Compliance in Indonesia 2017 - page 20

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provisions in Chapter 8 and 9 are dealing with the
sanctions in case of a violation of the law and the
exemptions from Law 5 of 1999.
3. Prohibitions
An overview of the chapters 3 to 5 of Law 5 of 1999
is presented in the following:
a. Prohibited Contracts
According to Law 5 of 1999, several contracts
which can restrain competition are prohibited.
Contracts in this respect can be both written and
unwritten agreements on for example oligopolies,
price fixing, area distribution and boycotting.
Among others, the following contracts might be
prohibited, if they are concluded
• with the intention to jointly control the
production and/or marketing of goods and/
or services which may potentially cause the
occurrence of monopolistic practices and
or unfair business competition. “Jointly
controlling production and/or marketing of
goods and services” means where two or three
entrepreneurs or groups of entrepreneurs own
more than 75% of the market share of one
certain type of goods or services (oligopoly –
article 4);
• in order to fix the price of certain goods and/
or services payable by consumers or customers
on the same relevant market if these contracts
are not on joint partnerships or in compliance
with the laws (price fixing – article 5);
• in order to fix price below the market price,
which may potentially result in unfair business
competition (predatory pricing – article 7);
• to conclude any contract with other business
competitors with the intention to divide the
marketing areas or the market allocation of the
goods and/or services potentially resulting in
monopolistic practices and or unfair business
competition (division of territory – article 9);
or
• in order to refuse to sell any goods and or
services from other company, so that such act
causes a loss or may be suspected of potentially
causing a loss to other company or limits other
companies in selling or buying any goods
and or services from the relevant market
(boycotting – article 10).
b.Banned Activities
Under chapter 4, Law 5 of 1999 stipulates banned
activities. Unlike the prohibitions governed
under chapter 3, most of these activities can be
conducted unilateral by a company. Among
others, companies are prohibited from
• controlling the production and or marketing
of goods and or services which may result in
monopolistic practices and or unfair business
competition.
Companies may be reasonably suspected
or deemed to control the production and/
or marketing of goods and/or services in the
following event:
▶︎ there is no substitute available yet for the
goods and/or services concerned;
causing other companies to be unable to
enter into business competition for the same
goods and/or services; or
one company or a group of companies
controls over 50% (fifty per cent) of the
market segment of a certain type of goods
or services (monopoly - article 17).
• engaging in one or more activities, either
individually or jointly with other companies,
which may result in monopolistic practices
and or unfair business competition, in the
following forms:
reject and or impede certain other
companies from conducting the same
business activities in the relevant market;
bar consumers or customers of their
competitors from engaging in a business
relationship with such business competitors;
limit the distribution and/or sales of goods
and/or services in the relevant market; or
engage in discriminatory practices towards
certain business actors (market control -
article 19).
• supplying goods and/or services by selling
while making a loss or by setting extremely low
prices with the aim of eliminating or ruining
the business of their competitors in the relevant
market which may result in monopolistic
practices and or unfair business competition
(article 20); or
• conspiring with other parties to obtain
information regarding the business activities
of their competitors classified as company
secrets which may result in unfair business
competition. (conspiracy - article 23).
c. Dominant Positions
Under chapter 5, Law 5 of 1999 deals with the
abuse of a dominant position. In accordance with
article 25 of Law 5 of 1999, Companies shall be
prohibited from using dominant position either
directly or indirectly to:
• determine the conditions of trading with
the intention of preventing and/or barring
consumers from obtaining competitive goods
and/or services, both in terms of price and
quality; or
• limiting markets and technology development;
or
• ban other potential business actors from
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