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One legal instrument in the development of the economy of Indonesia is Law Number 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition (Law 5/1999).
Like any other law, this law is enacted to safeguard the interests of the public and to improve the efficiency of the national economic as one initiative to improve the people’s welfare.
To ensure the enforcement of the law, the Business Competition Supervisory Commission or Komisi Pengawas Persaingan Usaha (KPPU), through Article 30 of Law 5/1999, was established to carry out the purpose of supervising the implementation of the law.
However, the current execution of the law does not provide protection to the whistleblowers who may or may not have been aggrieved by the unfair business practices that the reported entities have committed.
KPPU, as the public enforcement agency, can only decide whether the business practices have
breached the law3 without being able to burden the business entities to pay compensation to the direct damages, they have brought to the victims of such practices. Wouter Wils, through his work, stated that there are at least three functions of clinching an effective imposition of antitrust law, which are the
precedent, compensatory, and deterrence function.
Meanwhile, it is understood that the status quo law is lacking in the compensatory function.
In KPPU’s decision Number 26/KPPU-L/2007 concerning the SMS Cartel,
KPPU did not recognise its authority to impose compensation sanctions on consumers;
hence, the directly injured parties did not receive any compensation. Conversely, KPPU issued a decision in 2009 concerning the Fuel Cost Cartel.
Through the decision, KPPU determined the compensation payment of 10% of the excessive fuel surcharge to the whistle-blowers.
However, this compensation payment was not paid to harmed consumers but went to the state treasury. This is because the existing laws in Indonesia only accommodate public enforcement but do not look at private enforcement, which mechanism provides space in civil courts for victims to claim compensation for violations of business competition law.
Looking at the regulations that have been implemented in other countries, private enforcement is not something new, considering that this method has been applied in the United States, the European Union, and Germany.
About 90% of business competition violation cases in the United States are handled privately.The same is found in the European Union, although this form of balancing between public and private enforcement is
implemented through a directive13 released in 2014.
This Damages Directive provides legal certainty for the people of the European Union regarding their right to compensation. After establishing the Damages Directive, private enforcement in
the European Union became more common and balanced with the implementation of private enforcement in the United States
Strengthening of private enforcement has been deemed necessary mainly to enhance the effectiveness of the competition law system and guarantee that victims of antitrust infringements get compensated for the harm they have suffered.
The U.S. Supreme Court has repeatedly held that the private right of action under the antitrust laws serves two purposes: compensation and deterrence.
This kind of proceedings add considerably more to the effectiveness of the private enforcement system, and it is to this use of competition law provisions as a sword that this work will attribute most of its discussion.
Moreover, Court of Justice of the European Union reminded legislatures across Europe in Courage that “actions for damages before the national courts can make a significant contribution to the maintenance of effective competition in the [European] Community” and that “any individual” must be able to claim damages for loss caused by anticompetitive conduct.
The provisions related on private enforcement can also be used as a ‘sword’, the metaphor of which refers to the proactive use of the provisions by private parties as a basis for claiming damages or injunctive relief.
Private enforcement in Indonesia19 can have a positive impact on business competition law enforcement in Indonesia. Such impacts include, first, to increase deterrence and compliance with
business competition law in Indonesia because all economic actors can act as law enforcers.
Second, private enforcement is an appropriate means for aggrieved parties to claim compensation
for violating business competition law.
Third, implementing private enforcement has proven successful in cracking down on business competition law violations such as cartel agreements and improving consumer welfare.
To summarise, unlike the above jurisdictions, the current status quo of Indonesia has not yet given the liberty for victims to be compensated, despite the losses that may have occurred.
This is because the KPPU, an institution appointed to enforce business competition law in Indonesia, cannot provide protection related to the right to compensation for victims of business competition violations.
The authority of KPPU is only limited to determining whether there is a violation of the business competition law and has never demanded business actors to pay compensation.
Therefore, it is necessary to immediately establish regulations for healthy business competition law enforcement through harmonisation between public and private enforcement in Indonesia.
Reflecting on other jurisdictions that have implemented such laws, victims who experience direct losses may be granted compensation; hence the objective of protecting the people is achieved with the compensation given.
(SFA/SPU)
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