Newsletter on Indonesian competition law and policy

If you would like to receive this newsletter by e-mail, please send your e-mail address to international@kppu.go.id. This newsletter is published in English by theInter-institution Cooperation Division. Excerpts from this newsletter may be reproduced with full reference. Please send inquiries, comments and items to be consid-ered for publication to:

Deswin NUR (Mr.)Head of Inter-institution Cooperation Division

Directorate of CommunicationCommission for the Supervision of Business Competition

Jl. Ir. H. Juanda No. 36, Jakarta, INDONESIA 10120Tel: (62-21) 3507015/16/43—Fax: (62-21) 3507008

Vol. 12/I/2008 December 2008

News Pick

A cap needed on port charges

The government should enforce a limit on seaport charges charged by service providers tohelp reduce the high cost that traders, in par-ticular importers, have had to bear for far toolong… Cont. to page 2.

© 2009 Komisi Pengawas Persaingan Usaha All Rights Reserved Publish and Design by Institutional Cooperation Division

Quick HighlightDecision on the Violation of Article 22 in the Procurement of Labora-tory’s Equiptments for the University of Andalas

The procurement of laboratory’s equipment for economic science of theUniversity of Andalas, Padang and the procurement of joint-need equip-ment for economic science, humanism, and agricultural have alleged toviolate the Law 5/1999. [page 1]

Hearing on Indonesian Fertilizer Distribution

...in its development, applied policy tends to provide big opportunity formarket mechanism in a non-subsidized fertilizer… [page 4]

Bid-rigging in the Procurement of Building Development for KupangRegions Office

KPPU has done examination and specifies decision to the suspected alle-gation for collision in development of building for Regions of Kupang andproved that the reported parties was not breached Article 22 of the Law No.5/1999. [page 1]

Hearing on the Development and Management of Telecommunica-tion’s Tower

...the management of telecommunications in Indonesia has experiencedmushroom growth with implementation of the Law No. 36/1999 concerningTelecommunication… [page 4]Memorandum of Understanding (MoU) between KPPU and SAIC

...proposed draft of the MoU will covering several issues, such as exchangeinformation on policies, laws and regulations; co-hold relative symposi-ums… [page 6]

UNCTAD Peer Review

...UNCTAD had sent Mr. Hassan Qaqaya as UNCTAD representative toKPPU in order to formulate the main strategy for the peer review in accor-dance with KPPU objective… [page 6]

Inside

Law EnforcementDecision on the Violation of Article 22 in the Procurement of Laboratory’s Equiptments forthe University of AndalasBid-rigging in the Procurement of Building Development for Kupang Regions Office

Bid-rigging in the Procurement of Medical Equipments in Riau Islands

Bid-rigging in the Auction of Coordination and Development Activities of Electricity Meas-urement for Salatiga MunicipalBid-rigging in Procurement of Daily Official Uniform in Local Secretary of KaranganyarRegions

Competition AdvocacyHearing on Indonesian Fertilizer Distribution

Hearing on Development and Management of Telecommunication’s Tower

Regular Talk Show in Indonesia National Radio Broadcast, I-Radio

KPPU’ Audiency with the Indonesian National Defense InstitutionInternational activity

UNCTAD Peer Review

Memorandum of Understanding (MoU) between KPPU and SAIC

The Fourth Asian Competition Forum Conference

OECD Korea Policy Center Workshop on Anti Cartel Enforcement

AEGC Training Workshop

Law Enforcement

Decision on the Violation of Article 22 inthe Procurement of Laboratory’sEquiptments for the University of An-dalas

The procurement of laboratory’s equipment for eco-nomic science of the University of Andalas, Padang(http://en.wikipedia.org/wiki/Padang,_Indonesia) andthe procurement of joint-need equipment for eco-nomic science, humanism, and agricultural have al-leged to violate the Law 5/1999. It have been de-cided the existence of horizontal conspiracy betweenthe alleged parties, namely the Bid Committee, Ad-ministration Office of the University of Andalas, Pra-karsa Subur, Corp., Wahana Karsa Mulia, Ltd., Mu-lya Inza Pratama, Ltd., Damar Tiga, Ltd., amd FajarUtama, Ltd.

