The Cartels and Leniency Review: Indonesia

Enforcement policies and guidance

Law No. 5 of 1999 concerning the Prohibition of Monopoly and Unfair Business Competition Practices (the Indonesian Competition Law or the ICL) is the primary law regulating business competition in Indonesia. Chapters 3 and 4 of the ICL, regarding restrictive agreements and activities respectively, set out provisions prohibiting cartel conduct in relation to price, production or market, as well as bid rigging. In addition, provisions on restrictive agreements or activities are contained in other laws and regulations, such as Article 382 bis of the Indonesian Criminal Code, which prohibits unfair competition. Law No. 11 of 2021 concerning Job Creation (the Omnibus Law) has partially amended the ICL, among other things by removing the criminal sanctions for anticompetitive conduct violations and imposing a higher cap on criminal sanctions for obstructing a competition investigation or examination.

The competition authority responsible for the enforcement of the ICL, from research into certain industries, investigations and examinations to the imposition of sanctions, is the Indonesia Competition Commission (KPPU).2 The KPPU may commence investigations and examinations, as well as issue decisions and impose administrative sanctions for all violations of the ICL. The KPPU has the power to summon undertakings, witnesses or experts to obtain, examine and evaluate documents or other instruments of evidence.

The prohibition of cartels under the ICL covers horizontal restricted agreements or cartels through its prohibitions on price-fixing, production arrangements, market allocation, group boycotts, bid rigging and other arrangements, conspiracy or concerted practices that may restrict competition in the market or may cause harm to consumers. In the clause on bid rigging in particular, the ICL does not clearly state whether purely horizontal or vertical arrangements are covered. However, in its guidelines on this matter, the KPPU adopts both arrangements.

The substantive cartel test in the ICL takes either the 'per se illegal' approach or the 'rule of reason' approach in each article. The provisions that employ the phrase 'which may result in monopoly or unfair business practices' generally adopt the rule of reason approach. In the application of the provisions of the ICL, certain conduct or an agreement is considered a violation only after the KPPU has conducted an in-depth assessment to establish whether the conduct or agreement has an adverse impact on the market or on competition. This assessment applies to certain cartel conduct, such as output restriction, market allocation and bid rigging.

The per se illegal approach is adopted in those provisions that do not include the above-mentioned phrase. In this approach, the KPPU does not have to analyse the effect on the market of conduct or an agreement as the existence of a prohibited agreement or conduct is itself considered a sufficient violation of the provisions. This approach is similar to the application of the per se illegal rule in other jurisdictions and is applicable to price-fixing and boycott provisions in the ICL. To date, the KPPU has issued several guidelines relating to cartel assessment, namely guidelines on the assessment of bid rigging, restrictions on output and marketing, and price-fixing.

Cooperation with other jurisdictions

The ICL does not have any specific provision for cross-border competition issues, particularly with regard to leniency. However, the KPPU has so far officially cooperated with Japan, Korea, Mongolia, Australia, New Zealand, the United States, Vietnam and, in 2018, Singapore, in its attempt to administer the cross-border aspects of competition law. Since the nature of cooperation is bilateral, the scope of cooperation with a certain competition commission from one jurisdiction might differ from that with another.

Cooperation with Japan takes the form of an economic relationship under the Indonesia–Japan Economic Partnership Agreement (IJEPA). This agreement was implemented in 2007 and includes a special section on competition policy, particularly concerning notification of law enforcement, information exchange and technical assistance. This partnership agreement is a means of support for the Japan Fair Trade Commission (JFTC) and the KPPU to enforce competition law in both countries.3

In 2014, the KPPU established a bilateral cooperation with the Korea Fair Trade Commission. The cooperation aims to contribute to the effective implementation of the competition laws of each party by promoting cooperation in competition law and policy between Indonesia and Korea. In 2017, the KPPU established a cooperation agreement with the Authority for Competition and Consumer Protection Mongolia, whereby they agreed to build the capacity of competition agencies through technical assistance programmes, data exchanges and sharing knowledge. Cooperation with Australia (the Australian Competition and Consumer Commission) and New Zealand (the NZ Commerce Commission) on competition policy is covered under the ASEAN–Australia–New Zealand Free Trade Agreement.4

