|
ON-LINE DISCUSSION Competition Policy and Regulation I wish to share information concerning the Indonesian Competition Policy
and Regulation that are now in place.
1. Competition Policy: Objectives and Scope for Competition Challenged by market liberalization demand and facing the
globalization process, the Government of Indonesia has taken several measures to strengthen the national market and make it
more competitive. The economic crisis in 1997 has made the government to pursue ways to recover from the crisis, that is the
necessity to create a policy that could increase export with liberalizes market and remove barriers that in contrast to free
and fair competition. In line with efforts to build free and fair competition, the Government of Indonesia has enacted Law
No. 5 Year 1999 concerning the Prohibition on Monopolistic Practices and Unfair Business Competition. The law is based on the
considerations that development in economic sector should improve the welfare of the people, democracy in economic sector
should provide equal opportunity to all, and business in Indonesia should be in a fair and proper competition situation. The
principle of the law is that entrepreneurs in Indonesia in undertaking business activities should be based on economic
democracy by taking in account the balance of interest between the business and public interest. The law aims
(i) to safeguard the public interest and improve the efficiency of national economy, in order to better the welfare of the
public,
(ii) to create a conducive business climate by regulating fair business competition and thereby giving a certainty and equal
opportunity for small, middle, and big entrepreneur in running a business,
(iii) to prevent monopolistic and or unfair competition which is caused by the entrepreneur, and
(iv) to create an effective and efficient business activity. The law identifies three categories that are prohibited, namely
prohibited agreements, prohibited activities, and dominant position.
The agreements not allowed re price fixing, price discrimination, boycott, and closed agreement. Those agreement prohibited
on a rule of reason basis are oligopoly practices, predatory pricing, division of territory, cartels, trusts, and agreement
with foreign parties. Whereas, prohibited activities as being illegal are business conspiracy that leads to monopolistic
practices. Those activities prohibited on a rule of reason basis are monopsony and market control. Based on Law 5/1999, a
Commission for the Supervision of Business Competition or abbreviated as KPPU in Indonesian was issued by Presidential Decree
No. 75/1999. KPPU is an independent body established, as a “watch-dog” to supervise the implementation of the Law,
independent from the influence and control of the government and other parties.
The Commission has the tasks:
(i) to evaluate business agreements that lead to monopolistic practice (Article 4-16),
(ii) to evaluate business activities causing unfair business competition (Article 17-24),
(iii) to evaluate violation of dominant position (Article 25-28),
(iv) to take action in accordance with its authority (Article 36),
(v) to provide recommendations and considerations for government policy with respect to monopolistic practices and unfair
competition,
(vi) to issue guideline and or publication, and
(vii) to prepare periodical report to be submitted to the President and State Legislative Assembly.. KPPU is organized into
Commission Members and Secretariat. Its members are appointed and dismissed by the President upon agreement of the State
Legislative Assembly. Its Chairman and Vice Chairman are elected by the commission members.
|
|
"Ladies and Gentlemen, welcome to this online discussion on Competition Policy and Regulation, which is the training theme for 2007. As you are all aware, the purpose of this online discussion is to stimulate discussion on this topic ahead of the EAPIRF AGM and the Core Training Program that will occur later this year. This online discussion will provide course facilitators with the opportunity to assess the needs of members with regard to this topic and allow facilitators to prepare course content and materials to ensure that member’s training needs are met.
Speaking generally, a proper grounding and understanding on competition policy and regulation is desirable for regulators and economists working within the public services, as competition policy and regulation affect the efficiency and productivity of the economy as a whole and on the overall welfare of society.
It is well known that under competitive markets, society’s overall welfare is maximized as goods and services are delivered to consumers at prices close to marginal costs, and at high standards of service.Therefore competition policies should generally be aimed at protecting and encouraging competition, and should be focused upon lessening or removing impediments to competition.
Where competitive markets are not possible, such as in the case of utilities, effective regulation is needed to mimic competitive market conditions to ensure that society continues to obtain the maximum possible welfare outcome given the constraints.
A thorough understanding of this topic will be beneficial for EAPIRF members as this will assist them in making sound regulatory decisions in their jurisdictions.
I encourage every EAPIRF member to participate in this online discussion to learn more about Competition Policy and Regulation. “
Thomas Abe
|
