Law Number 5 of 1999 on the Prohibition of Monopoly and Unfair Business Practices, as amended by Law Number 6 of 2023 on Job Creation (the “Indonesian Competition Law” or ICL), is the primary law regulating business competition in Indonesia.

The Commission for the Supervision of Business Competition (Komisi Pengawas Persaingan Usaha or KPPU) is the authority responsible for the enforcement of the ICL. The KPPU has the power to summon undertakings, witnesses or experts. If it finds a violation of the ICL, it can impose administrative sanctions, including fines. It has no power to conduct criminal investigations or impose criminal sanctions, since criminal investigations are dealt with by the national police.

Under KPPU Regulation Number 2 of 2023 on Case Handling Procedure that was issued on 31 March 2023 (“KPPU Regulation 2/2023”), private damages claims are possible under proceedings before the KPPU. Parties may file a complaint to the KPPU and seek damages, and the KPPU will decide whether to investigate the complaint further. 

Under the ICL, cartel behaviour is defined as an agreement/conduct entered into/taken by competitors that may restrict competition on the market or cause harm to consumers.

The regulation of cartels under the ICL includes the prohibition of horizontal restrictive agreements in the form of:

• price fixing;
• output restriction;
• closed agreement aimed to restrict collective output of goods and/or services and marketing by several undertakings;
• group boycotts; and
• bid rigging, and other arrangements, conspiracy or concerted practices that may be restrictive to competition in the market, or harmful to consumers.

The law specifies certain conduct may be exempted, which includes agreements or activities:

• intended to implement any applicable laws and regulations;
• related to intellectual property rights;
• related to the application of technical standards of goods or services that do not inhibit or impede competition;
• related to research co-operation intended to improve the standard of life of society;
• related to exports of goods or services that do not disrupt domestic supply;
• made by and between small business undertakings; and
• made by and between co-operatives aimed specifically at serving their members.

Under the ICL, there is no applicable industry-specific infringement or exemption or immunity. 

The ICL is silent on the permitted statute of limitations for cartel arrangements. However, when looking at recent years’ practice, the KPPU would not hesitate to scrutinise allegations of cartel activity that took place more than ten years prior to the investigation. For instance, the KPPU has investigated an alleged market allocation involving several automotive parts companies in a tender that occurred over 15 years ago. The investigation has encountered many hindrances, as most of the important documents are no longer available and many of the witnesses have either been removed from their position or have retired. However, the investigation remains steadfast, and the case has reached the preliminary examination stage.

The ICL generally applies to any conduct that occurs outside Indonesia, providing it has a detrimental impact on the Indonesian market. Based on the recent precedent, even if the defendants are domiciled outside Indonesia but the cartel allegedly affects the Indonesian market, the KPPU may pursue the case by directly enforcing its authority over such defendants (eg, sending summons letters, and requesting information and documents relevant to the allegation). 

The application of the extraterritorial doctrine is not regulated under the ICL.

Although the following precedent was not a cartel case, it is worth noting, since it shows that the absence of a written rule does not discourage the KPPU from exercising its extraterritorial jurisdiction over foreign companies domiciled overseas when they commit an anti-competitive violation that affects the Indonesian market, as happened in KPPU Decision No 7/KPPU-L/2007. In that case, despite investigating Temasek Holdings in Singapore along with several foreign companies over an alleged violation of Article 17 on monopoly practice and Article 25 paragraph (1) on the abuse of dominant position, the principles of comity were not brought forward as a procedural objection.

Therefore, although there has been a precedent in which the KPPU applied the extraterritorial doctrine in its investigation over violation of the ICL, the application of the doctrine remains uncommon. In other words, there has been no precedent on the application of principles of comity, particularly with respect to competition cases in Indonesia.

In light of the COVID-19 pandemic, the KPPU issued a regulation to ease the competition law enforcement, allowing businesses to benefit from relaxations such as:

(a) the possibility to obtain approval of an agreement, activity, and/or the use of a dominant position to handle COVID-19 and/or to increase the economic ability of a business, meaning that it also covers cartel activity as part of the relaxation;

(b) extension of the deadline to file a mandatory post-closing notification to the KPPU between 30 to 60 business days from the effective date; and

(c) extension of the period to implement a written warning in the partnership monitoring procedure from 14 to 30 business days.

Last year, the KPPU issued a new regulation that revokes these relaxations to their original period, including reverting to (i) the deadline to file a post-closing notification to the KPPU; and (ii) the period to implement a warning letter from the KPPU in the partnership monitoring procedure.