In August 2018, the KPPU signed a memorandum of understanding (MOU) with the Competition and Consumer Commission of Singapore, the first-ever MOU between competition authorities in ASEAN Member States. This signifies the strengthening of the long-standing relationship between the two authorities. The aim of the MOU is to generate more consistent and effective competition outcomes and remedies so that business will have more regulatory certainty in cross-border matters (particularly the Indonesian–Singapore issue) by having a cooperation framework that encourages notification of enforcement activities that potentially affect one party's interests, facilitates the exchange of information between the competition authorities, ensures the confidentiality of information and coordinates the cooperation in handling cases of mutual interest. It also addresses exchanges of employees.5

Although the cooperation between the KPPU and competition authorities in other jurisdictions covers, among other things, the exchange of information in relation to competition law enforcement, to date there has been no precedent of this cooperation, particularly regarding information exchanges with respect to the investigation or examination of cartels or any other competition cases. However, the KPPU has issued a notification of law enforcement to the JFTC concerning the KPPU's decision on a cartel on automatic scooters committed by two multinational Japan-based companies (Yamaha and Honda) (Automatic Scooter case),6 and the JFTC has made a notification to the KPPU for the CRT case.7 These notifications were made based on the IJEPA. Another implementation of the IJEPA was in the Donggi-Senoro LNG case, in which the KPPU notified the JFTC immediately after the release of its decision because of the involvement of Mitsubishi Corporation.8

Jurisdictional limitations, affirmative defences and exemptions

The ICL generally applies to prohibited conduct that occurs abroad only if the conduct has an adverse effect in Indonesia. The KPPU will also investigate whether a defendant is established or domiciled in Indonesia, or directly or indirectly engages in business activities in Indonesia. In one bid rigging case, the KPPU included a foreign undertaking as a defendant.

In KPPU Decision No. 03/2016 regarding the tender for jack-up drilling rig services, which was conducted by Husky-CNOOC Madura Limited (HCML), the KPPU included HCML as one of the defendants although the company is established in British Virgin Islands. Note, however, that HCML had an office and was engaged in business activities in Indonesia. HCML was accused of conspiring with PT China Oilfield Services Limited Indo (COSL), an Indonesian entity, to win COSL. HCML and COSL, both of which were deemed to be affiliates owing to their ownership of shares, were found guilty and fined by the KPPU.9 However, the decision was later overruled by the district court.

If none of the conditions above are satisfied, the KPPU may pursue a case by enforcing its decision against local subsidiaries or affiliates of the foreign companies. This extraterritorial doctrine has been applied several times by the KPPU in investigations of violations of the ICL.

In the Temasek case,10 the KPPU accused Temasek, a Singaporean entity, of committing anticompetitive behaviour by having ownership of majority shares in both Telkomsel and Indosat, two major telecommunications providers in Indonesia. According to the KPPU, the cross-ownership had resulted in the control of more than 50 per cent of the Indonesian cellular market, which led to the lessening of competition. This situation then allowed Telkomsel to apply excessive prices for its services, which led to consumer loss. The KPPU's decision to include Temasek as a defendant created controversy about whether a foreign entity can be subject to the enforcement of the ICL. In its decision, the KPPU states that, with reference to national and international law, the ICL may be enforced extraterritorially as long as the requirements regarding implementation doctrine or the single economic entity doctrine are satisfied.11

