CN10 - Indonesian Competition Authority imposes fines for bid rigging conduct
13 October 2021
The Indonesia Competition Commission ("ICC") has imposed significant penalties on several Indonesian entities for bid rigging conduct in relation to three separate government tenders related to port and school facility construction. In a fourth case, the Commercial Court upheld the ICC's decision against a party that had engaged in bid rigging conduct in the context of hospital construction tender.
Key takeaways
- Article 22 of the Indonesian Competition Law prohibits business actors from conspiring with other parties to arrange or determine the winner of a tender where this may result in unfair business practices.
- Alongside delayed notifications for merger control filings, enforcement actions against bid-rigging conduct have historically accounted for a significant proportion of the ICC's enforcement activities.
- Pursuant to the Penalty Guidelines, parties found to be in violation of the Indonesian Competition Law must pay fines imposed by the ICC no later than 30 days after the ICC's decision is handed down. In addition, parties are obliged to pay 20% of the total penalty in the form of bank guarantee before filing an appeal against an ICC decision.
The ICC has imposed penalties on several Indonesian entities for bid rigging conduct in relation to three separate tenders. The ICC imposed penalties on the colluding parties as follows:
| Bid rigging in port construction tender |
Total – IDR 1,820 million (approx. USD 127,000) |
| Bid rigging in school facilities and infrastructure tender |
Total – IDR 4,030 million (approx. USD 281,000) |
| Bid rigging in port construction tender |
Total – IDR 3,250 million (approx. USD 227,000) |
In a fourth case, the Commercial Court at the Medan District upheld the ICC's decision against PT Mina Fajar Abadi for conduct in violation of Article 22 of the Competition Law in the context of a hospital construction tender.
Pursuant to the Regulation on Guidelines for the Imposition of Penalties for Violations of the Law on the Prohibition of Monopolies and Unfair Business Practices ("Penalty Guidelines") parties must pay the fines imposed by the ICC no later than 30 days after the ICC's decision is handed down. Any delayed payment may be subject to a fine for delay of 2% per month of the value of the fine. In addition, under the Penalty Guidelines parties are obliged to pay 20% of the total penalty in the form of bank guarantee before filing an appeal against an ICC decision. An appeal will not be filed if the bank guarantee letter is not submitted within 14 days after the ICC announces its decision.
Concluding remarks
The ICC's ongoing commitment to crack down on collusive conduct, particularly in the context of government tenders, continues. With decisions of the ICC being upheld by the Commercial Court, this will instil a great degree of confidence in the ICC as it continues to investigate entities for breach of the Indonesian Competition Law.