However based on the examination performed by theExamination Team, an act by Wahana Karsa Mulia,Ltd. which not complemented bid-offer document forprocurement’s package was not strong evidenceshowing existence of arrangement of tender by Wa-hana Karsa Mulia, Ltd. to win Prakarsa Subur, Corp.Then the cooperative action by Damar Tiga, Ltd. andFajar Utama, Ltd. in preparing the bid-offer docu-ment indeed was an action to fix tender as prohibitedby competition law. However, this cooperative meas-ure did not make one of both as a tender winner.

Based on equipment of evidence, fact, and result ofappraisal, and considering Article 43(3) and Article47 of the Law No. 5/1999, hence the CommissionCouncil decided Prakarsa Utama, Corp. and FajarUtama, Corp. to breach Article 22 of the Law No.5/1999 and prohibited both alleged parties enteringtender by the University of Andalas for one yearcommencing from the affirmation of the decision.Moreover, the Bid Committee, Wahana Karsa Mulia,Ltd., Damar Tiga, Ltd., and Fajar Utama, Ltd. wereimprovable to impinge Article 22 of the Law No.5/1999.

Bid-rigging in the Procurement of Build-ing Development for Kupang RegionsOffice

The KPPU has done examination and specifies deci-sion to the suspected allegation for collision in devel-opment of building for Regions of Kupang (http://en.wikipedia.org/wiki/Kupang) and proved that thereported parties was not breached Article 22 of theLaw No. 5/1999.

Based on result of examination, hence business ac-tor suspected for collusion and specified as the re-ported parties were the Bid Committee, Adhi Karya,Corp., and Hutama Karya, Corp. The CommissionCouncil fixes its decision based on several findings.The Bid Committee wins Adhi Karya, Corp. in 20(twenty) packets by aborting other tender participantwithout clear reason. At first, the report describedthat the Bid Committee passed Adhi Karya, Corp. atadministrative evaluation process, even though theiroffer was incomplete. Adhi Karya, Corp. itself alsoconducts a post bidding action by fulfilling the docu-ments after the opening of bid-offer documents.These documents were accepted by the Bid Com-mittee. The report also mentioned that the Bid Com-mittee did not execute a clarification on administra-tive offer during post qualification process and ap-plies abundant clauses. Meanwhile, Hutama Karya,Corp. submitted an offer that beyond the appliedbudget and did not issues an appeal on the BidCommittee for the findings.

But in deliberation of the Commission Council, therewas 1 (one) dissenting opinion (expressing that thereported party was proved to be guilty) between theCouncil that becomes an enclosure of the decisionand becomes part of which can not separated fromthe decision.

Therefore, based on equipment of evidence, factand conclusion and considering Article 43(3) andArticle 47 of Indonesian competition law, hence theCommission Council decides that the reported par-ties were improvable to impinge Article 22 of the LawNo. 5/1999. However, the Commission Council alsoviewed the need for providing an advice and recom-mendation to the Government of Kupang to paysmore attention to the competency of Bid Committeein organizing a tender offer and shall make a coordi-nation within respective authorities to correct obser-vation method in exercising a tender, thus can berealized according to plan.

Article 22:Business actors shall be prohibited from entering intoconspiracies with other parties in order to determineawardees of tenders which may result in unfair businesscompetition.

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Law Enforcement

Bid-rigging in the Procurement of Medi-cal Equipments in Natuna Region of theRiau Islands

Suspect violation occurs in the procurement of healthequipment and social prosperity of Region ofNatuna, Riau Islands Province (http://en.wikipedia.org/wiki/Natuna). The tender was in-volving nine packages of medical equipment, namelyfor laboratory of biology, radiology equipments, childcare, internal diseases, maternity, surgery, eyes, anddental equipments. Based on the examination result,ten reported parties were alleged to breach Article 22of the Law No. 5/1999. The alleged parties are thebid committee, Lintas Benua Farma, Corp., BundaGlobal Pertama, Corp., Graha Raya Utama, Corp.,Tripatria Andalan Medika, Corp., Pring GadingKuning, Corp., Sang Naga Berlian, Corp., KurniaBaru, Corp., Syifa Batam Mandiri, Corp., SyifaFarma, Ltd., Astina Raga, Ltd., and Mega TechnoMedical, Corp.