Further, the KPPU argued that it implemented the Single Economic Entity (SEE) doctrine to the defendant. The KPPU viewed Telkomsel, Indosat and other companies within the Temasek Business Group as a single economic entity. This is based on the KPPU's conclusion that Temasek, through its subsidiaries, was able to (1) appoint its representation within the management of Telkomsel and Indosat, (2) influence the business policy of Telkomsel and Indosat, and (3) access sensitive and confidential information about Telkomsel and Indosat. The Supreme Court has upheld the Temasek case and thus the KPPU has since been consistent in applying the SEE doctrine and the extraterritorial application of the ICL in any investigation, assessment or other case involving any foreign undertaking, either cartel-related or not; for example in the Travel Circle/DEI Holdings Limited case,12 Barclay Premier League case13 and the Amlodipine cartel.14

There is no industry-specific exemption applicable under the ICL. The ICL provides general exemption for certain agreements or activities, as follows:

  1. conduct (actions) or agreements for the purpose of implementing prevailing regulations;
  2. agreements relating to intellectual property rights, such as licensing, patent, trademark, copyright, industrial product design, integrated electronic circuit, and trade secrets and agreements relating to franchising;
  3. agreements on technical standardisation of goods or services that do not restrict or impede competition;
  4. agreements relating to agencies that do not contain provisions to resupply goods or services for less than the agreed price;
  5. agreements on research cooperation to increase or improve the standard of living of the society at large;
  6. international agreements that have been ratified by the government of the Republic of Indonesia;
  7. export-oriented agreements or actions that do not distract demand or supply for the domestic market;
  8. undertakings falling within the category of small-scale enterprises; or
  9. activities of cooperatives that exclusively serve the interests of their own members.

However, there are precedents in which the KPPU took a different view in interpreting the exemption in point (a). In the Garlic case,15 the KPPU alleged that 19 garlic importers, as well as several government institutions, were colluding and impeding the production or distribution of imported garlic. According to the applicable regulations, importers are required to obtain certain approvals from the Ministry of Trade to import garlic. The KPPU decided to include the Minister of Trade and the Directorate General of International Trade as defendants in relation to an allegation that they colluded with the 19 importers in issuing import approval. In its decision, the KPPU found the Minister and the Directorate General guilty although they had acted within their statutory powers and did not engage in any business or commercial activities.16

There was also a case in which the actions of the defendants were based on a written and formal instruction from the Ministry of Agriculture, which in this matter constituted a valid policy as there were sanctions for those who ignored the instruction; however, the KPPU held a different view. In the Chicken case,17 the KPPU alleged that 12 breeders were limiting the production of broiler chickens. The allegation was based on the fact that the defendants had conducted an early culling of parent stocks and hatchery egg final stocks in 2015. The KPPU viewed this early culling as an attempt by each defendant to jointly limit their output, even though it was done according to an official instruction from the Ministry of Agriculture. The instruction itself was issued by the government in an effort to mitigate the effects of oversupply of live birds, which was detrimental to small-scale farmers. Regardless of these facts, the KPPU held that the defendants were jointly limiting their output and found them guilty. The district court recently annulled the decision and the KPPU lodged an appeal with the Supreme Court. However, the Supreme Court upheld the district court decision.

The above precedents indicate that the KPPU will not apply the exemption set out in point (a) as an absolute exemption. Hence, it is necessary for undertakings to take cognisance of their business practices and decisions even if these are based on or carried out under government instructions or authority.

Leniency programmes

The ICL does not currently regulate leniency. However, it has been under a process of amendment for several years and the newly elected government and parliament may use the existing draft amendment, prepared and discussed by the previous government and parliament, which introduces a high-level provision on leniency whereby the KPPU may fully exonerate or reduce the sanction for an undertaking that confesses or reports any activity that allegedly violates the ICL. As yet, it is unclear how the leniency programme will be designed; for example, the nature of the mechanism itself and the benefits for applicants.

Notably, however, the implementing regulation for the Omnibus Law, Government Regulation No. 44 of 2021 on the Implementation of Prohibition of Monopolistic Practices and Unfair Business Competition (Regulation No. 44), sets out the following extenuating factors to be considered when determining the amount of applicable fines: (1) efforts by the business entity to comply with the law (e.g., by establishing a code of ethics, training or other similar activities); (2) voluntary termination of the violating conduct; (3) whether the business entity engaged in the violating conduct or similar conduct in the previous eight years; (4) whether there was an intentional basis for the violating conduct; (5) whether the business entity initiated the violation; and (6) the impact of the violation.


