KOMPETISIANewsletter on Indonesian

competition law and policy

Team of Editor:Ahmad Junaidi

Deswin NurIsti Prisniwi

Fathin Kemala NashirAlia Saputri

Contact address:KPPU Building

Jl. Ir. H. Juanda No. 36Jakarta 10120

INDONESIA

Also available online in our website:http://www.kppu.go.id

Index :

ForewordLaw Enforcement

Vertical collusion on road expansion in BatamCollusive behavior in the construction of official house in North Su-materaDiscriminatory practice in appointing of subsidize fertilizer’s distributorDiscriminatory practices in advertising management‘s right on outdoorplaces of Surabaya International AirportProcurement of contraception medicine was tend to restrict competi-tionAnti competitive behaviors in Broadcast Right for Barclays PremierLeague 2007

Competition advocacyTwo guidelines are publishedThe development of Indonesia’s oil and gas sector from competitionpoint of viewCompetition advocacy on airport warehouse managementCompetition advocacy on anti dumping policy of sodium tripolyphos-phate

International activityAPEC Senior Official Meeting IIIUpcoming international events

Newsletter on Indonesian competition law and policy

Published monthly by the Directorate of CommunicationCommission for the Supervision of Business Competition (KPPU)Republic of Indonesia

Vol. 08/I/2008 August 2008

After being awaited sufficiently long period,finally KPPU in this month has authenticatedtwo guidelines of Law No. 5/1999, which areconcerning administrative measures andexemption from the Law with regard to itsassociation to law and regulation. The twoguidelines bring additional wealth of KPPU’sinfrastructure after guideline of prohibitionof collusion in tender to increase publicawareness to competition policy in Indone-sia. In addition in competition law enforce-ment, KPPU have also finalized case sus-pected of violation on monopoly of BarclaysPremiere League and some discriminationcases and tender collusion. From policy side,KPPU have also given an airing to the gov-ernment on competition in downstream oiland gas industry and in management ofwarehouse in airport. Enjoys!

Foreword

Putera Nusa Per-kasa, a local con-struction company,and bid committeeare decided to con-duct a vertical co-lussion in roadexpansion projectin Batam. The casethat involved avalue of Rp. 1.848billion and basedon report, at begin-

ning was involving five alleged parties in bidprocess, namely Putera Nusa Perkasa, KurniaDjaja Makmur Abadi, Mitra Graha IndonusaIndah, Sumber Alam Sejahtera, and the BidCommittee. At early indications, it wasfounded that there were several indicationsof collussion between all participants, suchas formulation of bid documents by oneperson that lead to similarity in format andtyping mistakes, absent of complaint forappointment of Putera Nusa Perkasa, andsmall margin of owner estimate (0,99%).Vertical collussion was found by an indica-tion by the bid committee to pass PuteraNusa Perkasa which did not met administra-tive and technical evaluation, and absentia inclarification of bid offer document to bidwinner candidates.

In its decision on 1 August 2008, KPPU'sCommission Council evaluated several con-siderations. Firstly was that the similarity inbid document will not be sufficient to provedcooperation in formulating bid offer docu-ment. Secondly was that eventhough the BidCommittee did not agreed upon post bid-ding, thus KPPU's Commission Council ar-gued that the Bid Committee has initiatedpost bidding process due to circumstancethat entire bid documents are kept by theBid Committee. Thirdly was that the BidCommittee has facilitated Putera Nusa Per-kasa to pass them as the bid winner, not-withstanding that there were no legalizedletter of intent which shall declares a com-pany is not under supervision of the court,bancroupcy, and or suspended.

Based on aforementioned facts, CommissionCouncil of KPPU decided that Putera NusaPerkasa and the bid committee are convinc-ingly breach Article 22 of the Law, henceobliged to pay fine with amount of Rp 100milion. Other alleged parties are not foundguilty in this bid process.

Vertical Collusion on Road Expansion in Batam

...several indications of collus-sion between all participants,

such as formulation of bid docu-ments by one person that leadto similarity in format and typ-

ing mistakes...