Also, early in the COVID-19 pandemic, despite physical limitations, the KPPU resumed its activities virtually by issuing KPPU Regulation No 1 of 2020 on Electronic Case Handling. Under this regulation, merger notifications and reviews, case investigations and hearings, and monitoring of partnership agreements between small and medium enterprises (kemitraan) can now be done via “electronic means”. This regulation, and the use of electronic means for KPPU enforcement, remain applicable to date.

The tenure of the current KPPU commissioners ended in April 2023 and the selection of new KPPU commissioners is underway. At the final stage, parliament will select nine out of 18 names proposed by the government.

E-commerce seems to be one of the KPPU’s recent interests, as the KPPU has been monitoring and making enquiries of businesses in this sector. The KPPU has also published several assessments on e-commerce, related, for instance, to businesses’ behaviour and the identification of relevant markets.

The Initial Investigation Stage

Under KPPU Regulation 2/2023, the KPPU may initiate an initial investigation based on its own initiative or a report filed by external parties. The purpose of the initial investigation stage is to assess, among other things, (i) whether the alleged conduct falls within the scope of the KPPU’s jurisdiction; and (ii) whether there is conformity between the initial evidence and the allegation. If those requirements are satisfied, the KPPU will continue to the investigation stage.

The Investigation Stage

At the investigation stage, the KPPU is authorised to request documents, summon all relevant parties, and request statements from witnesses, experts, and/or the reported parties, in order to gather sufficient evidence to continue to the examination stage. During the investigation stage, the KPPU will assess the undertaking’s behaviour in the identified relevant market and determine whether the case fulfils the substantive criteria of an anti-competitive act prescribed by the ICL. The final product of the investigation stage is an Investigation Report. Based on such a report, the KPPU will determine whether the investigation should cease or move forward to the examination stage.

The Examination Stage

Essentially, the examination stage is performed in a court-like setting before the KPPU’s Commissioners’ Panel. The examination process consists of (i) a preliminary examination; and (ii) a further examination. In the preliminary examination stage, the KPPU will summon reported parties to appear before a hearing in which the KPPU’s investigator team will read out a case allegation report (Laporan Dugaan Pelanggaran or LDP) before the KPPU’s Commissioners’ Panel and reported parties. At this stage, reported parties are allowed to submit their response to the LDP in which they may:

• admit the allegation and not propose change-of-behaviour commitments – leading to a fast-track examination;
• admit the allegation and propose change-of-behaviour commitments, or
• rebut the allegation and list witnesses, experts and supporting documents to strengthen the reported parties’ arguments.

The Further Examination Stage

If the case is taken to the further examination stage, the KPPU’s Commissioners’ Panel will examine witnesses, experts and documents presented by the KPPU’s investigator and reported parties. Before the further examination stage ends, the KPPU’s investigators and reported parties are allowed to submit a conclusion to present their respective factual arguments. Based on the result of the examination process, the KPPU’s Commissioners’ Panel will decide whether the allegation of the existence of a cartel has been proved, or not.

Under the ICL, the KPPU has no authority to carry out dawn raids in handling cartel cases. However, it is worth noting that in one of the cases, the KPPU decided to visit the premises of a reported party, without prior notice, to investigate and request documents. Although not common, it is possible that the KPPU will consider this approach again, when necessary for the investigation.

Investigation and Examination by the KPPU

Rather than conducting dawn raids, the ICL only allows the KPPU to summon all relevant parties, including officers and employees from the undertakings, to record their testimonies as well as request documents. Pursuant to KPPU Regulation 2/2023, the KPPU will send a formal letter to the investigated party while conducting the investigation. The official letter, which is in the form of a summons, must be received by the parties under investigation at least three days before the interview session. During the investigation stage, the parties may be accompanied by their counsel/lawyer, who may only listen to and follow the interview session passively. This means that the counsel/lawyer is prohibited from cross-examining the investigated party. After the interview is completed, the parties will sign the minutes of the investigation. Furthermore, at the examination stage, the KPPU will examine the related parties, including a reported party, and request additional documents from the investigated party. At this stage, the counsel/lawyer can ask questions of the parties under investigation. The questions and answers will be recorded in the minutes of the examination, which will only be signed by the KPPU. At all these stages, refusal to co-operate is prohibited. Based on Article 41 of the ICL on the obligation to co-operate, the parties are prohibited from rejecting examination or from providing information that will impede the investigation or examination process. Any violation will be faced with criminal sanctions.

Access to Documents

On the other hand, the KPPU does not have the authority to access computers or emails, or seize relevant documents without obtaining consent from a related party. To obtain the relevant documents, the KPPU must send a formal letter to the parties and, under the ICL in conjunction with KPPU Regulation 2/2023, the parties will provide and submit the requested documents and/or information. In the event that the parties are not willing to provide and submit the required documents at the investigation and/or examination stage, the KPPU may report such violations to enforcement agencies, such as the national police.