When the KPPU concludes that a violation has occurred, it has the authority to impose administrative sanctions, such as annulling the agreements or cancelling any provisions of an agreement that would violate the ICL, imposing administrative pecuniary penalties. The Omnibus Law is maintaining the minimum administrative penalty at 1 billion rupiahs. The maximum administrative fine has now been increased to 50 per cent of the net profit or 10 per cent of total turnover in the relevant market during the violation period; previously the cap was only 25 billion rupiahs. In addition to these administrative fines, the KPPU can award compensation for damage incurred by companies or individuals as a result of anticompetitive conduct. In some cases, the KPPU may also order the defendants to lower the prices of their products or refrain from or commit to performing certain activities or practices (debarment).

Article 47 of the ICL, which has been amended by the Omnibus Law, reads as follows:

(1) The KPPU has the authority to impose administrative sanctions on undertakings that are proven to have violated the ICL.
(2) Administrative sanctions as referred to in Paragraph (1) of this Article can be in the form of:
  1. a decisioon to annul agreement as intended in articles 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 15, and 16;
  2. an order to discontinue vertical integration as intended in article 14;
  3. an order to discontinue practices that may cause monopolistic practices or unfair business competition, and/or harming the society as intended in articles 17, 18, 19, 20, 21, 22, 23, 24, 26, and 27;
  4. an order to discontinue the abuse of a dominant position as intended in article 25;
  5. a decision to annul a merger or amalgamation and share acquisition as intended in article 28;
  6. a decision to pay compensation for damage; or
  7. a fine of at least 1 billion rupiahs.

In 2021, the KPPU issued Regulation No. 2/2021 on the Guidelines for Imposing Administrative Fines as the implementing technical regulation on administrative fines (Regulation No. 2/2021). As mentioned earlier, the cap for administrative fines is either 50 per cent of net profit or 10 per cent of the total turnover of the relevant market during the violation period. Regulation No. 2/2021 further formulates the net profit as the gross profit minus the sum of fixed costs, taxes and levies, as opposed to deducting the total cost (which is the sum of fixed costs and variable costs) from the gross profit. There has been no publicly available information stating whether the KPPU will also consider deducting the variable costs from the gross profit when determining administrative fines.

As meticulous calculation of administrative fines is imperative, the KPPU requires extensive supporting documents from businesses to confirm the basis for fines, using either the net profit or the turnover value. For net profit, the company needs to provide legitimate and credible financial statements and accounts, as well as proof of (1) sales; (2) attributable fixed costs; (3) tax payments; and (4) levy payments (all of which are needed to calculate the net profit). Similarly, for turnover, the company needs to consider the following factors, among others,: (1) legitimate and credible financial statements; (2) bank statements; (3) sales volume; (4) market price; (5) price list; (6) offer price list; (7) accounts and proof of sales or purchases; and (8) other relevant data required by the KPPU Commission Panel. Legitimate and credible financial statements are either the company's audited financial statements or the company's financial statements supported by a statement from an accounting expert.

As a consequence of Regulation No. 44 of 2021, it is imperative for businesses that wish to lodge an appeal to the Commercial Court against a competition case decision to deposit a bank guarantee with the Chair of the KPPU within 14 business days of receipt of the KPPU decision. The bank guarantee will be returned to the reported party if the KPPU's decision is overturned but liquidated by the KPPU if the decision is upheld.

Where a fine is imposed, the party concerned must pay within 30 business days of the date that the KPPU decision to this effect becomes final and binding. Otherwise, the KPPU will impose a penalty for late payment. Regulation No. 2/2021 is silent on how the late-payment penalty will be calculated. Nevertheless, in several webinars, the KPPU has confirmed that the late-payment penalty will refer to Law No. 9 of 2018 on Non-Tax State Revenue, in conjunction with Government Regulation No. 58 of 2020 on Non-Tax State Revenue Management, and a penalty of 2 per cent of the total fine per month for a maximum period of 24 months will apply. Notably, a one-day delay will be considered to be one full month.