Seven alleged parties was stipulated hadbreach article 22 of the Law No. 5/1999 onconspiracy in tender and being obligated topay fine with total amount of Rp 292 millionin the case of construction for regent’s andvice regent’s official house in HumbangHasundutan, North Sumatera. The sevenalleged parties are Mutiara Lautan Indah,Karya Bukit Nusantara, Dipa Panalasa, Kar-tika Indah Jaya, Linggahara Pratama, ToruanNciho Corporation, and Erkarya Jaya.

The bid process which involved govern-ment’s fund of Rp 1,496,250,000 for theregent’s house and Rp 996,800,000 for thevice regent’s house, was begun with reporton an agreement by Mutiara Lautan Indah,

Karya Bukit Nusantara, dan Dipa Panalasa indetermining Mutiara Lautan Indah as the bidwinner, and an agreement between KartikaIndah Jaya, Linggahara Pratama, ToruanNciho Corporation, dan Erkarya Jaya in de-termining Kartika Indah Jaya to win the bidfor vice regent’s house. This collusive behav-ior is proved due to the existence of formu-lation of bid offer document by a bid partici-pant that will be submitted to win the pro-curement.

Collusive behavior in the construction of official housein North Sumatera

This collusive behavior is proveddue to the existence of formula-tion of bid offer document by abid participant that will be sub-mitted to win the procurement.

Indonesian major fertilizer company(Petrokimia Gresik) was not proven tobreach the Law No. 5/1999 in its stroke inappointing Mahkota Tani Cooperative tosolely distribute subsidize fertilizer in Sragenregency, Central Java.

Subsidize fertilizer is classified as highly regu-lated industry in Indonesia, due to its supplyand distribution which supervised directly bythe Government to ensure farmers for acheap and affordable price to support theagriculture sector. Production, distribution,and profit margin on this transaction is alsoregulated by several government regula-tions, such as Decree of the President, De-cree of Minister of Trade, and Decree ofMinister of Agriculture, and GovernmentRegulation. It was also occur that throughRegulation of Minister of Trade No. 03/M-DAG/PER/2/2006 on Supply and Distributionof Subsidize Fertilizer for Agriculture, theGovernment gave exclusive right to Petroki-mia Gresik to produced ZA, SP-36, and NPKfertilizer with its own authority to assign itsdistributor. Mahkota Tani Cooperative wasassign as the distributor for Sragen in replac-ing Murni Sri Jaya Corp.

The relevant market to this case was thedistribution of subsidized fertilizer in Sragenregency. This was supported by the Regula-tion of Minister of Trade No. 03/M-DAG/PER/2/2006. In one side, this assignment isnot inline with fair competition due to itsrestriction for a potential distributor. But inthe other hand, KPPU’s Commission Councildid not found any negative effect or scarcitywhilst Mahkota Tani Cooperative runningthe show.

Based on the examinations, KPPU’s Commis-sion Council recommended the Commissionto provide advice and recommendation toMinister of Trade to revise the existing regu-lation and issued new regulation that regu-lated process for assignment of distributorthrough competitive process to provideequal opportunity on other business actors.The Commission was also deemed necessaryto provide advice and recommendation toPetrokimia Gresik Corp. to adjoin new dis-tributor in Sragen regency and consideringthe area of distribution and allocation. Also,to endorsed fair competition mechanism inassigning its distributors.

Discriminatory Practice in Appointing ofSubsidize Fertilizer’s Distributor

Subsidize fertilizer is classifiedas highly regulated industry in

Indonesia, due to its supply anddistribution which superviseddirectly by the Government to

ensure farmers for a cheap andaffordable price to support the

agriculture sector.

A state-owned enterprises (Angkasa Pura I)was proved to performed discriminatorypractices in advertising management’s righton outdoor places of Surabaya InternationalAirport, hence being advised to renegotiatedtheir agreements.

Through this case, KPPU’s Commission Coun-cil is considering several findings. Firstly wasthe fact that Angkasa Pura I has outsourcedits right on management of advertisement intollgate area and it surrounding (1,414.23square meter) to Sido Maju Industry Estatwithout formal bidding process. However,notwithstanding that other outdoors’ loca-tions were designated through beauty con-

test, it was not type of discriminatory prac-tices, because Angkasa Pura I has outsourcedits right as a compensation for tollgate’sconstruction according to the stipulation byits Board of Director. Secondly was the factthat Angkasa Pura’s action in not providinginformation on formation of advertisingspace in tollgate area and its surroundingduring the beauty contest was not type ofdiscriminatory practice.

