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Competition Law
1. Legislation on Competition in Indonesia
Law Number 5 of 1999 concerning the ban
on monopolistic practices and unfair business
competition (Law 5 of 1999) is the main legislation
on competition. The purpose of Law 5 of 1999 is
stipulated in Article 3 as among others to maintain
public interest and improve efficiency of the national
economy, to create a conductive business climate,
to prevent monopolistic practices and to create
effectiveness. Next to Law 5 of 1999, Government
Regulation number 57 of 2010 governs the voluntary
pre-merger consultation and the mandatory post-
merger notifications in Indonesia. Furthermore,
the implementation regulations of the Supervisory
Commission for Business Competition (KPPU)
are also relevant for the Indonesian framework on
competition.
The main governmental authority which is in
charge of the enforcement of the legal framework
on competition is the KPPU. The KPPU is a state
administrator of Indonesia, which is governed
by Law 5 of 1999 as well. The KPPU shall be an
independent institution, free from any influence by
the government of others parties.
2. General Structure of Law 5 of 1999
Law 5 of 1999 is structured into several chapters,
starting with definitions and principles and
objectives. Chapter 3, 4 and 5 contain the relevant
provisions for companies. Chapter 3 governs
prohibited contracts, Chapter 4 deals with banned
activities and chapter 5 establishes rules on market
behavior in the event a company has a dominant
position in the relevant market. Several of the
prohibitions of Law 5 of 1999 refer to the “relevant
market” as one important element in order to assess
whether a particular market behavior violates Law
5 of 1999. According to the definition of Law 5 of
1999, the relevant market shall be the market related
to a certain marketing scope or area by companies
for goods and/or services of the same or similar
type or substitutes for such goods and/or services.
Thus, the relevant market is determined by a
product market and a geographical market. Finally,
for business highly relevant topic dealt with in the
