Last year, the Competition Supervisory Commission (Komisi Pengawas Persaingan Usaha or "KPPU"), an independent government agency that oversees unfair business competition practices in Indonesia, issued the Competition Compliance Program for companies in Indonesia through KPPU Regulation No. 1 of 2022 on the Competition Compliance Program ("KPPU 1/2022").
In general, KPPU 1/2022 aims to encourage companies in Indonesia to prevent unfair business competition practices. The Competition Compliance Program ("Program") is intended to ensure that all companies in Indonesia comply with the prevailing Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition ("Competition Law"). The Program can also detect any violation of Competition Law, as well as enforce adequate remedial actions toward violations.
In this article, we provide a general overview of KPPU 1/2022, particularly the: (i) Benefits for Companies; (ii) Contents of the Programs; (iii) Registration, Reporting, and Evaluation by KPPU; and (iv) Concluding Remarks.
Benefits for Companies
Under the regulation, KPPU provides several benefits to companies already participating in the Program. These companies can maintain their reputation, promote the ethics and good corporate governance, create compliance procedures, increase the trust (of investors, partners, consumers, and government), foster healthy competition, and prevent legal violations.
(Article 4 of KPPU 1/2022)
Furthermore, KPPU may reduce the sanctions if they find that companies already registered in the Program violate the Competition Law (Article 5 paragraph (4) of KPPU 1/2022
Contents of the Program
KPPU 1/2022 provides the minimum prerequisites for companies joining the Program:
- Code of Ethics: The company's internal rules containing values, norms, and/or ethical principles in accordance with fair business competition as the basis for the company's behavior in conducting its activities.
- Compliance Guideline: A document that contains work guidelines and commitments for every element in the company in conducting its activities and interacting with stakeholders in accordance with the principles of fair business competition.
- Implementation of socialization, counseling, training, and other activities in respect of the Program: Activities of all officials in the company that provide knowledge, increase specific and systematic understanding, and develop competence and technical skills in implementing the principles of fair business competition.
(Article 6 to 9 of KPPU 1/2022)
The perquisites above are not ubiquitous and can be modified depending on the nature and needs of the business actors. In this regard, a business actor may adjust the content of the Program depending on the business sector, the structure and market power, and the frequency with which employees have contacts with their competitors, suppliers, and consumers (Article 6 paragraph (3) of KPPU1/2022).
Registration, Reporting, and Evaluation by KPPU
Any company in Indonesia that wants to register into the Program should deliver a written registration in Bahasa Indonesia, signed by the Director and a report on the company's preparation to join the Program to the Head of KPPU. The preparation report should consist of:
- Commitment of the company;
- Person-in-charge of the Program;
- Risk identification;
- Risk mitigation;
- Socialization, counselling, training, and/or other activities relating to the Program;
- Supervision scheme;
- Internal reporting mechanism;
- Evaluation and monitoring;
- Internal sanction; and
- Regular adjustments.
(together, "Preparation Report")
KPPU will evaluate the Preparation Report within 15 days after receiving the report (Article 11 (3) of KPPU 1/2022). If KPPU rejects the report, the company would be required to make the necessary revisions based on KPPU's notes and/or instructions. Once KPPU approves the revisions after a thorough evaluation process, the company will be given a green light to start the Program. The approval for Program participation will be valid for five years and can be extended. (Article 13 (4) of KPPU 1/2022)
Concluding Remarks
KPPU 1/2022 aims to foster equitable practices in business competition. This regulation promotes the establishment of Program by companies to ensure adherence to the Competition Law, identify violations, and implement corrective measures. The Program encompasses various components, such as a code of ethics, compliance guidelines, and activities like awareness campaigns, guidance, and training. The existence of the Program has become the best practice in various global business competition authorities to minimize infringement risks by business actors. KPPU expects that business actors, particularly state/regional government-owned enterprises, and large, multinational, and export-oriented companies can adopt the said competition compliance program to support the credibility of the companies in the eyes of the international community.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