The ICL has yet to regulate the obligation to prevent or avoid the spoliation of potentially relevant information. However, the ICL obliges all relevant undertakings and parties in a case to surrender all documents or information requested by the KPPU during the investigation and/or examination stage. Any failure to meet this request poses the risk of obstructing an investigation or examination, to which criminal sanctions may apply.

Under KPPU Regulation 2/2023, officers or employees who will be examined by the KPPU may have a right to be assisted by counsel. A counsel may assist and advise the investigated party during the investigation and the examination stage.

Investigation Stage

the investigation stage, a counsel can attend the interview session to assist or advise the investigated party. However, counsel does not have the right to ask questions of the investigated party during the interview session. A counsel can convey a statement if the KPPU permits them to speak, and such statement will be recorded in the minutes of the investigation. At this stage, the investigated party has the right to be assisted by counsel in reviewing the minutes of the investigation before signing it.

Preparing a Defence

At the investigation stage, as the initial phase of enforcement, counsel can undertake several steps to prepare a defence, including:

• conducting fact-finding to gather the evidence required to defend the client against the allegation established by the KPPU;
• identifying the characteristics of the relevant market to determine the characteristics of the industry;
• identifying the potential witnesses, experts and documentary evidence to corroborate their arguments; and
• if relevant and possible, preparing risk identifications and assessments on change-of-behaviour commitment as the strategy to dismiss the case (note that change of behaviour does not apply to price fixing, market allocation, output arrangement and bid rigging).

By understanding the facts and the condition of the market, the defence counsel can prepare an argument on the merits and dissuade the KPPU from taking the case to the examination stage. 

Examination Stage

Unlike at the investigation stage, a counsel has more comprehensive rights at the examination stage as they are entitled to: (i) cross-examine each party examined by the KPPU; and (ii) accompany the accused undertaking as a reported party at the examination session. At the examination stage, the counsel’s questions and statements will be recorded in the minutes of the examination, which will only be signed by the KPPU. This means that the counsel and investigated party will not review those minutes. 

On a separate note, the ICL and KPPU Regulation 2/2023 do not recognise or regulate the obligation to obtain separate counsel. Generally, the examined parties can appoint the same or different counsel in cartel cases. Although this is not discussed under the current regulations, counsel needs to be more cautious when representing the same reported parties of different business groups in cartel cases. It is pivotal to mitigate the potential of confidential information exchange between the reported parties of different business groups through the assigned counsel, which could necessitate another cartel case. Therefore, such counsel needs to establish a separate lawyer team in handling cartel cases. In some KPPU cases, however, several reported parties may appoint the same counsel when their interests align.

As regulated by KPPU Regulation 2/2023, sufficient evidence is, at a minimum, two items of evidence. To obtain evidence supporting a cartel allegation, the KPPU is authorised to request both physical and digital documents from the investigated party and witnesses, and to perform an on-the-spot investigation to construct the case. At the investigation and examination stages, the KPPU is permitted to request the assistance of the national police to deal with possible resistance while obtaining evidence. All the required documents and/or information must be submitted in Indonesian. Where the case involves foreign reported parties and such documents are unavailable, then the documents and/or information in question must be translated to Indonesian by a certified translator.

Substantive wise, the KPPU will commonly search for data or documents that reveal or indicate an agreement or communication on price arrangement, production quota, or area division. The minutes of association meetings will be a key way for the KPPU to find out whether there has been any communication among undertakings related to price, output or market territory. 

Procedure-wise, the KPPU will send a formal letter to witnesses or experts at least three days before the interview session. To obtain letters or other documents, the KPPU will send an official letter to the relevant party. 

The ICL obliges related parties to comply with the KPPU’s demands and requests for documents and information. If the undertakings are not willing to comply, the ICL authorises the KPPU to report such violation to the national police so that a criminal investigation can be initiated against the non-compliant parties on the grounds of obstruction of justice. Related parties must therefore fulfil the KPPU’s request for documents, even when the documents in question are located in another jurisdiction. An example of this is the KPPU’s recent bid-rigging investigation, where the reported parties involved are foreign global automotive components manufacturers domiciled overseas, and it involves several foreign automotive parts companies. 

The ICL does not regulate the principle of attorney-client privilege as it is regulated in a separate legal framework, namely, Law No 18 of 2003 on the Advocate (the “Advocate Law”) which regulates that advocates must keep communications between an attorney and its client confidential. This privilege includes the obligation to protect all important files or documents against seizure or examination, and to ensure that all digital communications are protected from tapping. Therefore, communications to and from a client, including in-house counsel, are protected by attorney-client privilege. 

