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In brief

The new regulation was intended to facilitate a more through appeals process, following other recent legislative changes to the appeals procedure. However, companies facing investigation should factor in the possibility that appeal hearings may continue to be limited to a short review of the KPPU files. This includes  gathering as much supporting evidence as early as possible and ensuring these are all presented in a timely fashion during the investigation phase.


Contents

  1. In more detail

In more detail

During the first week of November, the Supreme Court held a series of events to publicize its Regulation No. 3 of 2021 (“Regulation 3/2021“) on the procedure for hearing appeals against decisions of the Business Competition Supervisory Commission  (commonly known as KPPU) in the commercial courts. This regulation is dated 17 September 2021 and revokes Supreme Court Regulation No. 3 of 2019 (“Regulation 3/2019“) on appeal procedures for KPPU decisions.

The background of Regulation 3/2021 is the issuance of the Omnibus Law, which amended Law No. 5 of 1999 (“Antimonopoly Law“), by among other things, moving the authority to hear appeals against KPPU decisions from the civil courts (pengadilan negeri) to the commercial courts (pengadilan niaga), and ending the rule that these courts must issue their decisions within 30 days. Then, Government Regulation No. 44 of 2021 (“Government Regulation 44/21“), which implemented provisions of the Omnibus Law relating to the Antimonopoly Law, provided that commercial courts must try appeal cases for at least three months and a maximum of one year and must examine the substance, not just the formality of appeals.

The below sets out how Regulation 3/2021 interprets the provisions of the Omnibus Law and Government Regulation 44/21, and the impact of this regulation on the primary legal issue of how the appeal process can improve by ensuring a high quality review and due process guarantees for the appellant.

Extension of the appeal examination procedure

Under Regulation 3/2019, examination of appeals was conducted solely by examining KPPU decisions and the case files without further hearings. This restriction was justified on the grounds that the civil courts had to strictly abide by the 30-day time limit for them to issue their decisions, mandated by the Antimonopoly Law. Consequently, there were concerns that the courts were sacrificing quality and due process of law in order to meet the 30-day deadline. As the courts merely read the KPPU dossiers, the appellant did not have adequate opportunity to present its case.

It was hoped that the 3-12 months timeline provided by Government Regulation 44/2021 would encourage the commercial courts to spend more time hearing cases, and present more opportunities for appellants to present their cases, such as by cross-examining witnesses and experts.

Regulation 3/2021 dutifully restated the 3-12 months examination period provided by Government Regulation 44/2021. However it opens the possibility for the courts to issue their decisions within less than three months, as long as the panel of judges provided justification for it.

That provision of Regulation 3/2021 opens up the possibility that commercial court appeal trials may continue to be limited to a quick review of the KPPU dossier, allowing little chance for thorough examination by the courts and contest by the appellants.

The new cross-examination procedure

Regulation 3/2021 also dutifully restated the provision of Government Regulation 44/2021 that appeal trials must examine both the substance and the formal aspects of each case. The specific reference to the formal aspects of the case (so called material aspect) gives hope that the commercial courts will allow a much more thorough re-examination of cases, perhaps allowing for cross-examination of witnesses and open review of other evidence.

As it is, Regulation 3/2021 limits the examination of witnesses and experts to those who were put forward by the appellant during the KPPU examination process, but whose explanations were not included or considered in the KPPU decision, or they were not given the opportunity to provide explanations. The appellant is not allowed to submit any evidence that was not previously submitted to KPPU.

So Regulation 3/2021 does provide for the possibility to correct omissions made by KPPU during its examination. Witnesses and evidence that were not previously allowed or considered by KPPU may now be examined and considered by the commercial courts on appeals. At the same time, Regulation 3/2021 also specifies that that examination is subject to the courts’ discretion, and it does not specify that evidence that KPPU has considered must be presented again before the commercial court panel. Overall, the commercial courts are still allowed to simply rely on the KPPU dossier to make their decisions.

Civil review abolished

After an appeal decision by a commercial court, the appellant may submit a cassation. Under the Supreme Court Law (Law No. 14 of 1985, as amended in 2004 and 2009), there is a general right to ask for a civil review against a cassation decision, an extraordinary measure that is available if certain strict criteria are met. However, Regulation 3/2012 provides that appellants cannot apply for civil review at all. Cassation decisions are not subject to this extraordinary measure. While in reality success at this stage is rare, this is a concerning development because the Supreme Court has effectively denied wholesale a legal redress that is still mandated by law.

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Author

Wimbanu Widyatmoko is a senior partner in Mergers & Acquisitions Practice Group. He has experiences in handling various legal corporate/commercial issues, corporate Indonesian tax and international tax planning on inbound and outbound investment. Wimbanu has been consistently ranked as a leading lawyer by leading legal directories, such as Chambers Asia, Asia Pacific Legal 500, AsiaLaw Profiles and International Tax Review for several years.

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