The suspected violations was take form of horizontaland vertical collusion that involving the similarity ofbid-offer documents, action by the bid committee inpassing Lintas Benua Farma, Corp. and Graha RayaUtama, Corp. though there was the existence of mis-take in each document. There were also found thelack of supporting letter by Bunda Global Pertama,Corp while its two products were given point higherthan its maximal point even though the quality is de-niable.

Before come to its conclusion, the CommissionCouncil considering that during the examinationprocess all reported parties were co-operative toconfess and realizes their mistakes. For which, theCommission Council stipulate in its decision thatmost of the reported parties are convincingly tobreached Article 22 of the Law No. 5/1999, whileAstina Raga, Ltd., and Mega Techno Medical, Corp.not proved to violate it. As such, the CommissionCouncil decides to impose administrative sanctionrange from Rp. 47,998,200 – Rp 1,169,531,700 tothe alleged parties and banned them to enter anyprocurement in the Government of Riau Island forone year commencing from the affirmation of deci-sion. As for the bid committee, the CommissionCouncil recommends its superior to impose sanctionto their staff according to the respective administra-tive regulation.

Bid-rigging in the Auction of Coordina-tion and Development Activities of Elec-tricity Measurement for Salatiga Munici-pal

KPPU found the bid committee and several businessactors, namely Dwipa Konektra, Corp, Julaga SaktiUtama, Corp, and Guna Swastika Dinamika, Corp,not to violate Article 22 of the Law No. 5/1999 in theauction of coordination and development activities ofelectricity measurement in Salatiga City (http://en.wikipedia.org/wiki/Salatiga). This allegation wasbased on several facts found during the examinationprocess.

Firstly, the bid offer document by Dwipa Konektra,Corp was formulated by a freelance staff of DwipaKonektra, while the bid offer price was determinedby a Director after compare it with the manufacturingprice. The bid offer document by Julaga SaktiUtama, Corp was also prepared by a freelance staffof Julaga Sakti Utama, Corp, which the Director onlyagreed to sign it. Guna Swastika Dinamika, Corprecognize the auction from its freelance staff andattended the registration itself. The bid offer docu-ment was prepared by its staff.

All three business actors received support fromKarsa Sahabat Inkatama, Corp as the sole distribu-tor for American Electric Lighting in Indonesia. Thethree business actors were decided to use AmericanElectric Lighting product due to their flexible pay-ment system and an easy access to the supportingletter. At first, Dwika Konektra used Focus lamp, butthis product could not pass the technical requirementstipulated in the workplan. Thus, Dwipa Konektra,Corp decided to used the American Electric Lightingproduct. The three business actor also received sup-porting letter from Suryamas Lumisindo Dwidaya asthe official distributor for Osram lamp and its compo-nents, Terang Kita, Corp for electrical wires, andHutama Karta, Corp for the pipes, even though thebid committee did not require them to offer an extra/additional services. The problem was, the three busi-ness actor offer the additional services with a similarsubstances.

Guna Swastika Dinamika was proposed by the bidcommittee as the bid winner due to its high scores.During the re-auction, Guna Swastika Dinamikaraised its offer price for adjusting the increase of la-bor price, iron pile, and transportation cost. GunaSwastika Dinamika did not realize that they had won

Kompetisia Vol. 12/I/2008

Law Enforcement

the auction because they did not receive the informa-tion from the bid committee. Therefore based on theexamination, the Commission Council stipulates thatthe similarity of documents by the three businessactors was not a type of collusion, because they re-ceived the supporting letter from one company,Karsa Sahabat, Corp.

Bid-rigging in Procurement of Daily Offi-cial Uniform in Local Secretary of Karan-ganyar Regions

The violation of article 22 Law No.5/1999 also hap-pened in the government's area. The allegation ofthe law violation occurred in the procurement tenderof the daily official uniform in Local Secretary ofKaranganyar regions (http://en.wikipedia.org/wiki/Karanganyar). In this case, the Commission Councilhad to consider the behaviour of the business actorsin the matter of vertical and horizontal conspiracy.Based on the investigation results, several businessactors were suspected in carried out the violation,namely Sejati Corp., Sinar Baru Corp., and the BidCommittee of Local Secretary of Karanganyar Re-gions.