Thirdly was the fact that Angkasa Pura’saction in fixing floor price for rent of adver-tising space in tollgate area which lower thanfloor price of other outdoor location was oneof the types of discriminatory practice.Fourthly was the fact that Angkasa Pura’saction to fixed the different floor price intollgate area (and its surrounding) whichlower than the floor price in other outdoorlocation, and by not providing informationon the availability of advertising space intollgate area (and its surrounding) during thebeauty contest process have caused dispar-ity of price rent as follows:

Based on these findings, KPPU (in 19 August2008) stipulated in its decision that AngkasaPura I has engaged discriminatory practicesin advertising right in outdoor location ofSurabaya International Airport which impedecompetition between advertising manage-ment companies. Therefore it was deemednecessary to issue an order to Angkasa Pura Ito renegotiate their rent agreement for ad-vertising space in tollgate area (and its sur-

rounding) with Sido Maju IndustriEstat.

Discriminatory practices in advertising management‘s right on out-door places of Surabaya International Airport

...Angkasa Pura’s action tofixed the different floor price intollgate area (and its surround-ing) which lower than the floorprice in other outdoor location,and by not providing informa-

tion on the availability of adver-tising space in tollgate area

(and its surrounding) during thebeauty contest process have

caused disparity of price rent...Tollgate and its

surroundingParking area Entry access to

airportWide 1.414,23 m2 325 m2 607 m2Management Sido Maju

Industri EstatTeam Work Advertising

IndonesiaFloor price (m2/month)

Rp. 50.000,- Rp. 150.000,- Rp. 150.000,-

Rent price (m2/bulan)

Rp. 85.000,- Rp. 509.000,- Rp. 155.000,-

Procurement of contraception medicine was tend torestrict competition

The only concern was the bidcommittee inquired the contra-ception medicine in one pack-age which consists of tablet,injection, and implant. This

packaging was incorrect due totheir impact in restricting busi-

ness actors.

Despite of providing cheap medicine to sup-port government initiative to birth control, aprocurement of contraception medicine byNational Planned Family CoordinationAgency (BKKBN) in Central Java was at-tempted to bind the competition. This reportbased case was involving five alleged parties,where one of them was the bid committee,while other are Usahatama Sentosa MasCorp (USM), Djaja Bima Agung Corp (DBA),Pamitra Nitya Kencana Corp (PNK), and Tri-yasa Nagamas Farma (TNF).

KPPU’s Commission Council found informa-tion as follows. Firstly was the fact that therewere a cross ownership between USM, DBA,PNK, and TNF. Even if this was not banned bythe regulation, this will lead to a shame com-petition between bid participants.

Secondly was the fact that bid offer price forthe medicine submitted by USM, DBA, andPNK (Rp 191,158/set) was based on ownerestimate formulated by the bid committeewhich considering prices regulated by Minis-try of Health. The price differentiation be-tween government intervention and pricesubmitted by TNF was Rp 81,158/set. How-ever, there are not enough evidences tostipulated price arrangement between USM,DBA, and PNK.

Thirdly was the fact that requirement oncopy of valuation of local content (minimumof 40%) by Ministry of Industry on every

contraception was inline with the Regulationof Minister of Industry No. 11/2006. Basedon this requirement, only TNF was the onlylocal producer that meets the requirement.The only concern was the bid committeeinquired the contraception medicine in onepackage which consists of tablet, injection,and implant. This packaging was incorrectdue to their impact in restricting businessactors.

Considering the facts, KPPU’s CommissionCouncil recommended the Commission toprovide advice and recommendation to theGovernment as follows:

Recommendation to the Minister ofIndustry to socialized the Regulation ofMinister of Industry No. 11/2006 onlocal content requirement to have aprecise implementation of the regula-tion.Recommendation to the BKKBN to notcombined contraception medicine andtool in one package.Recommendation to the Minister ofHealth to re-evaluate their referenceprice, which deemed as overvalued.Recommendation to the IndonesianNational Development Planning Agencyto formulate regulation in public pro-curement that banned cross-ownershipin a bid process.

