A More Strict Sanctions for the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition

More Strict Sanctions for the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition

To boost the country’s new investments, to promote a healthier business climate and to emphasize fair business competition within the framework of professional and accountable supervision, the government has enacted Law No. 11 of 2020 on the Job Creation (the “Omnibus Law“). The Omnibus Law has amended several laws, including Law No. 5 of 1999 on the Prohibition of Monopoly Practices and Unfair Business Competition (the “Law 5/1999“). As the implementation of the Omnibus Law, the government issued Government Regulation No. 44 of 2021 on the Implementation of the Prohibition of Monopolistic Practices and Unfair Business Competition (the “GR 44/2021“). GR 44/2021 emphasizes various administrative sanctions for any business actor violating the provisions of Law 5/1999.

Previously, Law 5/1999 stipulated that the Business Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha – “KPPU“) has the authority to impose sanctions in the form of administrative actions against business actors who violate the provisions of Law 5/1999 with the imposition of fines from as low as Rp1,000,000,000 (one billion Rupiah) to a maximum value of IDR 25,000,000,000 (twenty-five billion Rupiah). However, the Omnibus Law has changed such provision and removed the maximum amount, which has raised ambiguity among business actors. With the issuance of GR 44/2021 as the implementing regulation of Omnibus Law, the provisions on the imposition of fines have become clearer so that the maximum penalties are as follows:

  • a maximum of 50% of the net profit obtained by business actors in the relevant market during the period of the violation; or
  • a maximum of 10% of the total sales in the relevant market during the period of the violation.

The two of the maximum penalties above are intended to provide a deterrent as the amount of fine imposed will be based on each business actor’s profit or total sales. This provision is expected to provide a greater sense of justice based on the amount of sanctions imposed that are adjusted to each company’s capabilities. Based on Article 14 GR 44/2021, the determination of the amount of the fine above shall be based on various factors, including: (i) the negative impact of the violation; (ii) duration of violation; (iii) lightening and weighting factor; and/or (iv) the business actor’s ability to pay.

GR 44/2021 also provides an opportunity for business actors to submit objections within 14 working days after receiving the notification of the KPPU’s decision. The objection should be submitted to the Commercial Court according to the domicile of the business actor. Formal and material checks will be carried out in at least 3 months and a maximum of 12 months. If some parties object the decision of the Commercial Court, they may submit an appeal to the Supreme Court of the Republic of Indonesia within 14 working days after the Commercial Court decision’s notification is received.

By: Daniel Radityo

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