Based on the investigation report that was conductedby the Investigation Team, the Commission Councilevaluated the co-operation occurred during the bid-ding process between Sejati Corp. and Sinar BaruCorp. The Commission Council also recognized thatthe Bid Committee made several mistakes and negli-gence in carrying out the bidding process, such ascarried out clarification to the manufacturer duringthe administration evaluation, while in fact the pro-curement used the merit point system which ar-ranged that clarification procedure should be con-ducted after the merit point process completely done.

The Commission Council also had a situation thatneeded to be considered, since both Sejati Corp.and Sinar Baru Corp. made a confession that theyindeed carried out the co-operation during the pro-curement of the daily official uniform, but they admit-ted to not knowing that their action had violated LawNo. 5/1999, as well as promised to not repeat theiraction.

The Commission Council stipulate in its decision thatall of the reported parties are convincingly tobreached Article 22 of the Law No. 5/1999, and

banned both Sejati Corp. and Sinar Baru Corp. toenter other clothing material procurement in theGovernment of Central Java for two year commenc-ing from the affirmation of decision. As for the bidcommittee, the Commission Council recommends itssuperior to impose administrative sanction to theirstaff according to the respective administrative regu-lation.

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Article 22:Business actors shall be prohibited from entering intoconspiracies with other parties in order to determineawardees of tenders which may result in unfair businesscompetition.

Competition Advocacy

Hearing on Indonesian Fertilizer Distribu-tion

The Commission for the Supervision of BusinessCompetition (KPPU) once again, performed a hear-ing forum to get useful inputs in Indonesian fertilizerdistribution. This forum carried out on 11-12 Decem-ber 2008 representing several Commissioners tolight the discussion. This forum aimed to be partici-pating by stakeholders from fertilizer industry, espe-cially the National Fertilizer Council and IndonesianFarmer Association.

Prior to this forum, KPPU has done initial analysis inaddressing problems in the industry, such us de-mand on fertilizer that treated as one of main com-modity which subsidized by the Government. Now,there are two types of fertilizer in the market, a subsi-dized fertilizer and a non-subsidized one. Subsidizedfertilizer is provided for agricultural activity of fieldcrop, while non-subsidized is for the non-food crop.

The general picture of the industry is its distributionsystem which plays significant role in forming theprice and the availability of fertilizer in the market.For subsidized fertilizer, distribution system is fo-cused on ways to achieve efficient mechanism forfertilizer distribution and includes most of marketingregion specified by a government regulation. Non-subsidized fertilizer is addressed its distribution sys-tem according to market demand of the respectivefertilizers. In this case, one of the indications is thedevelopment of non food agricultural sector. More-over, should this demand are increased, then thefertilizer will be focused at regions with higher de-mand.

Hereinafter in its development, applied policy tendsto provide big opportunity for market mechanism in anon-subsidized fertilizer. In line with this condition,producer of non-subsidized fertilizer will cope toreach efficiency in its production and distributionprocess to various possible distribution lines. Ob-serving that till now fertilizer’s policy was majored toreach the cheap price of fertilizer for all field croprequirements, hence then is specified policy of subsi-dized fertilizer in parallel with distribution systemmeant to reach distribution efficiency.

From the policy hence the economic impact is notonly happened at subsidized fertilizer, but also thereis significant implication for development of non-subsidized fertilizer industry that is not has decision

at more specific policy. Different condition is found atthe subsidized fertilizer policy, in which the govern-mental specifies certain holding to arranges produc-tion, distribution, and fertilizer selling price in level offarmer. Non-subsidizer fertilizers do not have therule that appropriately will reside at competition be-tween producers. Nevertheless, considering most ofdemand for fertilizer for crop is a subsidized one,hence in the end will partake affecting the develop-ment of non-subsidized fertilizer.

Other factor which plays important role in the devel-opment of fertilizer industry is the obligation for na-tional standard for every fertilizer sold in market. Thestandard is important to fulfill fertilizer requirementstandard for crop expansion, but on the other handalso affecting producer and fertilizer distributor. In itsimplementation, peculiarly, this policy also will gen-erate separate cost for its supervision.

Development dynamics in fertilizer industry is veryattractive to studied based on competition policy per-ception. KPPU makes this issue as effort to assesscompetition condition in the industry with regard toits market efficiency. It hopes that through the forum,KPPU and the stakeholder will enhance its coopera-tion to increase competition value within the regu-lated industry.