...agreement between ESS andAAMN was categorized as ananti competitive behavior due

to their impact on monopolisticpractice and unfair business

competition in Indonesia’ paidTV industry.

Indonesia. By which therefore, KPPU’sCommission Council decided there were noviolation on Article 19 (letter “a” and “c” ofIndonesian competition law).

Based on series of examinations by KPPU,the Commission Council deemed necessaryto implement fair competition value inachieving and exploiting premium contentbroadcasted by Indonesian television opera-tor. The Council was valued that to promotecompetition in this case, it can be done withcancellation or revising the agreement be-tween ESS and AAMN. Under Article 47 ofIndonesian competition law, KPPU can im-pose administrative fine on AAMN, but con-sidering that Indonesian pay-TV industry stillin its early development, then KPPU thoughthat it will not imposed any fines in this case.

Furthermore, KPPU valued consumer right toenjoy broadcasting by AAMN and AstroGroup as an economic entity.

Therefore based on these findings, the Com-mission Council recommended KPPU to pro-vide advice and recommendation to theGovernment and relevant parties whichconsisted several ideas as follows:

to formulate general information onstandard and qualification of premiumcontent in broadcasting industry;to formulate regulation that encouragetransfer of right for premium contentthrough a competitive and transparentprocess to be broadcasted by Indone-sian television operator;to formulate regulation on contentwhich can not be broadcasted exclu-sively by pay-TV operator.

ESPN Star Sports Corp. (ESS) and All AsiaMultimedia Network Corp. (AAMN) wereproved to breach Article 16 of the Law No.5/1999 on anti competitive agreement withforeign parties. Meanwhile, Direct VisionCorp. (DV) and Astro All Asia Network Plc.(AAAN) were not proved to breach Article 16and Article 19 (letter “a” on entry barrierand “c” on limitation of sales/distribution) ofthe Law No. 5/1999.

At the beginning, Premier League was broad-casted through Free to Air TV and paid TVsince 1991 until season of 2004-2007. How-ever, for season of 2007-2010, the leaguewas exclusively broadcast by a paid TV(namely Astro) provided by DV. As the result,other paid TVs (namely Indovision, Telkomvi-sion, and IndosatM2) and several group ofsocieties reported this case to KPPU.

Violation of Article 16 of the Law No.5/1999

KPPU’s Commission Council highlighted thatan exclusive agreement itself was not breachcompetition law. However, KPPU’s Commis-sion Council judged that agreement betweenESS and AAMN was categorized as an anticompetitive behavior due to their impact onmonopolistic practice and unfair businesscompetition in Indonesia’ paid TV industry.KPPU’s examinations were showed that Bar-clays League is one of the important contentfor paid TV industry, notwithstanding thatthe exclusive agreement was not occurs by acompetitive process. This agreement willbrought impact on competition of paid TV inthe short run. However, KPPU also consider-ing the last update which informs transfer ofBarclays League’s broadcast right to Aora, anew paid TV company in Indonesia.

Violation of Article 19 (letter “a” and “c”) ofthe Law No. 5/1999

Indications which AAAN, AAMN, and PTDVused their monopolistic power in Malaysia tosqueeze ESS in giving broadcast rights forBarcklays League in Indonesia to AAMN wasnot legally proved. This shown by lack ofevidences that showed monopolistic prac-tices by Astro Group, either during negotia-tion process between Astro Group and ESS,nor the differentiation of buying value ofBarclays League’s right for Malaysia and

Anti competitive behaviors in Broadcast Right for Barclays PremierLeague 2007

Based on evidences, facts, as well as conclu-sion of the examination, KPPU’s CommissionCouncil on 29 August 2008 decided as fol-lows:

that ESPN Star Sport and All Asia Multi-media Networks have convincinglybreached Article 16 of the Law No.5/1999;that Direct Vision, Corp, and Astro AllAsia Network, Plc were not breachedArticle 16 of the Law No. 5/1999;that Direct Vision, Corp, Astro All AsiaNetwork, Plc, and All Asia MultimediaNetworks were not breached Article 19(letter “a” and “c”) of the Law No.5/1999;that All Asia Multimedia Networks was

not proved to breached Article 19(letter “a” and “c”) of the Law No.5/1999;to cancelled agreement between ESPNStar Sports and All Asia MultimediaNetwork on control and placement ofbroadcasting right for Barclays PremiereLeague 2007-2010, and shall conduct acompetitive process to determine it.order All Asia Multimedia Network tomaintain and protect Indonesian con-sumer by maintaining business relationwith Direct Vision Corp, and not to ter-minate entire services to the costumeruntil legal certainty on ownership ofDirect Vision, Corp.

