kompetisia What s New? Competition Advocacy Law Enforcement International Newsletter on Indonesian competition law and policy vol.

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1 kompetisia vol. 02/2010 Newsletter on Indonesian competition law and policy What s New? President supports the harmonization of Competition Policy Law Enforcement The Commission Gave Explanation of its Decision at the South Jakarta District Court Competition Advocacy The Commission for the Supervision of Business Competition and the Indonesian Coordinating Minister for Economic Affairs International Courtesy Visit by the Former Deputy Prime Minister of the Republic of Korea

2 Table of Contents Competition Advocacy The Commission for the Supervision of Business Competition and the Indonesian Coordinating Minister for Economic Affairs The Commission and the Supreme Court Advocacy to the Postgraduate Students of Bandar Lampung University What s New? President supports the harmonization of Competition Policy 3 Tresna P Soemardi and AM Tri Anggraini Chairman and Vice Chairman of the Commission for the Supervision of Business Competition of the Republic of Indonesia 5 International Courtesy Visit by the Former Deputy Prime Minister of the Republic of Korea 11 Law Enforcement Cartel Practices in Medical Checkup Services for Indonesia Migrant Workers The Commission Gave Explanation of its Decision at the South Jakarta District Court Bid Rigging of Clean Water Network Development in Riau Islands 7 7 8

3 President supports the harmonization of Competition Policy What s New? The Commission had a meeting on January 12, 2010, with the President of the Republic of Indonesia, Susilo Bambang Yudhoyono to report on the Commission s performance, challenges and constraints in the year 2009 and presented its work program in At that meeting, the Commission represented by the Chairman and Commissioners, was received by the President who was accompanied by Coordinating Minister for Economic, Hatta Rajasa, Finance Minister, Sri Mulyani, Minister of State Secretary. Sudi Silalahi, Minister of Trade, Mari E. Pangestu, Minister of Justice and Human Rights, Patrialis Akbar, Cabinet Secretary, Dipo Alam, Minister of State Enterprises, Mustafa Abubakar, and State Minister for State Apparatus Empowerment and Bureaucratic Reform, Ernest Evert Mangindaan. During the meeting, the Commission s Chairman, Benny Pasaribu reported the Commission s performance in 2009 that succeeded in increasing the community income saving through the handling of the case, giving the advice and opinions to the government, international cooperation and the publication of textbooks. Benny also delivered six principal programs that have been defined and implemented by the Commission in a planned and measured manner, namely: (i) Law Enforcement; (ii) Delivery of Advice and Opinions to the Government, (iii) Information vol 02/2010 3

4 What s New? Dissemination and Advocacy, (iv) Policies Evaluation; (v) Studies of Industries and, (vi) I n t e r n a t i o n a l Cooperation. Thanks to the good c o o p e r a t i o n a n d coordination with the G o v e r n m e n t, t h e majority of advice and o p i n i o n s o f t h e Commission has been responded positively and have changed s o m e g o v e r n m e n t policies to become more in line with the p r i n c i p l e o f f a i r competition. However, t h e C o m m i s s i o n continues to enhance coordination and harmonization of policies with various government agencies and State Ministries through a series of meetings and hearings. Responding to the report of the Commission, the President appreciated the important roles of the Commission in monitoring the business competition and improving the business competition climate in Indonesia, according to the mandate given by the Law No. 5 Year President stated that the Government appreciated a fair market mechanism and could intervene if considered necessary. On this occasion, the Government also promised to immediately complete the Government Regulation Draft on Merger. The enactment of the government regulation draft is an instrument for the law enforcement greatly needed by the Commission as the competition supervisory agency to enforce Article 28 and Article 29 of Law No. 5 Year 199 to oversee the merger to be done by business actors. Furthermore, the President accompanied by the Chairman of the Commission had press releases at the State Palace shortly after the hearings were completed. In the press release, President stated the important role of the Commission in the development of the Indonesian economy. With the monitoring conducted on the business community in Indonesia, the Commission gives business certainty for business actors, making a fair product price, thus saving expenditure and improve the welfare of the community. The President also said that the Commission has received supports and appreciations from the institutions in the country and abroad, among other, awards as the best business competition supervisory agency in ASEAN and South Asia by the UN UNCTAD (United Nations Conference on Trade and Development). 4 vol 02/2010

