Verent Nathalia Putri April 26th, 2019

NPM 1606897971

COMPETITION LAW
TAKE HOME MID TERM TEST

1. Please mention the prohibited activities which regulated in Law No. 5/1999!
Answer:
Law No. 5 of 1999 put ban on prohibited acts in competition law in which apply to a single
entrepreneur. The first prohibited act, is one that results in an entrepreneur having
monopoly power through unfair competition, or known as “monopoly”, as mentioned
under Article 17. This article also provides a rebuttable presumption of the existence of
monopoly with the following conditions: (a) the said goods and/or services do not have
substitutions at that time; or (b) it causes other entrepreneurs to not be able to enter business
competition for the same type of goods and/or services; or (c) one entrepreneur or one
group of entrepreneurs controls more than 50% (fifty percent) of the marketing share of
one type of certain goods or services.

The second prohibited activity is performed in monopsony activities, as mentioned under

Article 18. This article prohibits entrepreneurs from controlling the supplies receiving or
being the sole buyers of goods and/or services in the relevant market which can cause
monopolistic practices and/or unfair business competition. Moreover, the second
paragraph of Article 18 emphasizes a rebuttable presumption of the occurrence of
monopsony act with being suspected or considered being the sole buyers if one
entrepreneur or a group of entrepreneurs controls more than 50% (fifty percent) of the
market share of the same type of certain goods or services.

The third prohibited activity as regulated in this Competition Law concerns with market
controlling. This market control/domination is performed unilaterally or jointly by an
entrepreneur with other business person(s), as regulated under Article 19. This controlling
of markets by entrepreneurs can be done in any one of three ways. First of all, as stated
under Article 19 which prohibits entrepreneurs from conducting one or more activities,
 either separately or jointly with other entrepreneurs, which can result with monopolistic
practices and/or unfair business competition by: (1) refusing and/or hampering certain
entrepreneurs from conducting the same type of business in the relevant market; or (2)
hampering the consumers or clients of their company’s competitors from conducting any
business contact with those company’s competitors; or (3) restricting distribution and/or
selling of the goods and/or services in the relevant market; or (4) conducting
discrimination practices against certain entrepreneurs. Besides, Article 20 prohibits the
intention of predatory pricing by entrepreneurs to eliminate or end business competitors in
the relevant market by selling goods and/or services without making any profits or by
setting a very low price which results with monopolistic practices and/or unfair business
competition. Other prohibited conduct in the terms of market controlling conducted by
entrepreneurs is regulated under Article 21 of the Law. This article prohibits misleading
production cost and other related expenses for the relevant goods or services.

The last but not the least banned conduct by entrepreneurs as stipulated under this
Competition Law is concerning conspiracy. This conspiracy act is performed with other
party in deciding a winner of a tender/bidder resulting unfair business competition, as
mentioned under Article 22 of the Competition Law. The conspiracy act as mentioned in
Article 22 of the Law is elucidated further in Article 23 and Article 24 of Competition Law.
First, entrepreneurs may not conspire in order obtain their business competitors’ trade
secrecy. Other than that, entrepreneurs are prohibited to conspire business competitors’
impair production or marketing of goods in order to reduce the quantity, quality, and the
required delivery punctuality of the goods and/or services offered or supplied in the
relevant market.

2. What is KPPU’s duty if there is a case of business competition? Please make

comparison to Australia Competition and Competition Commission if there is case in
business competition?
Answer:
In accordance with Law No. 5 of 1999 on Competition Law, article 35 regulates about
duties of Commission (KPPU), which are:
 1. undertaking evaluation or examination upon any contract, conduct, and abuse of
dominant position that may result in monopolization and/or unfair business
competition;
2. contributing advises and considerations over Government policies with regard to
competition issue;
3. preparing any guidance and/or publication related to this law;
4. providing a periodical report on achievements to President and the legislative body;
5. taking any action/measure in accordance with the Commission authorities
stipulated in the Law.

Comparing to Australia law enforcement in handling business competition, Australian

Competition and Customer Act (2010) regulates about the Commission namely Australian
Competition and Customer Commission (ACCC) in Part II of the Act. In particular, the
ACCC itself promotes competition and fair trade in markets to benefit customers,
businesses, and community, as well as national infrastructure services. The primary
responsibility of this ACCC is peculiarly sharing similar responsibility by which to ensure
that individuals and business comply with Australian Competition and Customer Law
(2010). ACCC and KPPU are both independent authority of government. However, ACCC
is organized to provide protection not only within scope of entrepreneurs but also that of
customers (customer rights, industry regulation, prevent illegal anti-competitive behaviour,
etc), compared to KPPU that is only specialized to protect the prohibited acts and contracts
that may inflict unfair business competition.

