Cartels, Abuse of Dominant Position and Merger in Indonesia * by Siti Tri Yoelyartini

Transcription

1 Cartels, Abuse of Dominant Position and Merger in Indonesia * by Siti Tri Yoelyartini I. Introduction : Since the Business Competition Supervisory Commission (BCSC) has been established in 1999 (formally on July 8,1999) and has operationalized its duties and authorities in June 2000 (since the commissioners have been appointed by the President of the Republic of Indonesia upon the approval of the House of Representative on June 7, 2000) up to December 2002, there were 55 (fifty five) report, mostly procurement cases have been received by BCSC. Based on these reports, BCSC has decided 9 (nine) cases as follows: 1. The Decision of Commission No. 01/BCSC-L/2000 on Tender Casing and Tubing of PT Caltex Pacific Indonesia; 2. The Decision of Commission No. 03/BCSC-L-I/2000 on Retail Business Activity of PT Indomarco Pristama; 3. The Decision of Commission No. 07/BCSC-L-I/2001 on Tender Procuring of Importing Cow in East Java Province; 4. The Decision of Commission No. 08/BCSC-L/2001 on Tender Procuring Barite and Bentonite in YPF Maxus Southeast Sumatra B.V. company; 5. The Decision of Commission No. 09/BCSC-L/2001 on Tender of Outside Pipe Copper Access Network (OSP-CAN) in PT Telekomunikasi Indonesia Tbk; * Presenting in APEC Training Program on Competition Policy, 5 7 August 2003, Hanoi Vietnam Page 1 of 6

2 6. The Decision of Commission No.10/BCSC-L/2001 on Insurance Company at PT Bank Negara Indonesia (Persero) Tbk; 7. The Decision of Commission No. 01/BCSC-I/2002 on Work Sharing PT Seamless Pipe Indonesia Jaya and PT Citra Tubindo; 8. The Decision of Commission No. 02/BCSC-I/2002 on Cartel of Day Old Chick Company; 9. The Decision of Commission No. 03/BCSC-I/2002 on Tender Offering for PT Indomobil Sukses International Tbk. Actually, there are many cases or behavior of entrepreneurs in Indonesia that related with cartels, abusement of dominant position and merger, but this paper will be focused on three cases as follows : II. Cartel : II.1. Regulation : Article 11, Law No.5,1999 prohibits entrepreneurs to make agreements with other business competitors, with the intention to influence the price by arranging production and/or marketing of goods and/or services, that that can cause of monopolistic practices and/or unfair entrepreneurs. This article assumes an agreement between competing entrepreneurs. Consequently, the implementation of the provision depends on three elements : the participants must be entrepreneurs, they must be in competition with others, and they must agree the agreement or a concerted action. Page 2 of 6

3 II.2. Cases : One of cartel cases that has decided by BCSC is Day Old Chiken (DOC) case. The Public hearing has been held on 16 May 2001 in order to get information about cartel presumption in DOC. BCSC invited stakeholders, they were: Ministry of Agricultural, Head Council of Indonesia Poultry Breeder Association Centre, Husbandry Expert from Bogor Agricultural University, Association of Fodder Entrepreneurs, Association of National Animal Medicine, Association of Indonesia Poultry Entrepreneurs, Charoen Pokphan Indonesia, Ltd., Wonokoyo Rojo Koyo Ltd., and Anwar Sieraa Ltd., Japfa Comfeed Ltd., and Leon Hap. Ltd., From this public hearing, BCSC viewed that the problem was not as simple as it was. So that, the deepest investigation was needed to get the right information. BCSC then formed an investigation team in order to handle this case completely and thoroughly. DOC had been executed un guilty by the Decision of Commission No. 02/KPPU-I/2002 on Cartel of Day Old Chick Company. II.3. Jurisdictional Hurdles : In this case, BCSC has found some meeting among the breeders that is followed by concerted action to control the DOC s price, but BCSC could not get the real evidences, like agreement or testimony of the breeders. On the other hand, The Indonesia Legal System still could not accept circumstances evidences, like concerted action. Page 3 of 6

4 III. Abuse of Dominant Position : III.1. Regulation : Article 25, Law No.5, 1999 prohibits entrepreneurs to use their dominant position, directly or indirectly: a). to determine the trade terms with the intention to prevent and/or to hamper the consumers to acquire competitive goods and/or services, both in prices and quality; or b) to restrict market and technology development; or c)to hamper the entrepreneurs having the potential to become the competitors enter the relevant market. One entrepreneur or a group of entrepreneurs is presumed to have dominant position if he controls 50% (fifty percent) or more of the market share on one type of certain goods or services. Two or three entrepreneurs or groups of entrepreneurs is presumed to have dominant position if they control 75% (seventy five percent) or more of the market share on one type of certain goods or services. III.2. Cases : Based on public report, BCSC has examined PT. Bank Negara Indonesia (Persero) Tbk., one of a public (state owned) entrepreneur related with their insurance policies. In fact, they have pointed only four insurance companies to guarantee their loan, and have refused other insurance companies to join them. They made some requirements which is unreasonable for other insurance companies. Finally, PT. Bank Negara Indonesia (Persero) Tbk. had been executed un guilty by The Decision of Page 4 of 6

5 Commission No.10/BCSC-L/2001, but they had been ordered by BCSC to break their agreement with the four insurance companies that were their partner before, and give a chance to other insurance companies to join them. III.3. Jurisdictional Hurdles : Frankly, it is not easy for BCSC to enforce Article 25, Law No.5, 1999, because dominant position requires a certain value of market dominance, 50% (fifty percent) for an entrepreneur, and 75% (seventy five percent) for two or more entrepreneurs. BCSC needs much time to examine market dominance, and in other side BCSC s activities has limited by a strict period, not later than 30 (thirty) days in preliminary examination, and 90 (ninety) days in further examination. IV. Merger : IV.1. Regulation : Article 28, Law No.5, 1999 prohibits entrepreneurs to conduct mergers or dissolution on companies might cause of monopolistic practices and/or unfair business competition. IV.2. Cases : In fact, although merger has already been practiced by entrepreneurs in many economic sectors, BCSC has not handled merger cases yet, but BCSC has made actively some studies on certain economic sector, like telecommunications, transportation, etc. Page 5 of 6

6 IV.3. Jurisdictional Hurdles: It is caused by lack of law, since there is no implementation of the regulation for merger. Now, BCSC and government are still formulating it. There are two supervision theories for merger, pre notification, and post notification. Both of them have their own advantage and disadvantage. Article 29, Law No.5,1999 states that : mergers or consolidation of companies acquisition of shares as referred to in article 28 causing its assets value and/or sales value to exceed a certain amount, must be reported to The Commission at the latest within a time period of 30 (thirty) days after the merger or consolidation or acquisition has taken place. It is means that Law No.5,1999 uses pre notification system to supervise merger activities. It is not easy for BCSC and government to determine a certain amount of asset value and/or sales value that can be a starting point for pre notification system, because it is related with the real market structure in Indonesia. V. Conclusion: Law No. 5 of 1999 and BCSC face many challenges either procedure, substantive or law enforcement aspects. Therefore, Indonesia must learn from other countries.experiences. Page 6 of 6