Hearing on the Development and Man-agement of Telecommunication’s Tower

Telecommunication is one of the main industry thatbeing monitor intensively by Indonesian competitionagency in regard to its strategic characteristic forinflicting people’s welfare. Part of the action for thisindustry was an advocacy (through public hearing) indevelopment and management of telecommunica-tions tower in South Sulawesi. This forum carried outon 11 December 2008 which representing KPPU’sCommissioners and stakeholders from representa-tive of cellular operator and telecommunications in-frastructure provider.

At first, KPPU has done initial analysis on occursproblems, namely the indication of exclusive right toone suppliers to build and manages the telecommu-nications tower. On the other side, reality shows thatthe management of telecommunications in Indonesiahas experienced mushroom growth with implemen-tation of the Law No. 36/1999 concerning Telecom-

Kompetisia Vol. 12/I/2008

munication. Based on the regulation, hence businessactor besides state-owned enterprises gets opportu-nity to be telecommunications service provider.

In the development, cable based fixed line technol-ogy initially pledged in telecommunications industryis now has shifted to frequency based wireless tech-nology. Besides, there is a trend that number of busi-ness actor is chose to manage the GSM and CDMAtechnology. KPPU also observes that in the manage-ment of frequency based telecommunications, devel-opment of new infrastructure especially telecommu-nications tower (base transceiver station/BTS) istechnically mandatory and becomes determinant towin competition with other cellular operator. The ex-istence of BTS will guarantee quality and quantity ofcoverage area to all cellular users which tend to in-creases.

Hereinafter, facts indicate that development activityof BTS tower in South Sulawesi increasingly difficultto be controlled and paid less attention to compatibil-ity and urban planning. Though distribution pattern ofthe development has been arranged through Munici-pal of Makassar Regulation No. 19/2006, and dividedinto zones based on certain criterion while the distri-bution area between towers must be 1 km at mini-mum. Till today, the Municipal of Makassar has de-termined 48 points for development of tower, but be-cause the Municipal unable to entangle the role ofcellular operator in determining this location points,thus this development often not accommodate theneed of the cellular operator. This condition can gen-erate inefficiency because the operators must re-design the scheme for existing network.

Regular Talk Show in Indonesia NationalRadio Broadcast, I-Radio

KPPU in co-operated with Deucthe Gesellscaft furTechnische Zusammenarbeit (GTZ) and FriedrichNaumann Stiftung (FNS) held the talk show programthat was broadcasted regularly in I-Radio, an Indone-sian national radio broadcast, with the title “MainBersih” (Fair Play). This talk show discussed casesand competition policy issues that were linked withthe Law No. 5 Year 1999 concerning “Prohibition ofMonopolistic Practices and Unfair Business Competi-tion”, with KPPU Commissionaires as guest star. Thetalk show was carried out once a month, and it wassupplemented with the interactive dialogue segment

with the I-Radio listeners. After several times heldon-air broadcast in radio, KPPU co-operated withGTZ and I-Radio held the off-air show interactivedialogue in one of the Jakarta shopping centre inDecember 2008 under the theme, “Fair Play, itsmore Profitable”. This public event was attended bymany audiences, from the public's community to themedium-sized business actors. The talk show wentsuccessfully, the audiences actively took part in ask-ing questions, such as the procedures to make areport, and some audiences also share their busi-ness problem. The topic of this talk show was sogeneral since it discussed several topics, such asKPPU performance from community’s point of view,the procedures of case handling in KPPU as well asthe strategies that had been conducted by KPPU tosocialize the competition law in Indonesia.

KPPU’ Audiency with the Indonesian Na-tional Defense Institution

On December 11th, 2008 KPPU had an audiencewith the Governor of Indonesian National DefenseInstitution. KPPU delegation was represented by theChairman of KPPU, several KPPU Commission-aires, and Executive Director. This meeting was todiscussed the possibility to include competition lawas one of the curriculum for any training held by theIndonesian National Defence Institution for everysenior (high ranking) state officials in Indonesia.

