The recently issued KPPU Regulation No. 2 of 2021 is not much different from the Government Regulation No. 44 of 2021 which we discussed in our previous publication.
This new set of regulations provides greater certainty for KPPU, the Indonesian Competition Authority, in chasing payments of fines from 'delinquent' companies which were subject to final and binding decision, a problem that has long overshadowed its success in the past years. KPPU is struggling to collect approximately US$30 million worth of fine backlog. In a recent 'virtual roadshow' held by KPPU, the Ministry of Law and Human Rights and the Ministry of Finance, we learnt three key things on the transformation of the antitrust enforcement regime to be expected soon.
One: The KPPU Tribunal – which issues decisions finding antitrust infringements and imposes sanctions, following the case examination in which the defendant(s) and KPPU investigators present their case – has wide discretion to decide the method of calculating the maximum fine – i.e., either the 10 percent of total turnover or 50 percent of illegal profit
The Tribunal will have wide discretion to decide – on a case-by-case basis – which method of calculation is most appropriate for the case at hand. Of course, the Tribunal depends on the availability of data and needs to ensure the defendant's ability to pay and to not close its business. In the end, it is in the interest of KPPU itself to keep more players in the relevant market and it is in the interest of the Government of Indonesia that enterprises flourish to open up as many job opportunities as possible.
Two: The Tribunal sets the amount of deposit that should be logged as bank guarantee before a company can launch an appeal against a KPPU decision
The law stipulates that the maximum guarantee will not be more than 20 percent of the fine imposed, but what is the minimum?
In its roadshow, KPPU considered that since the Tribunal will review the financial documents of the defendant when deciding the fine, the Tribunal should also be able to weigh in on the amount of an appropriate and reasonable guarantee. The Tribunal will include a provision on this aspect in its sanctioning decision.
Three: If a defendant does not appeal against the KPPU decision, but still refuses to pay the fine imposed, it will face more severe consequences going forward
One of KPPU's biggest problems has been that it has a significant number of receivables (in terms of fines to be paid), but it has not been able to chase the actual payment of the fines. This ought to change.
Once a KPPU decision is final and binding, the defendant must voluntarily pay the fine imposed within 30 business days or request for payment deferral (like a grace period or payment in instalments) within 14 business days.
What if the defendant does not pay?
(a) Delay penalty of two percent per month
The fine imposed in a KPPU decision is treated as non-tax State revenue (Pendapatan Negara Bukan Pajak), and an additional fine of two percent per month of delay will be imposed for any delay in payment – including for the delay in payment of the fine imposed in a KPPU decision.
(b) Law enforcement
KPPU may also opt to coordinate with relevant law enforcement bodies, to initiate a criminal investigation on the purported 'loss to the state' caused by the defendant's omission to fulfil its payment obligation.
(c) Suspension of services from governmental institutions
Perhaps most controversial of all is the statement made during the roadshow that KPPU may also explore coordinating with the relevant governmental institutions to seek suspension of services, for example the export and import license services or the immigration services (such as passport processing for the relevant member of management in a company which does not pay the fine imposed by KPPU). This statement has ignited a public debate and might even have further – more complex – implications, such as potential administrative claims and what-not.
Changes are coming and continuing. On the horizon, KPPU is preparing to amend KPPU Regulation No. 1 of 2019 on Procedural Law (for general antitrust and competition cases) as well as KPPU Guideline No. 3 of 2009 on Relevant Market. KPPU also aims to update the KPPU Regulation No. 4 of 2019 on Supervision of Partnership (between Corporations and Small and Medium Enterprises) and the relevant Procedural Laws.
On the judicial front, the Supreme Court is preparing the amendment of the Supreme Court Regulation No. 3 of 2019 on the Procedure of Appeal against KPPU Decisions.
In a dynamic jurisdiction such as Indonesia, the flood of changes can be overwhelming. But the government stated that these changes are aimed at a more business-friendly regime and to protect people against unfair business practices. Business people need to keep abreast of the changes before them and continue to ensure compliance with the law.
Businesses under investigation by KPPU will need to take a more holistic approach in strategizing their case, looking at the various options and preparing early – financially – for a potential appeal or fine payment.
Authored by Dyah Paramita.