5 What s New? Tresna P Soemardi and AM Tri Anggraini Chairman and Vice Chairman of the Commission for the Supervision of Business Competition of the Republic of Indonesia Tresna P Soemardi and AM Tri Anggraini were elected as the Chairman and Vice Chairman of the Commission for the Supervision of Business Competition of the Republic of Indonesia for the period based on the results of an internal c o m m i s s i o n e r s s e l e c t i o n o f t h e Commission held on January 14, The Chairman and Vice Chairman will hold office for 1 (one) year. Tresna Soemardi born in Palembang 51 years ago began his career in a private company, PT. United Tractors, in 1980 as an engineer and at PT. New Module International as a Division Manager in Switching into the research and development field at the Technology Research and Application Agency (BPPT) in 1982 and eventually choose the profession as a lecturer at the Faculty of Engineering, University of Indonesia since 1983 and became professor in March Tresna was also a lecturer and senior advisor at Postgraduate Management Program of Faculty of Economics of the University of Indonesia. In his career, Tresna has been also a Senior Consultant and Instructor in the field of Strategic Operations, Project and Risk Management at the Management Institute of Faculty of Economics of the University of Indonesia ( ). In his career advancement at the University, he has been assigned as the Head of the Planning and Development Board of the University of Indonesia ( ), Institutional Director of UI-BHMN ( ), and the Director of UI National Venture which eventually became PT. Daya Makara UI with his last position as the Deputy Director of Innovation and Business Development ( ). Tresna studied engineering at the Mechanical Engineering of Bandung Institute of Technology and then continued to doctoral program at the Ecole Centrale de Paris-France ( ). Thereafter, he also developed his insight by earning the degree of Bachelor of Economics at the Faculty of Economics of the University of Indonesia in the field of Financial Management and Postgraduate on Environmental Studies of the University of Indonesia. Anna Maria Tri Anggraini was pioneering her career as a lecturer of the year 1988 and since 1990 a lecturer in the Faculty of Law of Trisakti University. Tri Anggraini is also actively teaching at the Graduate School of Law of the University of Indonesia, Krisnadwipayana University and Trisakti University. She conducts various scientific researches, gives seminars and training, writes at various law journals and attends scientific seminars in and outside the country. Her research, among others, on "Economic Law in Indonesia", organized by USAID, the University of Washington School of Law (Seattle), and the University of Indonesia, "Competition and the Market Economy in Indonesia" with the Friedrich Naumann Stiftung (FNS), a speaker at the Asian Law Institute vol 02/2010 5