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Competition Advocacy

International Activity

UNCTAD Peer Review

On July 2008, KPPU attended the meeting of UNC-TAD Ad Hoc Expert Group on the Role of Competi-tion Law and Policy in Promoting Growth and Devel-opment and the 9th session of UNCTAD Intergovern-mental Group of Experts on Competition Law andPolicy, in Jenewa, Swiss. One of the main pointsachieved from the meeting was when the Chairmanof KPPU made a statement that Indonesia, c.q.KPPU, had interest and invited UNCTAD to heldpeer review on competition law and policy in Indone-sia, and it will be held on July 2009 at the latest. Itwas emphasized that peer review will gave positivevalues for the development of competition law andpolicy in Indonesia, especially for the judges as thelaw enforcer. Peer review had 2 main purposes.First, peer review will enhance the quality as well asthe effectiveness of the competition law and policystudies in Indonesia in order to strengthen the en-forcement of competition law and policy. Second,peer review will tightened the co-operation amongthe entire competition policy maker. UNCTAD Volun-tary Peer Reviews on Competition Law and Policywill be conducted by some experts in competitionpolicy and it will be the peer review implementationbase on the annual meeting of IntergovernmentalGroup of Experts (IGE).

As the follow up of the peer review process, KPPUalready held several internal meetings to properlyconstruct the concept and prepared related data thatmight be necessary. Up to this time, UNCTAD al-ready appointed 2 consultants from Brazil and Ja-pan. On December 2008, UNCTAD had sent Mr.Hassan Qaqaya as UNCTAD representative toKPPU in order to formulate the main strategy for thepeer review in accordance with KPPU objective.KPPU and Mr. Qaqaya also had a discussion toidentify the scope of the related issues that about tobe discussed in the peer review, to collect the baseinformation that was needed, and held several dis-cussion with relevant stakeholder such as Indone-sian Consumer Protection Foundation, IndonesianChamber of Commerce and Industry, and a DistrictCourt judge.

Memorandum of Understanding (MoU)between KPPU and SAIC

On 5 December 2008 KPPU welcomed a visit by theState Administration for Industry and Commerce ofthe People’s Republic of China (SAIC). SAIC dele-gation was lead by Ms. Zhang Huan, Deputy Direc-tor General of the Department of International ofSAIC. The meeting was to discuss the potential co-operation in the competition area, as well as to for-mulate a co-operation mechanism in the form ofMemorandum of Understanding (MoU) betweenKPPU and SAIC. The proposed draft of the MoU willcovering several issues, such as exchange informa-tion on policies, laws and regulations; co-hold rela-tive symposiums; conduct exchange of personneland trainings; and other progress of related legisla-tion and enforcement in fields of countering unfaircompetition and antimonopoly policy.

The Fourth Asian Competition ForumConference

The 4th Annual Competition Law and Policy Confer-ence held by the Competition Forum on 8-9 Decem-ber 2008 in Hong Kong Polytechnic University is anannual meeting of academicians, lawyers, and com-petition agency officials in Asia. This event was dis-cussed recents development in the application ofcompetition law in Asia, such as competition policyin energy sector, regulation or competition in finan-cial market, intellectual property right, preassure inhandling cartel cases, sanction or administrativemeasures, leniency program, and assistancy for de-velopment of regional competition law and policy.Nevertheless, this converence also provide specificportion to discuss competition law in China andHong Kong.

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AEGC Training Workshop on ”Setting Upan Effective Competition Agency and thePriorities of a New Competition Agency”

AEGC (ASEAN Expert Group on Competition) wasthe official ASEAN forum to discuss issues and thecompetition law development in ASEAN. AEGC wasformed as efforts to develop the competition policyframework in the more effective regional scale, aswell as to discuss and coordinate the competitionpolicy with the target to promote the creation of thecompetition environment in the ASEAN territory.

As the active member of AEGC, KPPU accepted theinvitation to attend The 2nd AEGC Training Work-shop on Setting Up an Effective Competition Agencythat was held in Japan Fair Trade Commission(JFTC) office on 2-4 December 2008 in Tokyo, Ja-pan. This training was part of the AEGC Training andCapacity Building Working Group program in 2008.The training was attended by competition agenciesfrom developed countries (Korea, China, Japan, theUnited States), ASEAN member countries, whichalready have or did not yet have the competitionagency in their country (Indonesia, Singapore, Ma-laysia, Cambodia, Vietnam, the Philippines, BrunaiDarussalam, Myanmar), the OECD, as well asASEAN Secretariat and ADBI as the event organizer.

