CLARS presents research at the 23rd ASLI Conference in Jakarta at Universitas Indonesia
In June, CLARS Member Associate Professor Mel Marquis appeared at the Asian Law Institute Conference in Jakarta to present his collaborative research with Associate Professor Yuliana Wahyuningtyas, of Utma Jaya Catholic University.
Mel and Yuliana proposed a re-design of Indonesian merger law with a view to enhancing Indonesia’s competition culture, providing better economic outcomes for Indonesians, and supporting ASEAN’s goal of achieving stronger national competition regimes.
As Mel and Yuliana suggested at the conference, the main weakness in the existing Indonesian merger control system is the lack of mandatory pre-merger approval by the competition authority, the Komisi Pengawas Persaingan Usaha (KPPU).
The current regime merely requires notification for qualifying mergers, a symbolic but ineffectual mechanism that disempowers the KPPU, and invites moral hazard. The authority’s ability to fine business operators for late notification past a 30-day window achieves nothing meaningful.
Provisions adopted in Indonesian law in 1999 and 2010, the presenters argued, are long overdue for reform. Indonesia’s House of Representatives is currently debating possible amendments to the Competition Act of 1999 but it is unclear how ambitious or unambitious the reforms will be - if they are adopted at all, which cannot be taken for granted.
Indonesia does not need mere incremental adjustments and tweaking: such routine maintenance would only produce more path dependency. To promote effective competition, and to generate a strong return on investment, a deeper commitment to ex ante, preventive control of significant mergers is required.
A key consequence of the legal reform advocated by Mel and Yuliana is that the KPPU would face far greater challenges in relation to technical expertise and efficient operations. Enhancement of the legal apparatus for merger assessment must therefore be accompanied by a parallel, targeted upgrade in institutional capacity.
This would require (political support for) significant additional funding and training to ensure that the KPPU has sufficient staff with the needed capacity and proficiency to carry out competition law’s most important and most demanding task, the proper screening of mergers that could significantly impede competition.
Such a task cannot be implemented overnight; a phased series of enhancements would enable the competition authority as well as stakeholders to prepare for a complete transition to a more robust screening framework that delivers strong economic outcomes for Indonesian society, thereby also helping to advance the ASEAN integration project.