6 What s New? (ASLI) Conference held in Bangkok and Shanghai. Tri Anggraini was born in Kudus 44 years ago, earned the degree of Bachelor of Law from Gadjah Mada University (1987), Master of Law at the Tarumanagara University (1995), and Doctoral degree in Economics Law from the University of Indonesia (2003). With a vision to improve the behavior of business actors and improve the welfare of the People, as the chairman and vice chairman of the Commission, Tresna P. Soemardi and Tri Anggraini have duties to continue the fair competition supervision agenda for the welfare of the people in Indonesia. Work Agenda of the Chairman and the Vice Chairman of the Commission for the Supervision of Business Competition of the Republic of Indonesia, Period On January 14, 2010 the Commission has elected a new Chairman and Vice Chairman for the period Based on the resolution of the commissioner meetings, Tresna P. Soemardi was elected as the Chairman of the Commission and A.M. Tri Anggraini as the Vice Chairman. New Chairman and Vice Chairman have been set the Commission s work priorities for the year 2010, namely: -Focusing on strategic matters pertaining to people's basic needs; -Eradication of abuse of administrative power by procurement officials in tender conspiracy -Strengthening the substantial law and procedural law; -The integration of the Commission law enforcement in a competition law enforcement system along with other law enforcement agencies; -Harmonization of government policy according to the principles of fair competition; -Strengthening the institutionalization of the Commission. In the first point, the Commission supports the priorities of law enforcement by providing a bigger space of research and study with the approach of Structure - Conduct - Performance (SCP) so that the approach to economic analysis will become more dominant and the initiative case will increase. While the second point, the Commission considers that public officials who facilitate the occurrence of the tender conspiracy, should still get the same sanction with business actors in accordance with Article 47 of Law No. 5 Year 1999, including orders to stop activities that are proven to cause or lead to monopolistic practices and unfair competition and has proved detrimental to the community; determining compensation payments, the imposition of fines at least IDR 1 billion and at most IDR 25 billion IDR, because base on the facts that the public officials have acted as business agents who carry on economic activities. Related to the third and fourth points, the Commission plans to implement an integrated competition Justice System through: 1.The enactment of procedural law No.1 Year 2010 concerning Procedures for Handling Case effectively on April 5, 2010; 2.Building cooperation and coordination and signing of the MoU with the Indonesian National Police, Attorney Office, and Financial Audit Body (BPK); 3.Preparing the instrument of the organizational unit on Notification and Assessment of Mergers and Acquisitions as an effort to anticipate the application of the Government Regulation Draft on Merger which is currently in the process of ratification; 4.Encourage the amendment of Law No. 5 / 1999 primarily to strengthen the authority, the judicial procedure, as well as institutional position of the Commission so that its role can be optimized. Meanwhile, for the fifth and sixth points, the Commission plans to form a joint forum of competition policy under the coordination of the Coordinating Minister for Economy. This is done in order to harmonize the government policies to be in line with the principles of fair competition. With support from all parties the Commission is optimistic that the entire agenda of work will be achieved well. 6 vol 02/2010

7 Cartel Practices in Medical Checkup Services for Indonesia Migrant Workers Law Enforcement The Commission for the Supervision Of Business Competition (the Commission) conducts an examination to 26 reported parties in an effort to investigate alleged violations of Article 5 (on Price Fixing) and Article 11 (about Cartel) of Law No. 5 Year 1999 concerning Prohibition of Monopolistic Practices and Unfair Business Competition. The violation occurred in the practice of medical check-up services for prospective Indonesian migrant workers to be employed at the Middle East, performed by GAMCA (Gulf Approved Medical Centre Association), along with 25 clinics / medical centers to which they are members. GAMCA is an association of medical check-up institutions for Immigrant Worker Candidate (CTKI) which is profit-oriented and has met the requirements and received approval from the Gulf Cooperation Council to address worker health checks for the Middle East region. In this process, 25 clinical / medical centers that are members of GAMCA have set up the tariff for medical check-up ranging from IDR 300,000 to IDR 350,000, in order to maintain the quality of medical check-up. The reported party has also made a verbal agreement to determine the distribution of quotas (equal distribution) for worker s medical check-up every month. It was done with a reason to increase the quality of the medical check-up and control on Indonesian worker s medical checks at each clinic. Based on the investigation conducted by the examining team of the Commission, the Commission Council decided that the 25 clinics / medical centers which are the member of GAMCA and who become the reported parties have been found to have violated Article 5 and Article 11 of Law No. 5 Year Furthermore, the Commission council ordered the 25 reported parties to cancel the tariff and quota agreement in the medical check-up of Indonesian prospective migrant workers to be employed in the Middle East, and that each reported party announced the cancellation of the deal in three national newspapers at the latest 30 days since this decision legally takes into effect. The Commission Gave Explanation of its Decision at the South Jakarta District Court On January 11, 2010, the South Jakarta District Court conducted a initial trial of the Carrefour s Objection to the decision of the Commission No.09/KPPU-L/2009 about the acquisition of PT Alfa Retailindo Tbk by PT Carrefour Indonesia, with the District Court s case number: 1598/Pdt.G/2009/PN.Jkt.Sel. The trial was presented by the plaintiff, i.e. Carrefour s legal attorney, and the defendant, the Commission for the Supervision of Business Competition. In a trial that lasted two hours, the Commission presented a resume regarding the decision of the Commission No.09/KPPU -L/2009 and explanation on the definition of the relevant market. vol 02/2010 7