The training contained discussions and sharing ex-periences between countries about (i) how to formedthe effective competition agency; (ii) the priority ac-tivities that must be dealt with by the new agency,such as developing the legislative framework, theinternal process and capacity building; and (iii)mapped the human resources requirement and thefunding needed. Several countries shared their ex-perience, namely the OECD, United States of Amer-ica, Korea, Singapore, China and Japan.

For the closing session, the workshop held RoundTable Discussion and Regional Policy Dialogue. Itwas an open discussion between the participants toformulate several important points that ought to bethe priority in the competition agency activities. Thefirst point was Stakeholder Education; it was an edu-cational program for the government, the businesscommunity, the law enforcer and the consumer;about the profit and the important value from thecompetition law implementation. The education pro-gram must be carried out to form a competition cul-ture among stakeholder as the precaution towardsthe violation of the competition law. The second point

was Coordination. The competition agency needed agood, effective and efficient co-ordination with re-lated stakeholder. The competition agency must beopen minded and carried out discussions in order tocompare the competition law principles with theregulator, the government and the business commu-nity. The third point was Consumer Protection. Theforum stressed that the final purpose of competitionwas to increase the consumer welfare, so the com-petition agency have to make an effort to adjust theprinciples in competition law with the consumer pro-tection law. The last point was Capacity Building,where to increase the professional capacity of itsofficials; the competition agency must provide theofficials with training and workshop about the newestknowledge in competition area.

OECD-Korea Policy Centre Workshop on“Regional Antitrust Workshop on Anti-Cartel Enforcement”

OECD-Korea Policy Centre (OECD-KPC) was a fo-rum in sharing experiences and capacity building forthe competition authorities’ officials in the Asian Pa-cific territory, and it was a part of OECD. During theyear of 2008, OECD-KCP had invited KPPU to par-ticipating in 5 workshops. On December 10-12, 2008KPPU was invited to attend the workshop of“Regional Antitrust Workshop on Anti-Cartel En-forcement” which was held in Seoul, Korea. The par-ticipants of the workshop covered Competition Au-thorities from various countries including Indonesia,Singapore, China, Vietnam, Hong Kong, and Mongo-lia.

This workshop was designed to give participants anintroduction to the theory and practical considera-tions involved in modern anti-cartel enforcement. Itwas structured around an extended case study of ahypothetical asphalt cartel, interspersed with lec-tures from experts on various aspects of cartels andcartel investigation. The hypothetical case study wasdivided into three blocks in three days. During thefirst day, participants meet with the whistleblowersand a market expert and review case documents.Later, the Competition Commission had initiatedstarted an investigation. On the second day, the par-ticipants meet with the customers and one of thecartel companies which had decided to cooperatewith the Commission. On the third day, the partici-pants meet with the cartel companies themselves.

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Competition Advocacy

International Activity

The participants were divided into three groups tointerview one character each. Later, they had to briefeach other on each group’s findings and thereafterjointly assess and determine what has taken place.

In each day, participants also had to do discussionamong them to jointly decide what will be the appro-priate next steps in carrying out the investigation.Along with the case study, the participants also hadtraining in cartel theory, investigative methods, legalproof and effective sanction. The participants weregiven the techniques to detect the cartel behavior,the cartel’s investigation strategy and techniques tointerview the witness. The workshop stressed aboutthe cartel’s danger, that the loss resulting from thecartel in developing country could become biggercompared to the result in developed countries. It wasbecause the domestic industry in developing countryusually protected, and it made the cartel tendencybecome bigger. Meanwhile, the implementation ofthe goods and services procurement in developingcountry also made an important role towards thecountry’s GDP. The domestic cartel was worried canreduce the company's competitiveness against theforeign player, especially in this free trade era. Inconclusion, OECD countries which implemented thecompetition law should have an effective sanction aswell as should have the authority to take actionagainst the cartel. The OECD member countriesshould also promote the international co-operationand the commitment in law enforcement in cartel.

Kompetisia Vol. 12/I/2008

A cap needed on port charges

The government should enforce a limit on sea portcharges charged by service providers to help reducethe high cost that traders, in particular importers,have had to bear for far too long, a discussion heardThursday.