.

Aiming to increase its credibility in handlingcompetition cases, KPPU recently has fin-ished and published guideline on Article 47on administrative measures and Article 50letter “a” on exemption for application ofcertain regulation. These guidelines are ex-pected to provide clear and definite under-standing on how KPPU’s work in imposingadministrative sanction and providing anexemption to the Law No. 5/1999(Indonesian competition law).

Guideline on Article 47 (administrative meas-ures) regulate framework on administrativemeasures as stipulated by Article 47 (point 1and 2) of the Law No. 5/1999. This guidelinealso provides methodology in determiningvalue of the sanction, which will be includedcalculation of sales value and adjustment ofsanction provided. Positive considerationand firm’s ability are also considered in de-termining value for the administrative sanc-tion.

Exemption provides in Article of the Law No.5/1999, letter “a” – “i”, which regulates sev-eral independent exemptions. One of whichis the exemption on application of certainregulation (letter “a”). This exemption gives

to avoid conflict between government’spolicies which aims to develop national eco-nomic. As explained in the guideline, applica-tion of government policies that can be ex-emption from Indonesian competition laware government (and local government)regulations that related to national interestas its soul was stipulated by Article 33 ofIndonesian Constitution 1945 and imple-mented nor stipulated in certain law.

In the end, the guideline is expected to givelaw certainty to the business community andenhance rationality of business actor not toconduct monopolistic practices as well as anunfair business competition.

Two guidelines are published

KPPU recently has finished andpublished guideline on Article

47 on administrative measuresand Article 50 letter “a” on ex-emption for application of cer-

tain regulation.

...this withdrawal had refractedcompetition policy direction in

the oil and gas sector, where onone hand the government hadmade the decision to open themarket, but on the other handthe government also took overthe price control function whichmade the competition did not

happen in this sector...

wise on the oil and gas downstream indus-try, the opening of downstream market wasdesigned to give various choices and qualityimprovement which was pointed into effi-ciency progress on the downstream industry.

However, this new paradigm of transforma-tion was not accepted at moment's notice. Itwas proven by some efforts to revise LawNo. 22 Year 2001. This law was being consid-ered to be too liberal and did not take sideson the country’s interests. This differentopinion ended with the Decision of the Con-stitution Court against the law of Oil and Gasby pulling out the article that became thefoundation of the implementation for busi-ness competition mechanism.

Indirectly, this withdrawal had refractedcompetition policy direction in the oil andgas sector, where on one hand the govern-ment had made the decision to open themarket, but on the other hand the govern-ment also took over the price control func-tion which made the competition did nothappen in this sector. Nevertheless, eventhough the government was quite entitled todetermine the policy direction to protect itspeople, the assurances in business climatehave to be guaranteed in order to open op-portunity for potential business actors orinvestors.

Result of Competition Policy in Oil and Gas

The changing direction of Oil and Gas com-petition policy had impact on the oil and gasupstream and downstream business climate.On the upstream level, changes oil and gaspolicy contained in the Law No. 22 Year 2001was not to maximize added value for na-tional oil and gas industry nor for nationalincome. The Law No. 22 Year 2001 concern-ing Oil and Gas still could not create an at-tractive business climate in upstream sectordue to the bureaucratic investment process,the existence of the tax loading although theproduction process was not yet begun, andthe conflict situation with the ProductionSharing Contract (KPS) principle.