The ICL and Advocate Law do not recognise other privileges for cartel cases, apart from attorney-client privilege.

In initial requests, undertakings usually provide non-confidential information. More sensitive information requires higher caution and internal review before it can be provided, eg, unpublished financial statements or information related to a company’s core business and strategies. However, where there is no cooperation, the KPPU may impose a higher fine on those undertakings or file a report to the national police citing obstruction of justice. 

The targets of enforcement actions may declare and note that the information given to the KPPU is confidential. In response to this declaration of confidentiality, the KPPU is obliged to maintain the secrecy of the information. Third parties, knowing that their confidential or proprietary information is subject to the KPPU’s enforcement, may also request that the KPPU maintain the confidentiality of the information concerned.

At the investigation stage, KPPU Regulation 2/2023 does not give a formal forum for a counsel to submit its defence, since a counsel is only allowed to listen and follow the investigation process passively. That said, it is still possible for a defence counsel to submit its counter-arguments out of the interview session, in order to persuade the KPPU to modify its view. Apart from this, the regulation also provides a remedy forum (change-of-behaviour commitments) that can be taken by the undertakings to have the case dismissed. However, this forum is not applicable to most cartel conduct (ie, price fixing, market allocation, output arrangement and bid rigging). In cases where the KPPU can accept a change-of-behaviour proposal on the part of the undertakings, then the KPPU can dismiss its investigation. Meanwhile, at the examination stage, the regulation allows a defence counsel to present its counter-arguments in a formal forum during the examination process. Counter-arguments can be presented in two ways, namely:

• in the form of a response to the case allegations report (Laporan Dugaan Pelanggaran or LDP) produced by the KPPU’s investigator; and
• in the form of a conclusion of the examination process.

Both in a response and a conclusion, a defence counsel can raise legal and counter-factual arguments to persuade the KPPU to dismiss the case.   

Leniency is not available under the ICL. However, KPPU Regulation 2/2023 sets out a change of behaviour to be proposed by a reported party in order to dismiss the case. A change-of-behaviour commitment can be proposed either at the investigation or examination stage. Again, these commitments only apply to cartels that have allegedly taken part in group boycotts and not those that are accused of price fixing, market allocation, output arrangements, or bid rigging. At the investigation stage, a reported party can propose a change of behaviour without admitting guilt. The KPPU will close the case if the proposal is approved. Meanwhile, at the examination stage, a proposed change of behaviour will be approved by the KPPU if there is an admission of guilt, as stated in a case allegations report, and all the reported parties (if the case involves more than one reported party) follow suit. A sanction may not be imposed on reported parties if the KPPU approves their proposal at this stage. 

The ICL does not regulate amnesty. However, KPPU Regulation 2/2023 does allow a change-of-behaviour mechanism as explained in 2.11 Leniency and/or Immunity Regime. 

The KPPU has the power to summon company employees as a witness, including to request documents from the employees, before the KPPU investigators (at the investigation stage) or the KPPU’s Commissioners’ Panel (at the examination stage). The summons letter must be received by the summoned party at least three days ahead of the interview session. If this does not occur, the summons could still be considered proper as long as the summoned party is willing to appear and testify. At the examination stage, a witness must take an oath before testifying. 

Upon deliverance of the summons, it is compulsory for the person to appear and testify. A refusal to co-operate and provide information for the purpose of the investigation and/or examination may be considered an obstruction of justice and poses the risk of a criminal investigation under the authority of the national police. 

The KPPU is authorised to acquire letters, documents and other evidence for the purpose of the investigation and/or examination. To start, the KPPU sends a letter to the target company requesting certain documents and/or information. If the target company does not comply with the request, it is at risk of obstructing the investigation/examination. If the target company is eventually found guilty of cartel conduct, the KPPU may consider it as having been unco-operative and may impose a heavier sanction. The ICL has several provisions that deal with obstruction, whereby any party that is deemed to be impeding an ongoing investigation or examination will be handed to the national police for further criminal investigation. 

For summons to companies or individuals located outside Indonesia, the KPPU will not only send the summons letter to the addressee, but also send a copy of such letter to a competition authority located in the addressee’s jurisdiction through Indonesia’s representative office in the same location. If Indonesia has ratified an international agreement, the summons is conducted based on applicable laws and regulations.