The seminar, organized by Senada the USAID-backed non-profit agency, revealed that service firmsoperating in the Tanjung Priok port in Jakarta for ex-ample -- including forwarding and stevedoring pro-viders as well as storage operators -- had allegedlycolluded to fix prices. This alleged pricing ring "hasundermined an agreement" on the guidelines for ser-vice charges on imported goods for the less-than-container-load (LCL) category of shipments, resultingin "high costs" for importers using services at theport's line two, said Exporter-Importer Associationchairwoman Amalia Achyar.

"Many components of service charges are still un-clear, and are not part of the agreement, but sud-denly appear," Amalia said. The port's line twoserves imported and exported goods with LCL status-- a status given for categories of goods owned bymore than one business and shipped in shared con-tainers. Amalia said that based on her study, morethan Rp 1.45 trillion could be saved annually fromthe amount now spent on port services used by com-panies in Jakarta, West Java and Banten alone if theagreement could be properly implemented and effi-ciency maintained. The agreement was made in2007 following negotiations among service providersand users, including a forwarder association and ex-porter and importer associations.

Sharing Amalia's sentiments, Bonded Zone Employ-ers Association secretary Ade R. Sudrajat said thehigh costs had been a burden on importers, whichhad low bargaining power in relation to service pro-viders, as overseas exporters had usually alreadychosen a service provider for their shipments. "As aconsequence, importers have no other choice but topay all the charges (demanded) to get theirgoods unloaded, or else have their goods held up atthe port," she said.

Taufik Achmad, Director of Competition Policy for theCommission for the Supervision of Business Compe-tition (KPPU), said government intervention was nec-essary to help enforce the pricing agreement and toguarantee no "abuse of power" byservice providers. "The government must fix maxi-

mum service charges at sea ports in a regulationand detail the components of the charges because itknows at what level the business can be run, withoutexploiting consumers," he said. "If a business isfound to have imposed charges above the limit, itwould be in violation of a government regulation andcan then be dismissed from the Tanjung Priok port."

In response however, Transportation Ministry direc-tor general of sea transportation Sunaryo said thegovernment would permit agreed charges to serviceproviders and users, as stipulated under the 2008Law on Sea Transportation.

Source URL: http://www.thejakartapost.com/news/2008/12/05/a-cap-needed-port-charges.html

Kompetisia Vol. 12/I/2008

News Pick

Statistics

Kompetisia Vol. 12/I/2008

a

Number of Policy Advice to the GovernmentFor the year 2008

Statistic on Law EnforcementFor the year 2000 - 2008

In 2008, KPPU has issued nine policyadvices to the Government in varioussector, namely the agreement for im-port tariff in Tanjung Priok port, restruc-turing program by Ministry of State-owned Enterprises (SME), draft regula-tion on supervision of distribution ofavtur, Ministry decree on managementof tally business, interlocing directoratein two SMEs, cross ownership in televi-sion broadcasting, anti dumping fee forSodium Trilipospat, and draft regula-tion for management of modern andtraditional retailer. Three of this ad-vices has been responded by the Gov-ernment.

Tahun 2000 2001 2002 2003 2004 2005 2006 2007 2008 Total

Report 7 31 48 58 77 183 139 244 225 1012

Decision 2 4 4 7 7 18 12 27 28 109

Stipulation 0 1 4 2 2 4 6 4 19 42

Completed cases 2 5 8 9 9 22 18 31 46 151

On-going cases 0 0 0 0 0 0 0 0 19 19

Percentage forquality of reports

28.57%

16.13%

16.67%

15.52%

11.69%

12.02%

12.95%

12.70%

28.89%

16.80%

Based on provided statistics, number of handled cases tend to increase following the increased re-ports. Until 2008, KPPU has handled 170 competition cases, in which 116 of them (68.23%) werebid-rigging cases. Percentage for quality of reports identified number of reports that meet the criteriadetermined by KPPU as a completed report with a competition issues. This percentage is measuredby deviding number of handled cases with number of reports. With takin into account on the resultedvalue, the quality was tend to decrease in the first five years and begun to increase rapidly in thisyear due to increase number of socialization/publication on KPPU and how to submit a report toKPPU, as well as increase number of public consultations. Total value of 16.80% showed that KPPUstill need to advocate more to increase public awareness on competition issues.