This client alert covers amendments to Law No.5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Competition (the “Antimonopoly Law“) made by the Omnibus Law on Job Creation (the “Omnibus Law“), which was passed on 5 October 2020. The Omnibus Law is expected to take effect within 30 days, upon signing by the President.
The Omnibus Law amends several provisions of the Antimonopoly Law:
- Summary: Under the Antimonopoly Law, the Indonesia Competition Commission (the “ICC”), formerly known as the Business Competition Supervisory Commission (the “KPPU“), is authorized to impose administrative financial penalties, which has to-date been the most commonly imposed penalty. The decisions of the ICC are subject to appeal (keberatan) to the courts. In the past, the relevant court having jurisdiction over such appeals was the regular Pengadilan Negeri (State Court), which is the default court for most non-specialized legal cases. Under the Omnibus Law, the authority to decide such appeals has been transferred to the Pengadilan Niaga (the Commercial Court), a more specialized court which is more experienced in commercial affairs, though chiefly in relation to insolvency/bankruptcy and intellectual property disputes.
- Appeals: The period during which the Commercial Court is required to issue its appeal decision has been deleted. The previous deadline was 30 days. However, under the current Supreme Court circular on appeals to ICC decisions, such appeals are limited to a summary review of the case documents produced at the ICC-level. It therefore remains unclear if this development will substantively improve an appellant’s opportunities to present its case to the court in practice.
The Omnibus Law eliminates the 30-day deadline for the Supreme Court to issue its decision at the cassation level, which is the next (after the Commercial Court) and final level of appeal against an ICC decision. This amendment serves to codify the current practice where the Supreme Court has routinely disregarded the cassation deadline stipulated in the Antimonopoly Law. As there is no higher court, the Supreme Court has been free to do this anyway.
- Financial Penalty: Previously, the statutory maximum on financial penalties was set at IDR 25 billion. Pursuant to the amendments made by the Omnibus Law, the statutory maximum has now been deleted, subject to an upcoming government regulation which is expected to generally set out how the financial penalty will be calculated. This raises a number of questions. First and foremost, will there be a limit at all on the maximum amount of financial penalties that the ICC may impose? It is unclear if the government regulation will impose an upper limit on financial penalties. Secondly, what levels of financial penalty should the ICC apply before said regulation is issued? By way of analogy, in the past, the Supreme Court once ruled that the KPPU cannot impose financial penalties for infringements relating to merger control because the relevant government regulation on the thresholds for merger filings had not yet been issued. On this basis, it may be that the previous statutory maximum will continue to apply in practice, until the government regulation is issued.
- Other Penalties: Interestingly, based on the text of the Omnibus Law, all other penalties under the Antimonopoly Law will also be subject to further government regulation. This includes penalties that remain unchanged by the Omnibus Law, such as awards of damages to harmed parties, orders to cease offending actions and nullifications of violating contracts. The Government will have a wide say on how these penalties should be applied. Previously, the ICC made its own policy on penalties. Now, it will have to take into account the Government’s view although it will continue to retain its independence to decide on individual cases.
- Decriminalization: Finally, pursuant to the Omnibus Law, most of the criminal sanctions under the Antimonopoly Law have been repealed. The exception is the penalty for the crime of obstructing an ICC investigation – this is now subject to a fine of up to IDR 5 billion or one year detention in lieu of fine. This amendment under the Omnibus Law essentially codifies current practice, under which criminal prosecution for violations of the Antimonopoly Law were practically non-existent.
Overall, these amendments present significant new considerations for companies when assessing the practical risks that may arise from a violation of the Antimonopoly Law. Generally, this risk has increased due to the elimination of the statutory maximum for administrative fines. Whether such risks may yet be mitigated by the upcoming Government Regulation on the imposition of financial penalties remains to be seen. We will provide you with further updates as they develop.