To support the investigation of cross-border cases, the KPPU has, to date, co-operated with competition authorities in other jurisdictions, such as Singapore, Australia, Japan, Korea, New Zealand and Mongolia, on the enforcement of competition law. Co-operation with Japan was concluded under the Indonesia-Japan Economic Partnership Agreement, which includes a special section on competition policy, particularly on notification of law enforcement, information exchange and technical assistance. This co-operation helps the Japan Fair Trade Commission (JFTC) and KPPU to enforce competition law in both countries. Meanwhile, co-operation with Australia and New Zealand on competition policy is covered under the ASEAN-Australia-New Zealand Free Trade Agreement. The KPPU has also established bilateral co-operation with the Korea Fair Trade Commission, aiming to contribute to the effective implementation of the competition laws of each party by promoting co-operation in the field of competition law and policy between the two authorities. The KPPU has also established a co-operation agreement with the Authority for Competition and Consumer Protection Mongolia, under which the two agreed to build the capacity of competition agencies through technical assistance programmes, data exchange and the sharing of knowledge.

The KPPU is also reported to have initiated and conducted discussions on the handling of competition cases in the digital economy sector with the United States Fair Trade Commission (US FTC), the JFTC, the Bundeskartellamt (Germany), the Turkish Competition Authority, and with the Autorité de la Concurrence (France).

Although the co-operation between the KPPU and foreign competition authorities covers, among others, exchange of information in relation to competition law enforcement, there has been no precedent of this co-operation, particularly regarding information exchange with respect to the investigation or examination of competition cases.

The KPPU has made a notification of law enforcement to the JFTC concerning the KPPU’s decision in the Automotive Scooter Case (2017), which involved two Japanese-affiliated companies (Yamaha and Honda), and vice versa, the JFTC has notified the KPPU about another related or similar case in Japan. Another example was in the Donggi-Senoro LNG Case (2010), where the KPPU notified the JFTC immediately after the release of its decision due to the involvement of a Japanese company in the case.

The ICL does not directly apply criminal sanctions for violation of the ICL. Criminal sanctions in the form of fines and imprisonment can only be imposed when an undertaking or individual has obstructed a KPPU investigation or examination. 

Criminal proceedings will be subject to criminal procedural law. The investigation will be conducted by police investigators and the prosecution will be carried out by state prosecutors. The hearings will be held before criminal judges at the district court.

Anyone can make a report to the KPPU regarding an alleged violation of the ICL, either with or without damage claims. Such a report must include supporting evidence in relation to the alleged violation. The report will go through a clarification stage in order to examine the administrative requirements of the report; to verify the address and identity of the reporting party and the witnesses; to request testimonies from relevant parties; to examine the clarity of the provision that has allegedly been violated; to examine the conformity between the provision that has allegedly been violated with the evidence presented by the reporting party; and to evaluate the absolute competency of the report. The result of this clarification will determine whether the KPPU should stop the process or enter the next stage, the investigation.

Once the investigation stage is entered, the KPPU investigators will seek any required information and evidence from relevant parties or other sources to gather sufficient evidence to support the allegation. They will summon and request information from the reporting party and other related parties, witnesses and experts, and obtain related letters and/or documents, gather market data relevant to the allegation, and analyse the relevant market, evidence, and competitive impacts of the violation, and the fulfilment of elements in the provision that have allegedly been violated. The investigators will produce an investigation report which will essentially determine whether the KPPU will proceed to the examination stage (hearing).

All alleged cartel participants will be examined in a single proceeding. There is no precedent where the KPPU has examined multiple companies allegedly participating in a cartel in separate proceedings. However, if a reported party wishes to provide confidential information before the proceeding, it may request that the session containing such confidential information be in a closed hearing. Confidential information refers to information that is not known to the public, has an economic value, is kept confidential by the parties, and/or may cause economic loss to parties if it is disclosed. The approval of such a request is at the commission panel's discretion.       

The burden of proof is initially on the KPPU and to establish a case, the KPPU must obtain sufficient evidence. Based on the evidence gathered at the investigation stage, the KPPU will produce an allegation report. At the examination stage, the evidence will be cross-examined by the reported parties, KPPU investigators, and the KPPU commissioners’ panel. KPPU investigators must also prove the allegation, while at the same time, it is the reported parties’ turn to rebut and prove themselves not guilty.

At KPPU level, the standard of proof is relatively high, as the examination is intended to seek material truth. However, at the appeal level to the commercial court, the standard of proof is considerably lower, since the appeal judges may examine only witnesses/experts who have previously been submitted to an examination at the KPPU, but (i) the statements of the witnesses or experts were not included or considered by the KPPU commissioners’ panel in the KPPU decision; or (ii) the KPPU commissioners’ council rejected the presence of the witnesses and/or experts to be examined at the KPPU. The examination of such witnesses/experts must first be requested by the appellant, and this is subject to the approval of the appeal judges.