On oil and gas downstream, the policychanges direction had increased number ofbusiness actors in downstream industry. Thisphenomenon gave a greater choice, createda more competitive price, and better service

Competition is not a new term in the devel-opment of Oil and Gas sector. This sectoreven had a close relation with competitionterm especially with the emergence of thecompetition law. It was begun since the for-mation of Standard Oil Company in 1870 byJohn D Rockefeller that united all oil and gasshareholder in the form of ”trust” and be-came the biggest company through a bigeconomics scale. The existence of this mo-nopoly triggered another formation of“trust” that also carried out monopoly prac-tices. This “trust” became a forum that abol-ished competition amongst business actors.This form afterwards pushed the implemen-tation of the Anti Trust Law which calledSherman Antitrust Act (1890) as competitionlaw that banned various anti competitionpractices.

During its development, the Standard OilTrust had to face various prosecutions. Lateron, the trust was being separated into manynew companies, each company focused onspecific industry which separated to oneanother. This development had impact onvarious changes of oil and gas structure inmany countries, including Indonesia.

Competition Policy for Indonesian Oil andGas Industry

Competition policy in Indonesia was markedby the ratification of Law No.22 Year 2001about Oil and Natural Gas which replacedLaw No.8 Year 1971. Through this law, afundamental change happened since privatecompanies were allowed to participate inthe industry. It changed the role of PT Per-tamina which once known as the one andonly business actor in Oil and Gas sector.This transformation was not only triggeredby some efficiency reasons, but also as anefforts to maximize oil and gas managementthat could give maximize prosperity for thecommunity.

Competition policy direction in the Oil andGas Upstream had opened bigger opportu-nity for business actors. It was caused bycharacteristics of upstream industry whichits high technology and high capital. More-over, production of national oil and gas con-tinued to descend each and every year, thusnew investments on the oil and gas up-stream industry were really needed. Like-

The Development of Indonesia’s Oil and Gas Sector from Competi-tion Point of View

An interesting phenomenonalso occurred in the LPG (LiquidPetroleum Gas) sub sector sincethere was no new business ac-

tor entered the LPG market.

for the consumer. As an illustration, thecompetition in the distribution of Non Subsi-dize Fuel area takes place in July 2006. Thecompeting companies were Pertamina, Shell,and Petronas in relation to their competitiveprice.

The competition not only occurred in theprice area, it also occurred in the servicequality area. Petronas and Shell gave someadditional services, such as car cleaning ser-vice, minimarket, and gas station environ-ment which comfortable and transparent.Later on, Pertamina also applied this conceptas its competition efforts.

This condition didn’t occur in Subsidize Fuel.It was caused by the difference size of Subsi-dize Fuel price and Non Subsidize Fuel priceas a result of world oil’s increasing price. Itwas also caused by the Non Subsidize Fuelmarket that was considered less attractive,since almost 70% of Indonesia’s Fuel con-sumption was the subsidized Fuel.

An interesting phenomenon also occurred inthe LPG (Liquid Petroleum Gas) sub sectorsince there was no new business actor en-tered the LPG market. As formerly knownbefore, LPG was gas that produced by oilrefinery or gas refinery. It main componentswere diluted propane gas (C3H8) and butane(C4H10). In LPG production industry, therewere two big groups which dominate theLPG manufacture market. First company wasKPS oil and gas refinery (KPS = productionsharing contract or PSC) which responsiblefor LPG processing result for export distribu-tion. Second company was PT Pertaminawhich fully handled the domestic market forLPG which came from import, country’s ownproduction, and several KPS product. As aresult of this condition, there was no compe-

tition in supplying LPG processing result intothe market. Moreover, subsidy rumors byPT. Pertamina for LPG 12 Kg also caused theobjection from another business actor toenter the market.

The government policy for LPG was thoughtinefficient to be applied in the long term. Itwas because in the beginning of LPG policyapplication, LPG market was segmented forupper class consumer due to the definite ofLPG resources. However, the policy imple-mentation that forced energy conversioninto LPG had caused the dependence ofenergy from import. Therefore, no surprisedLPG import tended to increase nowadays.

Rumors of the Price Fixing by the BusinessActor

Based on the Constitution Court decision asbeforehand, there was an opinion statedthat the price of all fuel and its descendantsmust be determined by the Government. But

in fact, the Governmentonly determined the fuelprice that was categorizedas Subsidize Fuel. This fuelwas aimed for non-industryconsumer (ex. Premium,Solar and Kerosene). As forNon Subsidize Fuel (ex.aircraft fuel, industrial die-sel fuel, and high octaneBBM), its pricing washanded over to the market

mechanism. As for the LPG product, theirprice was carried out by Pertamina.