Furthermore, under Indonesian Competition Law (Law No. 5 of 1995) regulates about
procedures of case handling within scope of business competition and also creates new
judiciary proceeding in the field of business competition which examined and decided by
KPPU through KPPU Decision. KPPU is given authorities to conduct investigations,
prosecutions, and consultations. Beyond than that, KPPU as extra auxiliary organs is given
authority to hear and decide cases which it shall consider this main principle, namely
principle of equilibrium in interest.
 Meanwhile, ACCC under Australian Competition and Customer Act is granted with
educative role to educate both customers and business as to their rights and responsibilities
under the Act. ACCC also shares staff and premises in Australian Energy Regulator which
is responsible for economic energy regulation. ACCC may conduct examinations and
reports which become their function as being responsibility to the Minister. Other than that,
slightly different enforcement as in Indonesian Commission, ACCC is not allowed to
exercise judiciary proceeding under the Commission’s authority, as it become the
jurisdiction of Federal Court to decide the case and impose penalties. ACCC that
committed in bringing court actions against companies that breach the Act can be imposed
with sanctions for its non-compliance that further explained under the Act.

3. Related case in Yamaha Indonesia Motor Manufacturing and Astra Honda Motor
which doing agreement about sell prices. What the category into that prohibited
action? Please explain with the legal basis!
Answer:
Based on relevant sources in regard with the aforementioned case, PT. Yamaha Indonesia
Motor Manufacturing (or known as “Yamaha”) and Honda (or other competing company
or known as “PT. Astra Honda Motor”) entered into an agreement or conspiracy for price
fixing for automatic scooter 100 – 125 CC in the relevant market. Based on market price,
the product should have been sold for IDR 8.7 million, but Yamaha and Honda put the
price fixing at around IDR 14-18 million. One indicator of this conduct is resulting with
increasing operating profits of Yamaha and Honda which caused no considered
competition prices. Although Yamaha and Honda enjoyed operating profits from this price
determination, the sales of the concerned product declined.

The conduct of those two companies are business conspiracy which mentioned under
Article 1 of Law No. 5 of 1999 (or known as “Competition Law”) by which defined as a
form of cooperation with the intention to control the relevant market on the sole interest of
the conspiring companies/entrepreneurs. In addition to that, the business conspiracy that
conducted by those two companies for price fixing is violating Article 5 paragraph 1 of
Competition Law as the act of price fixing. Referring to Article 5 of Competition Law, it
is not clearly mentioned about the definition of price fixing, yet from this article it can be
elucidated that price fixing that set by the parties in the same product in same relevant
market by which the price is not only increased with a certain amount but also stabilized
as a price fixing.

To elucidate, the elements of article 5 paragraph 1 of Competition Law in relation to the

banned activity committed by these two companies can be mentioned, as follows:
1. Entrepreneurs
- The elucidation of entrepreneurs are regulated under article 1 paragraph 5 of
Competition Law, which elaborated further, as follows:
o Every individual or business entity: in this element, all reported candidates
are business entities in the form of Limited Liability Companies, so that the
elements of the business entity are fulfilled.
o Whether in the form of a legal entity or not a legal entity: Both Yamaha and
Honda are private business entities incorporated. Therefore, this element is
fulfilled.
o Established and domiciled or conducting activities within the jurisdiction of
the Republic of Indonesia: Yamaha and Honda are major manufacturers of
vehicles carrying out their business activities in Indonesia. Thus, this
element is fulfilled.
o Both alone and jointly through an agreement: It has been explained that
Yamaha and Honda are business entities in the form of a Limited Liability
Company established in the deed of establishment. Thus, this element is
fulfilled.
o Carrying out various business activities in the economic field: Yamaha and
Honda carry out business activities such as running a business activities in
the two-wheeled motorized vehicles manufacturing. Thus, this element is
fulfilled.

2. Making any contract

That agreement between Yamaha and Honda as the act of price fixing which is borne by
cartel agreement, as mentioned under article 11 of Competition Law. However, the
agreement in Business Competition does not need to be in the form of a written agreement
but also an unwritten agreement. The understanding of a contract mentioned in Article 11
of Competition Law is illegal contract by which prohibits in the Law and may cause
monopolistic practices and/or unfair business competition. Thus, there is difference in this
underlying contract that prohibited under Competition Law. This underlying contract is
rarely made in written contract, but could be decided in deal or silent agreement (see Article
1338 Indonesian Civil Code) in between two cartel parties for specified conditions and
purposes. The understanding of cartel silent contract is explained by Judge Takdi, Supreme
Court Judges, "Karena pelaku usaha dengan pelaku usaha lain dan pihak lain akan
melakukan perjanjian diam/silent agreement, yang diikuti oleh concerted action atau
perilaku yang saling menyesuaikan, misalnya penggunaan dan pemanfaatan orang-orang
tertentu yang sama,". Other than that, the agreement of price fixing itself cannot be
concluded in joint partnership agreement or any agreement that made based on existing
law.

3. Business competitors
As explained in the elucidation of article 5 of Competition Law, it is stated that business
competitiors are other business actors in one relevant market share. The competitors in this
case are Yamaha and Honda which both are producers of automatic scooter in motorcycle
industry in Indonesia (same relevant market), then they will compete with each other and
each seek profit. Thus, the element of this competing business actor is fulfilled.