For a KPPU proceeding (civil), the KPPU’s commissioners’ panel will be the finder of fact. At appeal level, fact-finding is handled by the commercial court judges, and later, at the next level, by the Supreme Court judges. Meanwhile, for criminal proceedings, the finders of facts will be the criminal judges at the district court. At appeal level, it is the judges of the higher court, and at the next level, the Supreme Court judges.

In essence, there is no provision prohibiting evidence obtained in a proceeding from being used in other proceedings; however, to date there has been no precedent in which the KPPU has used evidence in this way.

In relation to evidence proffered by a leniency applicant, this is currently inapplicable in Indonesia since the ICL has not adopted a leniency programme yet. However, the latest draft ICL amendment has a general provision regarding a leniency programme, although the timeline for ICL amendment and the details of the leniency programme – including any provision regarding the use of evidence obtained through a leniency application – are still unclear.

Furthermore, it is technically possible for the KPPU to use evidence obtained from another jurisdiction in a proceeding relating to the Indonesian market, since there is no provision prohibiting such practice in the prevailing laws and regulations. In fact, the KPPU has co-operated with competition authorities from other jurisdictions several times over the years, where such co-operation has included information exchange and technical assistance.       

The rules of evidence in Indonesian competition law proceedings are quite similar to those in criminal proceedings, in which the court only admits five types of evidence, namely: (i) witness testimony; (ii) expert testimony; (iii) letters or documents; (iv) indication; and (v) the reported parties’ testimony. Under the current rules, a witness is not only any individual who directly heard, saw and experienced the allegation, but also a witness may include any person who did not directly hear, see and experience the allegation. Indication refers to conformity between conduct, events, testimonies or data that shows the allegation, and can be in the form of economic or communication evidence. 

In proving an alleged violation of the ICL, the KPPU must provide at least two valid items of evidence in the forms mentioned, which support the allegations made against the accused undertaking.

It is common for both the KPPU and reported parties to present experts at the investigation and examination stage, in order to use their expertise or experience to confirm and verify the respective arguments. The presented experts may come from different academic backgrounds, but are most commonly economics, legal and industry specific.       

There are no privileges applicable in regard to experts presented by either the KPPU or the reported parties.

The law is silent on this matter; however, there is no precedent showing such practice to date, since the KPPU usually conducts its proceedings under the same case registration if the underlying facts and background are related or the same.       

The KPPU has the power to directly impose administrative sanctions on an undertaking that has been found to have violated the ICL. These sanctions include:

• annulling an agreement or cancelling any provision of an agreement that violates the ICL;
• instruction to cease a business practice or conduct that violates the ICL;
• fines in the amount of IDR1 billion (about USD70,000) up to either 50% of the company’s net profit or 10% of the company’s turnover, calculated from the relevant market during the violation period; and/or
• awarding compensatory damages incurred as a result of violation of the ICL.

At the preliminary examination stage, after the KPPU investigator has read out a case allegation report, the reported parties may take a plea deal to avoid the case moving forward to the further examination stage (cross-examination), and to move the case directly to the KPPU commissioners’ panel’s deliberation session, in the hope of lower sanctions. In this case, the reported parties may submit their response to the allegation report by admitting the allegation (without any change-of-behaviour commitments). However, the current rule does not specify the detailed mechanism for this procedure, so the process is highly dependent on the KPPU commissioners’ panel.

The procedure of “plea bargaining” or settlement can also be in the form of a change of behaviour at the investigation stage or examination stage. Unfortunately, for cartel provisions in the ICL, the change-of-behaviour option is applicable only in the case of boycott or concerted refusal to purchase between competitors, but not for allegations with respect to price fixing, market allocation, output arrangement, and bid rigging.

At the investigation stage, a reported party has an opportunity to propose a change of behaviour to address the KPPU’s concerns, without admitting guilt. The proposal for a change of behaviour must include at least the plan or stages with respect to the behaviour change, the timeline for the implementation of the behaviour change, and the reported party’s statement to report the implementation of the behaviour change and supporting evidence, and to participate in the competition compliance programme. The proposal and commitment do not have to be made by all the reported parties in a one-case proceeding.

To assess whether the KPPU will accept or decline the proposal of behaviour change, the KPPU will consider, among other things, the type, characteristics and period of allegation, harm resulting from the allegation, the commitments offered by the reported parties and any supporting evidence. The investigation will be ceased for a reported party that (i) proposes a change of behaviour and their proposal is accepted by the KPPU; and (ii) fully implements the proposal. The investigation will continue for other reported parties who do not agree to the proposal.

