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Economy

KPPU -- Indonesia's toothless watchdog

Powerless antitrust authorities lack fight to get tough on cartels

Allegations over collusion in the motorbike market have caused widespread anger.

TOKYO -- Talk of stamping out corporate collusion and wrongdoing is nothing new in Indonesia. But cleaning up the system is pretty much impossible when relying on ineffective, and some might say compromised, antitrust authorities.

On Feb. 20, the Commission for the Supervision of Business Competition, known as the KPPU, said it had fined the local units of Japan's Honda Motor and Yamaha Motor for forming a cartel to jack up the prices of their scooters. The allegations were denied by a local Honda official and the two companies plan to file a complaint with the agency.

The KPPU alleged that officials from the two companies had exchanged price information on 110-125cc scooters over a round of golf. The scooters were allegedly sold for over 15 million rupiah ($1,122) -- 25% over the market price.

The allegations have drawn the ire of the public as the two companies control over 95% of the country's bike market -- in which about 6 million units are sold annually.

Until now, the KPPU has largely focused on cases involving small-scale goods, such as tires and chicken. But the antitrust law put in place in 1999 has not kept pace with the country's rapid growth over the past few years. At 25 billion rupiah, the maximum fine for forming a cartel hardly serves as a deterrent, a government official said. Jakarta is considering raising the upper limit to 30% of total sales.

But there are factors that shackle the KPPU to an even greater degree. In the case of motorcycles, analyzing the price structure may be fairly straightforward. But doubts have been raised over whether the authorities had enough evidence to conclude that the companies had overpriced their vehicles. The antitrust body's lack of an official right to search a company severely limits its power.

Questions have also been asked about the body's impartiality. As well as investigating breaches of fair-competition rules, the KPPU also deliberates and makes decisions on its own cases. That contrasts with competition regulators in other countries. Japan Fair Trade Commission, for example, refers serious cases to prosecutors to be tried in court. In Indonesia, there is a high number of collusion cases that are carried in court only to get overturned higher up the legal system. By one estimate, the ratio stands at over 60%.

Some in Indonesia are calling for a system that offers leniency -- such as reduced penalties or exemption  -- to those who voluntarily report wrongdoing, just as in developed countries.

But first of all, the antitrust body needs to get its house in order and work as an effective watchdog. Otherwise, President Joko Widodo's goal of establishing a fair economy will only drift further away.

(Nikkei)

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