Power to the People: Enhancing Competition Law Enforcement in Indonesia through Private Enforcement

By Sugarda, Paripurna; Wicaksono, Muhammad Rifky | Asia Pacific Law Review, July 1, 2018 | Go to article overview

Power to the People: Enhancing Competition Law Enforcement in Indonesia through Private Enforcement


Sugarda, Paripurna, Wicaksono, Muhammad Rifky, Asia Pacific Law Review


I.Introduction

Competition law, like every other law, is created to safeguard certain values.1 Although historically no single unifying policy objective for competition law exist,2 there is a large consensus among competition authorities in recent years on the importance of protecting consumer welfare as the standard for antitrust enforcement.3 Indeed, this notion is also pertinent in Indonesia's competition law system, given that the preamble of Law No. 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition (Law No. 5 of 1999) declares the 'achievement of the people's welfare' as among the law's primary objective. To realise this goal, however, it is not enough for the law merely to prescribe legal rules; it is critical that effective enforcement of those rules take place.4

Accordingly, this raises questions on what is meant by 'effective enforcement' for competition law, and how competition regimes can establish effective enforcement mechanisms. Wouter Wils has addressed the former, and he argues that for antitrust enforcement to be effective, it must be able to: 1) clarify and develop the law (precedent function); 2) compensate and remediate the victims of those violations (compensatory function); and 3) cease, punish and deter antitrust violations (deterrence function).5 These parameters are consistent with the goal of protecting consumer welfare, as 1) clarity in law results in greater legal certainty for protection; 2) punishment and deterrence prevents harm to consumer welfare; and 3) compensation provides restitution for financial loss suffered by victims of antitrust infringements. As to the latter, the experience of mature antitrust jurisdictions such as the United States (US) and the European Union (EU) demonstrate that there are two possible types of enforcement mechanisms for competition law: public and private enforcement.6 Whereas public enforcement refers to proceedings conducted by competition authorities to prosecute antitrust infringements, private enforcement arises from the use of competition rules by private parties in court litigation to claim damages for those infringements.7

Both the US and EU have mechanisms to facilitate public and private enforcement, however differences in the political and legal development of their competition policies have led to significant divergences in their approach.8 In the US, private litigation takes centre stage, where approximately 90 per cent of all antitrust cases in the US involve private rather than public action.9 This trend was caused, among others, by Congress' conscious policy decision to encourage private enforcement,10 by providing, inter alia, treble damages11 and the asymmetric cost rule.12 These provisions were necessary as instruments of punishment and deterrence, because no budgetary appropriation was made for public enforcement at the time the Sherman Act was enacted in 1890.13 Hence, private treble damages actions were a substitute for public enforcement.14

Conversely, public enforcement has historically played a far greater role in the EU than private enforcement. This is because the European Commission (EC) and the EU Member States' competition authorities have the capacity to cease, punish and deter violations of Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU) through the imposition of fines.15 Recently, however, the discourse on competition law enforcement in the EU has focused more on the need to compensate those who have suffered welfare loss due to anticompetitive activities.16 After extensive debate, the European Parliament finally enacted the Damages Directive17 in 2014, which serves to enhance the effectiveness of the compensation process18 and the coordination of public and private enforcement.19

In this regard, it seems that the enforcement landscape of Indonesia's competition regime is more akin to the EU system than the US. For nearly two decades, the Commission for the Supervision of Business Competition (KPPU) has shouldered the task of enforcing Indonesia's competition law. …

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