Another interesting element of KPPU Regulation No. 2/2021 is that it provides for an option for the reported parties to meet the administrative fines through instalments over a maximum period of 36 months. If the instalment period is more than 12 months, the party must provide a suitable guarantee, approved by the KPPU, in the form of insurance, bank guarantee, surety bond, security interest or other guarantees. To avail of this facility, the reported parties must first submit a request to the Chair of the KPPU within 14 business days of the KPPU decision becoming final and binding. The request must be supported by the party's financial statements, including at least the following data:

  1. a statement of the company's cash flow during the proposed period along with an analysis of how the company's cash flow would suffer if the fine were paid outright;
  2. a cash flow plan that includes a proposal for instalments or payment within a certain period; and
  3. an explanation of the analysis showing that the proposed instalments or payment within a certain period is suitable for the company's financial capabilities or business activities.

'Day one' response

The KPPU does not have authority to conduct searches and seize documents. Pursuant to Article 36 of the ICL, the KPPU is authorised to investigate or examine alleged cases of monopoly or unfair business competition practices; summon undertakings, witnesses and experts; request information from the government; and impose administrative sanctions for undertakings that violate the provisions of the ICL.

Furthermore, if undertakings, witnesses, experts or any other person is not willing to comply with a KPPU subpoena, the KPPU may seek the assistance of law enforcers, such as police officers, prosecutors and others, to ensure the parties attend a KPPU examination.18 This is followed up by an MOU with the national police (as of 2010) and the Attorney General's Office (as of 2013). The scope of cooperation between the KPPU and the national police includes guidance, operation and exchange of information relating to competition law enforcement. The scope of cooperation between the Attorney General's Office and the KPPU includes data or information, studies, expert and legal aid, human resources development and socialisation of competition law enforcement.

Private enforcement

In general, the ICL does not expressly regulate undertakings seeking indemnity for alleged violations committed by certain undertakings. However, in its Regulation No. 1/2019 on case-handling procedures, the KPPU classifies two types of reporting parties: those requesting indemnity and those not requesting indemnity. However, since the implementation of Regulation No. 3/2019, the KPPU has not received any reports of alleged violations from undertakings requesting indemnity.

Current developments

The ICL is undergoing a process of amendment. Despite the fact that the substance of the ICL draft amendment has still not been made public (because of ongoing parliamentary discussion whether to provide a new draft amendment), the draft that is publicly available19 and related media releases suggest that the following changes have been proposed.

i Leniency procedure

The draft amendment introduces provisions for whistle-blowers to be given a fine reduction by participating in a leniency programme. The draft does not elaborate on the procedures, stating that it will be further directed by government regulations. Note, however, that leniency will not apply to conspiracies involving tender or bid rigging. Leniency might also be granted to a firm making a confession, which makes it easier for the antitrust enforcer to produce proof. Leniency programmes could reveal conspiracies that may otherwise not be detected by the antitrust authority, and make investigations more efficient and effective.

ii Increase in administrative fines

Under the current law, the maximum fine that can be imposed on each undertaking is 25 billion rupiahs. Parliament is proposing that the amount of the fine be increased to between 5 and 30 per cent of the sales value during the period of the infringement. However, the government opposes these figures and proposes a maximum of 25 per cent of the sales value relating to the relevant market during the period of the infringement. As yet, there has been no further discussion between Parliament and the government.

