Potential Challenges under the New KPPU Regulation to Supervise Partnerships

Apart from enforcing competition law, the Indonesia Competition Authority (Komisi Pengawas Persaingan Usaha or “KPPU”) also supervises partnership agreements between large/medium businesses and their micro, small, or medium enterprise (“MSME”) partners. If a large/medium business is found to have ownership or control over its MSME partners, the KPPU can initiate a case against the business and impose administrative sanctions.

For several years, the KPPU has diligently focused on MSME partnerships. The recent issuance of a new regulation in this field underscores their unwavering commitment to this area. This regulation, KPPU Regulation No. 2 of 2024 on the Procedure and Case Handling of Partnership Cases (“New Regulation”) was issued in April 2024, and replaces KPPU Regulation No. 4 of 2019 on the same topic.

The highlights of the New Regulation are as follows:

1. Enhanced clarity on the duration of the written warning stage, which gives more room for the reported party to implement the KPPU’s order.
2. Partnership cases now adopt stricter requirements for evidence, like competition cases.
3. Reported party has a more limited room to rebut the allegations.
4. There is a lack of clarity of whether KPPU’s decisions in partnership cases are final.