4. Fixing prices
The fixing prices is price for automatic scooter 100 – 125 CC which based on market price,
the product should have been sold for IDR 8.7 million, but Yamaha and Honda put the
price fixing at around IDR 14-18 million. Prahosto W. Pamungkas, expert of Competition
Law reveals that the business actors conducting price fixing does not have to determine
certain similar nominal, the core issue is whether the implied price of one object is
prohibited under Competition Law. Thus, this element is fulfilled.
 5. Certain goods and/or services
That automatic scooter 100 – 125 CC has fulfilled the elucidation of goods under article 1
number 16 of Competition Law, as it is movable and tangible goods that traded, used,
utilized, or taken advantaged by the customers or entrepreneurs.

6. Customers
That the traded automatic scooter 100 – 125 CC in this market has been consumed and
used for both for his/her own usage or for other people’s benefits which has fulfilled the
elucidation of customer under article 1 number 15 of Competition Law.

4. Please specify about the Fixed Pricing Procedural Law in Law No. 5/1999!
Price fixing is regulated under article 5 of Law No. 5 of 1999 or referred as “Competition
Law”. Referring to this article, it is not clearly mentioned about the definition of price
fixing, yet from this article it can be elucidated that price fixing that set by the parties in
the same product in same relevant market by which the price is not only increased with a
certain amount but also stabilized as a price fixing. Based on formulation of Article 5
Paragraph (1) of Competition Law means that this prohibition is per se illegal, which does
not require seeing the implications to business competition. Pricing agreements are
prohibited by Law No. 5 of 1999 in context of price fixing will lead to market law being
invalidated about prices formed from the existence of bids and requests. Business actors
are prohibited from entering into agreements with competing entrepreneurs. In addition,
parties which enter into this concerned agreement must compete with each other, meaning
that the entrepreneur is in the same factual relevant market both vertically and horizontally.
Agreements that can be done in writing or verbally.

Price fixing that occurs vertically or horizontally is considered as restraint of trade by

which brings bad effect on price competition. In other words, if price fixing is done, the
individual freedom to determine is reduced. Horizontal price fixing occurs when more than
one company is in the same production stage, then one company with another company is
in competition to determine the selling price of their products at the same level. Meanwhile,
 vertical price fixing occurs when a company that is in a certain production stage,
determines the price of a product that must be traded by another company which is in a
lower production stage.

5. Please explain the signs of conspiracy! Why business actors want to make a conspiracy to
make a conspiracy in business competition?
Answer
The definition of conspiracy is regulated under article 8 of Law No. 5 of 1999 or referred
as “Competition Law”. Competition Law bans any conspiracy with the purpose is to obtain
information on the business activities of its business competitors which are classified as
company confidentiality which may cause unfair business competition, as mentioned
under article 23. Company confidentiality is basically the properties of the concerned
business that shall not be opened, stolen, opened or used without the permission of the
company concerned. Confidential information is information that has economic value that
must be kept confidential from parties outside the agreement.

In deciding on conspiracy in tender case, the KPPU uses the legal basis of Article 22 of
Law Number 5 of 1999 which constituting several elements, namely elements of business
actors, conspiring, the existence of other parties, regulating and determining the winner of
the tender, and unfair business competition. The term "business actor" is regulated in
Article 1 number 5 of Competition Law. The term "conspiring" is defined as cooperation
carried out by business actors with other parties at the initiative of anyone and in any way
in an effort to win certain tender participants. In addition, the element of "conspiring" can
also be in the form of:
1. cooperation between two or more parties;
2. openly and secretly take action to adjust documents with other participants;
3. compare tender documents before submission;
4. creating false competition;
5. approve and or facilitate the occurrence of conspiracy;
6. does not refuse to take an action despite knowing or properly knowing that the action is
carried out to regulate in order to win certain tender participants;
7. the granting of exclusive opportunities by tender organizers or parties related directly or
indirectly to business actors participating in the tender, in a way that is against the law.

Besides, in deciding on conspiracy using company confidentiality, the KPPU uses the legal
basis of article 23 of Competition Law which constituting several elements, namely
elements of business actors, conspiring, the existence of other parties, information,
completing activities, company secrecy, and unfair business competition. The term
"business actor" is regulated in Article 1 number 5 of Competition Law. The term
"conspiring" is defined as cooperation carried out by business actors with other parties at
the initiative of anyone and in any way in an effort to win certain tender participants. In
addition, the element of "conspiring" can also be in the form of:
1. Information agreed that hinder competition between competitors include:
a. Inform each other and match price and market data
b. For cartel interests which include:
- joint pricing strategy;
- spending, production and / or joint marketing strategies;
- use of closed agreements, price networks, and sales
2. Information agreed between suppliers and buyers that hinder business competition

http://www.kppu.go.id/id/wp-content/uploads/2012/01/UPLOAD-Draft-Pasal-
23_Rahasia-Perusahaan-Clean-19.01.2012.pdf