At this point, we can see the Governmentinconsistency to regulate oil and natural gasprice fixing. Referred to Law No. 22 Year2001, the definition of fuel oil was the fuelwhich came and/or processed from Petro-leum. While the definition of natural gas wasa natural process result of hydrocarbons inthe pressure condition and the atmospheretemperature as a fasa gas which was formedfrom the mining process of Oil and NaturalGas. Based on these two definitions andbased on Constitution Court decision whichhanded over the pricing policy to the Gov-ernment, then all the price of Fuel and Natu-ral Gas ought to be appointed by the Gov-ernment.

...developed competition agen-cies (USA, Australia, and New

Zealand) gave credit on KPPU’sperformance for over eightyears of its establishment...

showed that the implemented policy still didnot have a significant competition impact onbusiness climate in oil and gas sector. Basedon this condition, KPPU encouraged the gov-ernment to make a real step concerning thedevelopment stage of the oil and gas indus-try, but it still have to consider businesscompetition as an instrument in guarantee-ing the business opportunity for each busi-ness actors and generally to create marketefficiency. The harmonization between everyagency which was involved in the oil and gasindustry policy still needed in order to createa better policy and enhance people welfare.

Conclusion

The changing policy in oil and gas industrywhich headed for competition side haddrove business actors to be more efficientand to make an improvement both in opera-tional and marketing side. Principally, thecompetition played a role to urge the busi-ness actors to make an improvement in or-der to increase the achievement of the oiland gas industry.

KPPU personally supported each step thatwas compiled by the government in oil andgas industry, although the factual condition

cies (USA, Australia,and New Zealand)gave credit onKPPU’s perform-ance for over eightyears of its estab-lishment. Generally,they were following

KPPU’s development, especially in handlingcases and disseminate their competitionpolicy to the Government, which valued asbest practices for newly developing competi-tion agencies. KPPU also reported to themember economies on its preparation forthe upcoming APEC training course whichwill be held in November 5-7, 2008. Thistraining course will discuss two major issues,(1) Challenges for Cartel Cases in Domestic/International Markets and (2) Interrelationbetween Competition Policy and IndustrialPolicy. Subsequent to the CPLG meeting,KPPU also takes an active part as Indonesiandelegation to the Plenary Meeting of Eco-nomic Committee (EC).

KPPU takes major role in the third APEC Sen-ior Official Meeting held in Peru on 11-23August 2008. To this beneficial meeting,KPPU was represented by Mr. Ahmad Junaidi(Director of Communication) and Mr. FaridNasution (Head of Filing Division). First rolewas involving the Competition Policy andLaw Group (CPLG), where KPPU have to re-port on the result of APEC Seminar for Shar-ing Experiences in APEC Economies on Rela-tions between Competition Authorities andRegulator Bodies held by KPPU on 11-13June 2008 in Bali, Indonesia. The second rolewas involving KPPU’s presentation on Shar-ing Experiences for Member with NewlyEstablishes Competition Agencies. On thepresentation, developed competition agen-

APEC Senior Official Meeting III

Mr. Ahmad Junaidi, Director of Communication.Together with Mr. Farid Nasution represented KPPUto the third APEC Senior Official Meeting in Peru.

The 4th APEC Training Course on Competition Policy,November 5-7, 2008, Sanur ParadisePlaza Hotel & Suites, Bali, Indonesia

Upcoming international events

...the availability of substitutionservice from warehouse rentalso relatively does not exist

considering special character ofairport management...

Pursuant to Article 35 letters “e” of the LawNo. 5 The year 1999, KPPU has duty to giveadvice and recommendation to policy of theGovernment relates to the prohibition ofmonopolistic practices and unfair businesscompetition. In this August, Commission forthe Supervision of Business Competition(KPPU) has submitted advice and recommen-dation to the President of Republic of Indo-nesia on the management of warehouse inairport. From KPPU’s observation, classifica-tion of airport warehouse service catego-rized as aviation supporting activity which ispart of classification for airport supportingactivity. Access to the airport warehouseentered in limited access category whereonly related officer can have the access.

