What you need to know
- The implementation of the Indonesian Omnibus Law on 2 November 2020 saw some major changes to the Law No. 5 of 1999 on Anti-Monopoly and Unfair Competition Law (Competition Law).
- These include: (a) that appeals against decisions of the Indonesian Competition Commission are no longer heard by the District Court but by the Commercial Courts; and (b) administrative fines are no longer capped at IDR 25 billion.
- Details relating to the changes outlined above were recently clarified and explained by way of: (a) a circular was published by the Supreme Court on 2 February 2021 (SSCL 1/2021); and (b) regulations published by Government of the Republic of Indonesia on the same date (GR 44/2021).
- These changes mark the Indonesian Government's efforts not only in terms of streamlining enforcement processes but also deterring anticompetitive conduct by giving the Indonesian Competition Commission the authority to issue potentially larger fines.
- Businesses should note these significant legislative changes and consider implications to their day to day operations.
This article outlines the clarifications and explanations outlined in each of the SSCL 1/2021 and the GR 44/2021.
SSCL 1/2021
Article 118 of the Omnibus Law stipulates that appeals against Indonesian Competition Commission decisions are to be lodged and adjudicated by the Commercial Courts. Previously these appeal decisions were lodged to, and adjudicated by, the District Courts.
Pursuant to the SSCL 1/2021:
- District Courts will no longer accept cases appealing Indonesian Competition Commission decisions from 2 February 2021;
- District Courts which accepted cases appealing Indonesian Competition Commission decisions prior to 2 February 2021 will complete their examination and decisions on such cases;
- the Commercial Courts will accept, examine and decide cases appealing Indonesian Competition Commission decisions from 2 February 2021; and
- unless otherwise specified by the Omnibus Law, procedures for accepting objections to Indonesian Competition Commission decisions by the Commercial Court will be conducted in accordance with the Supreme Court Regulation No. 3 of 2019 regarding Procedures on Submission of Objections Against Indonesian Competition Commission (SC Reg 3/2019).
GR 44/2021
Pursuant to GR 44/2021:
- Applicants may submit an appeal against the decision issued by the Indonesian Competition Commission to the Commercial Court of the applicant's domicile no more than 14 business days after the decision was received;
- The adjudication process which takes place at the Commercial Court will include consideration of various factors including material facts as outlined in the relevant Indonesian Competition Commission decision; and
- The adjudication process will be complete within 3 to 12 months in accordance with civil procedural law.Note that the District Courts were given only 30 business days to complete adjudication of appeals; and
- Subsequent appeals against Commercial Courts decision must be made to the Supreme Court of the Republic of Indonesia within 14 business days after the decision is received by the applicant.
GR 44/2021 also sets out the types of administrative sanctions that the Indonesian Competition Commission may order for breaches to the major prohibitions of the Competition Law (ie, including the prohibition on cartel conduct, abuse of dominance and anticompetitive mergers):
- revocation of agreements (including merger agreements);
- order to cease business activities (including vertical integration and abuse of dominance);
- ordering the payment of damages;
- ordering the payment of fines from a minimum of IDR 1 billion (~USD 70,000) to 50% of net profits acquired in the relevant market during the offending period or 10% of total sales in the relevant market during the offending period.
GR 44/2021 also sets out the factors to be considered when determining the appropriate type and degree of sanctions. These include:
- The degree of seriousness of the offence;
- Whether the respondent company is still operating; and/or
- Any other "well-founded" considerations and reasons.
Finally, GR 44/2021 also outlines the way respondents may make payment for fines. Respondents must issue a bank guarantee of up to 20% of the fines within 14 business days of notification of receipt of a sanctions decision from the Indonesian Competition Commission; before making arrangements to pay the remainder of the fine. GR 44/2021 does not, however stipulate a minimum amount for the bank guarantee. The power to determine this minimum amount is likely to fall under the discretion of the Indonesian Competition Commission.
Conclusion
Each of SSCL 1/2021 and GR44/2021 are very helpful in terms of providing businesses with some degree of certainty and clarity as to the relevant procedures and processes, following the changes to the Competition Law.
Having the Commercial Courts adjudicate on competition appeals process is a welcome change as judges sitting on those courts are generally more well versed with commercial laws. However, the longer process of the appeal process may be a double edged sword – on one hand this allows the court more time to consider the issues before handing down a decision and on the other hand, this means that appellants will have to wait for a longer period before obtaining the outcome.
On fines and other sanctions, the GR44/2021 mandates that the minimum amount of fines to be imposed is IDR 1 billion (~USD 70,000) and maximum fines could potentially be very high (ie, 50% of net profits or 10% of total sales in the relevant market(s). We expect that fines imposed by the KPPU would be much more significant in the near future.
Authors: Ratih Nawangsari, Partner; Prawidha Murti, Partner; Angie Ng, Counsel; Rizki Rakhim (Imral), Senior Associate and Rika Salim, Senior Associate