Aside from the amendment, there is an Indonesia Constitutional Court (ICC) decision that affects implementation of the ICL. Through its judicial review (Decision No. 85/PUU-XIV/2016), the ICC determines that:

  1. the use of the phrase 'other party' in Articles 22, 23 and 24 of the ICL was conditionally contradictory to the 1945 Constitution of the Republic of Indonesia and is not legally binding so long as it is not understood as other than 'and/or party related to other undertakings'; and
  2. the phrase 'investigation' in Article 36(c), (d), (h) and (i), and Article 41, Paragraphs 1 and 2 of the ICL conditionally contradicts the 1945 Constitution of the Republic of Indonesia and is not legally binding so long as it is not understood as 'collection of evidence as an examination material'.

Therefore, based on ICC Decision No. 85/PUU-VII/2016 regarding the addition of the wording 'and/or other parties related to other undertakings', Articles 22, 23 and 24 of the ICL should be understood as follows:

Article 22:
undertakings are prohibited from conspiring with other undertakings or other parties related to other undertakings (or both) to arrange or determine the winner of a tender resulting in the occurrence of unfair business competition.
Article 23:
undertakings are prohibited from conspiring with other undertakings or parties related to other undertakings (or both) to obtain information of their competitors' business activities classified as a company secret resulting in the occurrence of unfair business competition.
Article 24:
undertakings are prohibited from conspiring with other undertakings or parties related to other undertakings (or both) to restrict production or marketing of goods or services being offered or supplied in the relevant market for the purpose of reducing the quantity, quality or required punctuality.

All three of the above Articles are conspiracy-related. Through this Decision, the ICC is of the view that, to respond to and counterbalance the complexity of conspiracy, 'other party' must not be conventionally understood as 'other undertaking' but also as 'party related to other undertaking'. This serves as a limitation to the application of 'other party' as it had been used prior to the issuance of ICC Decision No. 85/PUU-VII/2016, which, according to that decision, was applicable to anyone and without limit. Nevertheless, the ICC does not further classify the definition of 'related to'. Owing to the absence of a definition, there is the possibility of any party freely assuming it to be, for example, a person or individual, or a tender committee, that stands in some relation to the other undertaking.

Furthermore, the ICC, through Decision No. 85/PUU-VII/2016, confirms that the KPPU is a state auxiliary organ having the authority to enforce competition law within the reach of state administrative law. This confirms that the KPPU can only impose administrative sanctions. The ICC further confirms that criminal sanctions can only be applicable to an undertaking for not implementing a KPPU decision, providing that the KPPU decision is final and binding. If that is the case, the KPPU decision shall be submitted to the law enforcer to be further processed, as stipulated under Articles 48 and 49 of the ICL regarding principal and additional criminal sanctions.

To date, there has been neither a new regulation nor a new guideline from the KPPU regarding implementation of ICC Decision No. 85/PUU-VII/2016 specifically in relation to conspiracy and cartel cases.


1 H M B C Rikrik Rizkiyana and Farid Fauzi Nasution are partners, Vovo Iswanto is of counsel and Anastasia Pritahayu R D is a senior associate at Assegaf Hamzah & Partners. The information in this chapter was accurate as at January 2020.

2 Komisi Pengawas Persaingan Usaha, the Indonesia Competition Commission.

3 Intergovernmental Group of Experts on Competition Law and Policy, Agenda Item 3c. Enhancing International Cooperation in the Investigation of Cross-Border Competition Cases: Tools and Procedures, 5 July 2017.

4 ibid.

6 KPPU Decision No. 04/KPPU-I/2016.

8 OECD/Korea Policy Centre Competition Programme, Asia-Pacific Competition Update Issue 11 April 2014,

9 See, for example, KPPU Decision No. 03/2016.

10 KPPU Decision No. 07/2007.

11 See, for example, KPPU Decision No. 07/2007.

12 KPPU Decision No. 27/2020, a non-cartel case.

13 KPPU Decision No. 03/2008, a non-cartel case.

14 KPPU Decision No. 17/2010.

15 KPPU Decision No. 05/2013.

16 See, for example, KPPU Decision No. 05/2013.

17 KPPU Decision No. 02/2016.

18 Article 36g.

19 This draft was prepared by the previous parliament and government.

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