At the examination stage (preliminary examination), the KPPU will only allow a change of behaviour to stand if it is made with an admission of guilt and proposed by all the reported parties. Examples of actions that may constitute a change of behaviour are payment of fines and/or damages (especially in the preliminary examination hearing), the ceasing of conduct or the annulment of an agreement that is the subject of the allegation. A reported party that has proposed a change of behaviour at the investigation stage, is not entitled to submit a proposal for a change of behaviour at the examination stage. 

The change of behaviour agreed by all reported parties will be formally recorded in an integrity pact. The case will stop if all the reported parties fully implement the changes in behaviour according to the integrity pact. The examination will enter into the further examination stage if the integrity pact is not fully implemented. 

Over the years, it has been common for the KPPU to impose additional sanctions in the form of debarment towards undertakings that were found guilty of bid rigging. Such debarment prevents undertakings from participating in bidding processes funded by the state or region expenditure budget for a certain period of time (ranging from one to two years). Such debarment cannot be prevented by a plea bargaining or settlement process, since such processes are not applicable to most cartel provisions in the ICL, other than boycott or concerted refusal to purchase between competitors. 

For a competition case with damage claims, the KPPU may order undertakings that are found guilty to pay compensatory damages to other parties. Such compensatory damages cannot be waived by the plea bargaining or settlement procedure. If a business is found guilty of violating the ICL, there will always be the risk of a lawsuit on a tort basis brought by the aggrieved parties in the civil court. 

Under the ICL, criminal sanctions can be imposed only when the undertaking or individual concerned is obstructing the KPPU’s investigation or examination. In such case, a criminal investigation may be initiated, and the undertaking or individual may face criminal sanctions in the form of imprisonment for up to one year or criminal fines of up to IDR5 billion (about USD350,000). However, there has been no precedent regarding such a criminal proceeding to date.       

The KPPU has the power to directly impose administrative sanctions on an undertaking that has been found to have violated the ICL. See 4.1 Imposition of Sanctions. In imposing administrative sanctions:

• the sanction must be proportionate to the degree or impact of the violation;
• the sanction should ensure business continuity but be effective enough to act as a deterrent; and
• the sanction must be based on detailed and concrete reasoning from valid and measurable data.

The calculation of administrative fines is based on the adverse effects of the violation, the duration of the violation, extenuating factors, aggravating factors, and the business actor’s ability to pay. The KPPU considers the following as extenuating and aggravating factors in the calculation of the fine:

• the company’s efforts to comply with the ICL (eg, by establishing a code of ethics, training, or other similar activities);
• the company’s efforts to voluntarily cease the ongoing anti-competitive violation, counted since the date when the anti-competitive violation initially took place;
• whether the company in question has previously been involved in a similar anti-competitive activity prohibited by the ICL;
• the part played by the business actor (ie, whether the business actor was the initiator of the violation); and
• the impact of the violation on the competition.

The company’s efforts to comply with the ICL are one of the extenuating factors when the KPPU imposes sanctions on the reported party. This effort refers to the company’s code of ethics, training or similar activities, that are part of the competition compliance programme registered at the KPPU.

To obtain benefits from this extenuating factor, an undertaking must previously have had and registered a competition compliance programme with the KPPU. The programme must comprise at least three elements, namely (i) a code of ethics; (ii) a competition and antitrust handbook; and (iii) general or specific training. These should be based on the undertaking’s commercial activities, market power and interaction with third parties (suppliers, competitors and consumers).

The applicable laws and regulations are silent on the exact reduction of fines that an undertaking may receive from having a competition compliance programme. Therefore, the reduction is expected to be determined by the KPPU on a case-by-case basis.

Under the ICL, the KPPU is authorised to order a payment of compensation by the reported parties, for damages incurred as a result of an anti-competitive agreement/practice, if such compensation was requested by the reporting party at the beginning of the investigation process.

However, the application can take a sudden turn, as in Case No 25/KPPU-I/2009 on Excessive Fuel Surcharge in the Domestic Aviation Industry. In this case, the KPPU declared that there had been consumer loss which had to be compensated by the reported undertakings by way of compensation payment to the state. This precedent sparked controversy since the case itself was commenced at the KPPU’s own initiative rather than a report, so there was no reporting party requesting compensation payment, which made the basis of the KPPU’s order questionable. One of the reported parties eventually lodged an appeal to the district court and the district court granted their request. The KPPU tried to defend its stance and proceed the case to a higher judicial body, the Supreme Court, but was eventually met with another rejection. Accordingly, the KPPU Decision for Case No 25/KPPU-I/2009 was annulled.

