versed in Indonesian competition law from the outset.

In summary, the increasing scrutiny by the KPPU and the complex, multifaceted nature of antitrust proceedings in Indonesia make it imperative for companies to be proactive in their compliance measures. Continuous monitoring of market conduct, regular internal audits, and fostering a culture of compliance can go a long way in mitigating risks and ensuring that businesses operate within the boundaries of the law.