8 Law Enforcement By virtue of Article 1 point 10 of Law No. 5 Ye a r , t h e relevant market shall be the market related to a certain marketing scope or area by business actors for goods and or services of the same or similar type or substitutes for such goods and or services. The relevant market consists of: (i) Upstream relevant market, namely the market of goods supply at hypermarkets and supermarkets in the hypermarkets and supermarkets retail services market throughout Indonesia (the customers are suppliers), and (ii) the downstream relevant m a r k e t, n a m e l y h y p e r m a r k e t s a n d supermarkets in a radius of 4 km for areas of Jakarta and 5 km for areas outside Jakarta. Therefore, based on the results of the examination, the Commission states that PT. Carrefour Indonesia is legally and convincingly proven to have violated Article 17 paragraph 1 on Monopoly which contains prohibition to business actors to control the market and Article 25 paragraph 1 a letter regarding the use of dominant position to set the trading terms. Meanwhile, Carrefour's legal attorney only submitted objection document to the Panel of Judges and gave no explanation when the trial was taking place. Further, the Panel of Judges ruled that the verdict of the Carrefour s objection will be pronounced February 17, Bid Rigging of Clean Water Network Develop ment in Riau Islands The Commission decides four business actors (PT Dwitama Fortuna Perkasa, PT Graha Citra Perdana, PT Eka Balingga and PT Bintan Alam Jaya) and Procurement Government Unit, Lingga Regency, Riau Islands (tender committee), as the Reported Parties on cases of the alleged violations of Article 22 of Law Number 5 Year 1999 regarding conspiracy. This alleged conspiracy occurred in the tender for the construction work of clean water network in the Singkep Sub-District, Lingga Regency, Riau Islands. In the case number 12/KPPU-L/2009, the Commission has examination and assessed the alleged horizontal conspiracy among the four business actors and the alleged a vertical conspiracy between PT Dwitama Fortuna Perkasa and tender committee. Based on the results of the examination conducted by the Commission s examining team and upon receiving the response/defense that has been presented by the Reported Parties, the Commission Council assesses that PT. Dwitama Fortuna Perkasa, PT Graha Citra Perdana, and PT Eka Balingga was proven to have jointly developed the bidding documents and fix the price to set PT Dwitama as the tender winner. The three Reported Parties were also proven to have falsified the bid documents of PT Bintan Alam Jaya to arrange the tender winner. While regarding the alleged vertical conspiracy, the Commission Assembly found evidence that the tender committee has committed discriminatory action by letting PT. Dwitama and PT Graha Citra participate in the tender although both companies have the same shareholder affiliation and there are mistakes in its bid documents. This discriminatory action is identified as a form of conspiracy to set PT Dwitama to win the tendering process. Based on these facts, the Commission Assembly states in its decision that PT Dwitama, PT Graha Citra, PT Eka and the Tender Committee have been legally and convincingly proven to have violated Article 22 of Law No. 5 Year The three companies are also obliged to pay the fine and not permitted to participate in any tender at Lingga Regency for one year after this decision is put into force. The Commission Assembly also recommends that the Head of Government Goods/Service Procurement Unit of Lingga Regency as the superior to impose administrative sanctions against the Tender Committee in accordance with laws and regulations. 8 kompetisia vol 02/2010

9 The Commission for the Supervision of Business Competition and the Indonesian Coordinating Minister for Economic Affairs Competition Advocacy Hatta Rajasa, the Coordinating Minister for Economic Affairs of the Republic of Indonesia, conveyed his appreciation and respect on the performance and achievements of the Commission within the last 10 years. This was expressed in bilateral meetings conducted by the two institutions, namely the Commission and the Coordinating Ministry for Economic Affairs on January 26, In this meeting, the Commission was represented by its Chairman period 2010, Tresna P. Soemardi, and the ranks of the Commissioner and the Secretariat. The Commission expressed its expectation in the meeting that the Coordinating Minister for Economic Affairs could provide support for the vision and mission of the Commission in realizing the people's welfare through fair competition. Through the enforcement of competition law, the Commission contributes significantly to improving the economic structure of Indonesia, among others, the completion of the SMS cartel case, aviation tariff, fuel surcharge, or cooking oil. The Commission is also active in the study of various industrial sectors in Indonesia and will provide advice to relevant government policies that conflict with the values of fair competition. On this occasion, the Coordinating Minister also requested that the commission could intensively control the level of basic goods prices in the market to prevent monopolistic practices or unfair business competition. vol 02/2010 9

