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KPPU Provides Leeway for Business Actors Through Compliance Programs

Compliance Program

The decline in the number of positive cases of COVID-19 in Indonesia provides new hope for business actors to continue their business, which has been hit by economic difficulties in the last 2 (two) years. However, it is not easy for business actors to carry out business activities as usual in the midst of increasingly complex economic turmoil and the changes in the current business climate.

Recently, the Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha, “KPPU”) issued the KPPU Regulation on the Revocation of The Competition Supervisory Commission Regulation Number 3 of 2020 concerning Relaxation of Law Enforcement of Monopolistic Practices and Unfair Business Competition, and Supervision of Partnership Implementation to Support the National Economic Recovery Program. This shows that business activities will be re-supervised by the KPPU through its duties and authorities as regulated in Law 5 of 1999 (Law 5/1999“) to ensure that business activities run based on the principle of healthy and fair business competition. Previously, the relaxation was intended to provide dispensation for business actors and to support the government in the national economic recovery program due to the Covid-19 pandemic.

Compliance Program carried out by KPPU

However, KPPU still provides space for business actors to remain effective in carrying out their business activities through the “Compliance Program” as stipulated in KPPU Regulation No. 1 of 2022 concerning Business Compliance Program (“PerKPPU 1/2022“). The definition of Compliance Program is regulated in Article 1 number 5, which reads “a series of activities that show compliance efforts to the principles of healthy business competition, implemented and developed by Business Actors and compiled in a written document in the Indonesian language“.

The Compliance Program carried out by the KPPU aims to provide further understanding on compliance with Law 5/1999 and is also an effort to ensure that business actors and other interested parties comply with the provisions of business competition in order to minimize violations and to encourage the efficiency and innovation of business actors in carrying out business activities, as described in the Compliance Program Guidelines against Law 5 of 1999 (“Compliance Program Guidelines“).

Based on Article 6 paragraph 1 of PerKPPU 1/2022, the Compliance Program includes:

  1. Code of ethics;
  2. Compliance Guidelines; and
  3. Implementation of socialization, counseling, training, and/or other activities in the framework of implementing the Compliance Program in the company.

Then, paragraph 3 explains that the Compliance Program is arranged based on the nature of each industry by taking into account the following aspects:

  1. Business sector;
  2. Market structure and mastery;
  3. Business Actors’ Interaction with suppliers, competitors, and consumers.

Each implementation of the preparation of the compliance program will be evaluated and determined by the KPPU through the Commission hearing set out in the “Determination of Compliance Program“.

Compliance Program

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Benefits of Compliance Program

The issuance of PerKPPU 1/2022 by KPPU provides flexibility and protection for business actors in dealing with business turmoil after the Covid-19 pandemic in Indonesia. From what is described in the Compliance Program Guidelines, this Program provides benefits for business actors:

  1. Maintain the good name and reputation of the company;
  2. Considered capable of maintaining high moral ethics;
  3. Help create the company’s internal standard procedures related to compliance with Law 5/1999;
  4. Minimize the cost consequences arising from non-compliance with Law 5/1999. The cost consequences that may arise are related to (i) costs during the law enforcement process, the objection process up to the cassation, and (ii) administrative sanctions that may be imposed.
  5. Encourage companies to maintain the values of healthy business competition so that companies become competitive and innovative.

As a protection for violations of Law 5/1999

One of the concerns of business actors related to violations of Law 5/1999 is administrative sanctions in the form of fines imposed by the KPPU Commission Assembly, especially after there is an amendment to the Job Creation Law regarding the amount of fines stipulated in the derivative regulation of Government Regulation No. 44 of 2021 Article 12 with the amount of fines:

  1. At most 50% (fifty percent) of the net profit earned by Business Actors in the Relevant Market, during the period of violation of the Law; or
  2. At most 10% (ten percent) of total sales to the Relevant Market, during the period of violation of the Law.

Through this Compliance Program, business actors are expected to understand the principles of healthy business competition based on Law 5/1999 so that they can maintain order in the business environment and avoid making company policies that have the potential to violate Law 5/1999.

However, the KPPU emphasizes that the existence of a Compliance Program does not necessarily exempt business actors from the law enforcement process if they violate Law 5/1999. Business actors can be given relief from fines if they are willing to voluntarily register their companies to take part in the Compliance Program promoted by KPPU.

Compliance Program

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