Undertakings that have been found guilty of violating the ICL may file an appeal against the KPPU’s decision to the commercial court within 14 days of being notified about the decision. For an appeal against a KPPU decision with administrative fines, the undertaking is required to submit a bank guarantee of a maximum of 20% of the fines imposed by the KPPU. The period of examination by the commercial court of the merit of the appeal lasts for three to 12 months, during which the appellant may submit witnesses and/or experts who have previously been submitted to an examination at the KPPU, if the statements of these witnesses and/or experts have not been included or considered by the commissioners’ panel in the KPPU’s decision, or if the commissioners’ panel rejected the presence of witnesses and/or the experts to be examined at the KPPU. However, this can be done based on the approval of the judges of the commercial court. 

A further appeal against the commercial court decision can be filed by way of cassation to the Supreme Court within 14 days of receipt of the decision. The decision of the Supreme Court with respect to the appeal process will make the KPPU decision final and binding, and there is no further appeal proceeding against the Supreme Court decision.       

The ICL does not regulate a private right of action. Under the ICL, private firms and/or individuals can file a report to the KPPU regarding a cartel allegation, and there is no specific threshold for the relevant parties seeking redress caused by cartel behaviour. The KPPU will proceed such report to the investigation and examination stage if there is found to be sufficient evidence for the cartel allegation. 

However, a private right of action may still be conducted under Article 1365 of the Indonesian Civil Code, which essentially states that a party that commits an illegal act causing damage to a second party is obliged to compensate the second party for this. Thus, according to this provision, to obtain an indemnity, private firms and/or individuals may file a lawsuit to the Indonesian civil district court only after the KPPU has issued a final and binding decision which stipulates that the Competition Law has been breached.

In general, the ICL does not stipulate the mechanism for class actions.

However, consumer associations or public interest groups can still file a class action lawsuit with the civil district court in order to obtain indemnity for alleged violations committed by certain undertakings. Note that such a lawsuit may only be filed to the district court if the KPPU has issued a final and binding decision which states that the reported party has committed a violation. This is since such a final and binding decision will be the basis for the class action lawsuit. 

This is not applicable in Indonesia, considering that there has not been any precedent regarding a private action filed with the court by indirect purchasers, or related to “passing-on” defences. 

In practice, the evidence from government investigations or proceedings is admissible in the Indonesian district court.

There have only been a few civil lawsuits filed by claimants in the district court related to a cartel case. For instance, in 2019, claimants filed a lawsuit to the district court after the KPPU decision on the scooter cartel case became legally binding. In this lawsuit, the claimants explained that they had suffered losses due to the cartel behaviour of the reported parties. Those claims were unsuccessful, as the district court viewed that such lawsuit did not fall within the scope of the district court’s competence, so the district court rejected them. Moreover, the KPPU has examined the allegation and obtained a final legally binding decision from the Supreme Court. Generally, the district court needs around three to six months to complete a civil lawsuit process from the inception of the claim to the decision. 

The ICL does not set out compensation for a successful attorney. Compensation is determined separately between the claimant and its attorney in an agreement. Thus, the availability of compensation and its amount are dependent on the respective agreement.

The ICL does not regulate the obligation for unsuccessful claimants to pay certain costs or fees in private litigation. However, the claimant can still be forced to bear certain costs/fees under the Indonesian Civil Law, if its claim is rejected by the district court and it is declared the losing party. 

The losing party in the Indonesian district court may file an appeal to the High Court. In this respect, the High Court has jurisdiction to re-examine the case through all the materials submitted by the parties at the district court. The judges at the High Court will subsequently decide whether they accept the appeal or not. 

Furthermore, the losing party at the High Court may file a cassation to the Supreme Court, which is a final appeal from the lower courts. The Supreme Court has the authority to review the case based on the same materials presented in the district court and High Court. However, the Supreme Court will not accept any new evidence presented by the parties in the case and will only assess whether the lower court has implemented the law correctly. The Supreme Court judges will reach a final and binding decision regarding the case. However, the losing party may file a civil judicial review against a legally binding decision to the Supreme Court. In this process, the Supreme Court will re-examine its cassation decision. 

Since April 2023, businesses must follow the new KPPU Regulation No 2 of 2023 on Case Handling Procedure (“KPPU Regulation 2/2023”). Unlike the previous regulation, which allowed virtually all types of violation in the change-of-behaviour forum, KPPU Regulation 2/2023 stipulates that certain cartel conduct cannot be subject to the change-of-behaviour forum. These are price fixing, market allocation, output arrangement, and bid rigging.

The KPPU publishes two guidelines on price fixing and output restrictions that can be downloaded respectively at:

• Guidelines on price fixing; and
• Guidelines on output restriction.

The original Indonesian guidelines can be accessed through these links:

• Indonesian guideline for price fixing; and
• Indonesian guideline for output restriction.