10 Competition Advocacy The Commission had an a u d i e n c e w i t h t h e S u p r e m e C o u r t o n January 5, 2010, in an effort to create a harmony a n d i m p r o v e t h e coordination between the Commission and the S u p r e m e C o u r t i n upholding the business competition law in Indonesia. In this meeting, the Commission represented by its Chairman, Benny Pasaribu accompanied by the commissioners and secretariat staff, while the Supreme Court was represented by its Chairman, Harifin A Tumpa and its staff. In the meeting, the Commission expressed its expectation that the Supreme Court can provide The Commission and the Supreme Court support on the vision and mission of the Commission to realize the welfare of the people through fair competition. To enhance the capacity of the judges on the competition law, the Commission regularly conducts socialization and training for judges, both at the District Court and in the Supreme Court. Advocacy to the Postgraduate Students of Bandar Lampung University On January 18, 2010, the Commission received a visit from post graduate students of the Faculty of Law, Bandar Lampung University for an audience. During the visit, the students get exposure on the role and function of the Commission, as well as its important role in building the Indonesian economy through business competition. The Commission also explains the mechanism and process of handling cases of business competition at the Commission. The case comes from public reports and the results of monitoring and assessment conducted by the Commission to various industries in Indonesia. The case handling process ends with the issuance of the decision by the assembly commission of the Commission. Any legal action against that decision, the appeal may be filed through the District Court and the appeal to the Supreme Court. Audience with the students is one of the advocacy activities undertaken by the Commission to socialize the Indonesian competition law and policy. In this audience, students asked about the existence and authority of the Commission in the state structure and its peculiarities in procedural law at the Commission. 10 vol 02/2010

11 International Courtesy Visit by the Former Deputy Prime Minister of the Republic of Korea The Commission for the Supervision of Business Competition (the Commission) represented by its Chairman and its Commissioners and the Secretariat, received a visit from the Korea Development Institute (KDI), who consists of the former Deputy Prime Minister of the Republic of Korea, Dr. Okyu Kwon, along with the staff on Thursday, January 21, During the meeting, the Chairman of the Commission expected continuous cooperation between Indonesia and Korea, especially through the Commission and Korea Development Institute (KDI) in the development of science and law enforcement on business competition. This meeting was a part of the closing of the Knowledge Sharing Program (KSP) which is implemented by the Government of Korea, and Indonesia through the KDI, and the Ministry of Finance, where the Commission becomes one of the stakeholders. In this meeting, the two delegations discussed various strategic issues related to the development of competition law and policy, law enforcement methods, as well as the authority owned by the business competition institutions in Korea and Indonesia in the enforcement of competition law. vol 02/

12 Competition is about price, supply, selection and service. It benefits consumers by keeping prices low, avaibility, quality and choice of goods and services high. KPPU-RI Commission for the Supervision of Business Competition Republic of Indonesia KPPU Building, Jl. Ir. H. Juanda No. 36, Central Jakarta Phone , , Fax Regional Representative Offices Surabaya Bumi Mandiri Building, Jl. Basuki Rahmat No Surabaya East Java Phone , Fax kpd_surabaya@kppu.go.id Medan Jl. Ir. H. Juanda No. 9A Medan - North Sumatera Phone , Fax kpd_medan@kppu.go.id Balikpapan BRI Building 8th Floor, Jl. Sudirman No. 37 Balikpapan East Kalimantan Phone , Fax kpd_balikpapan@kppu.go.id Makassar Menara Makassar 1st Floor, Jl. Nusantara No. 1 Makassar - South Sulawesi Phone , Fax kpd_makassar@kppu.go.id Batam Graha Pena Building 3rd A Floor Jl. Raya Batam Center, Teluk Tering, Nongsa Batam Kepulauan Riau Phone , Fax kpd_batam@kppu.go.id