Furthermore, the availability of substitutionservice from warehouse rent also relativelydoes not exist considering special characterof airport management. KPPU also finds thatairport warehouse operator stands as theconcessionaire, but there are some policieswhich may not be figured in or overflowedfully to other related operator due to stan-dard quality of service and tariff or pricefixed to consumer.The policy mustconstantly withinthe regulatorhand. This willcause impact forconsumer or air-port warehouseservice user, espe-cially on unequalquality over pricepaid.

But because limitation of number of feedersand substitution available in airport ware-house, hence consumer does not have spaceto switch to alternative service feeder thatcan offer same service with competitiveprice. From the aforementioned conditionhence KPPU submits advice and recommen-dation to the President that governmentshall do some revisions on its regulation,some of which are arrangement of tariff andstandard quality of service. The Governmentmust able to formulate formula tariff and itscomponent in warehousing service, wherethe determination is executed based oncomprehensive study capable to indicate

component tariff truthfully. The governmentintervention is also important to avoid ap-pearance of exploitative price, especially forservice feeder having high bargaining posi-tion to airport facility consumer, nor ware-house feeder.

Hereinafter, if management of tariff done byone business actor (in this case airport op-erator), hence government as regulator mustcan take over the management. But if it isdone by private sector, hence audition isdone through mechanism of competition forthe market, where cheap price will be one ofaudition criterion for warehouse operator.While for quality standard, all important isarrangement of minimum quality, because atminimum level, all business process can beenforce carefully. The main orientation shallfor the shake of consumer satisfaction, suchas speed of service time, inexistence of dam-age goods, security and safety and clearresponsibility if there is collision to minimumstandard of services. It was expected thatthis will become screening sphere for ap-pearance of business actor in service pro-vider in airport.

Competition Advocacy on Airport Warehouse Management

KPPU also finds China as theonly importer for STPP as well

as the main competitor for Pet-rocentral, Corp., the only pro-

ducer in Indonesia.

Moreover, the impact caused by anti dump-ing cost of STTP is that the detergent will notbe efficient to produce in Indonesia due theprofitability of imported detergent. Espe-cially most of producers for detergent inIndonesia are multinational companies. Thisconsidered will lead to reallocation of do-mestic detergent industrial resources andalteration of orientation from productionoriented becomes import oriented. Thus inthe end will cause downdraft of domesticdetergent industry and local producer ofdetergent would be threatened due to theirreluctance to survive from importer.

Hereinafter KPPU have also concluded thatthere was an extinction of clear blueprint forSTTP, in neither the upstream level nor thedownstream level in Indonesia. This wasbelieved to cause argument on prioritizedsector, is STTP or detergent. Seen from po-tential impact which will be generated,hence KPPU suggested the Government toreleases blueprint or road map on STTP sec-tor, especially when there will be inefficiencyif the application of anti dumping cost ofSTTP did not reflect on its potency for mar-ket distortion.

As a proprietor of commendation in uphold-ing Indonesian competition law, KPPU pre-cedes to finds that observation to SodiumTripolyphosphate (STPP) and detergent in-dustries, especially on imposition of policyplan for Anti Dumping Import Cost (BMAD)for STPP which is coming from China. Deter-mination policy of BMAD ought to be gov-ernment authority, which in its process con-sidering matters including national interest.But in reality, the determination of BMADwas creating potency for distortion of com-petition in STTP domestic market, which mayresult on expensive price for downstreamproduct of STTP, especially detergent.

KPPU also finds China as the only importerfor STPP as well as the main competitor forPetrocentral, Corp., the only producer inIndonesia. The existence of import will takecare of competition in market while at thesame time will lessen market power of Pet-rocentral, Corp. Thus, Petrocentral, Corp.would always pays attention to import priceof STTP as its substitution. That way, therewill be increased of material cost at imposi-tion of anti dumping cost of STTP, which willtakes affect on price increase of the down-stream product of STTP, especially deter-gent.

Competition Advocacy on Anti Dumping Policy of Sodium Tripoly-phosphate

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