Unfair Business Competition Harms Consumers


JAKARTA, presidentpost.id – Introduction; Unfair business competition will inevitably inflict the consumers, therefore the state is obliged to protect them by creating the legislation to fairly regulate the competition among the business players while protecting the consumers. In many countries the supervision of business competition and consumer protection is done by one institution.

In Indonesia, they are separated and regulated by two different laws. The ban of unfair business competition is regulated by Law No. 5 of 1999 with the title Prohibition of Monopolistic Practices and Unfair Business Competition. The institution overseeing it is named Business Competition Supervisory Commission (KPPU).

Meanwhile the consumer protection is regulated by Law No. 8 of 1999 with the title Consumer Protection. The agency that supervises it is called National Consumer Protection Agency (BPKN). Long before the establishment of BPKN in 1973, the Indonesian Consumers Foundation (YLKI) had been founded.

The Article 1 point 1 of the Consumer Protection Law Number 8 of 1999 states that the consumer protection is all the efforts to ensure legal certainty to provide protection to the consumers. Consumer, based on the law, is defined as any person who uses goods and or services available in the society, both for their own interests, family, other people, and other living things, and not for trading.

According to Law No. 5 of 1999 article 1 point 6, unfair business competition is a competition between business players in carrying out activities of production and or marketing of goods and or services in an unfair or unlawful manner or inhibiting business competition.

The role of KPPU; The issuance of Law No. 5 of 1999 shows a positive impact on consumers because it encourages the government to not issue policies that benefit the businesses only, but also consider the interests of consumers. It is expected to make the market structure more competitive, the number of businesses players in the market is numerous and efficient so that it encourages them to compete in a healthy manner, not having the ability to control prices according to their wishes. In other words, the business players are only able to obtain normal returns, not excessive returns.

In this paper, in accordance with the competence of the author as KPPU commissioner, the discussion will be based on the Law No. 5 of 1999.

Since the establishment of KPPU in 2000 until now, approaching 18 years time span, more than 300 cases have been handled and these cases, especially those related to the cartel, have harmed the consumers of the Indonesian people in billions of rupiah.

A cartel is a business player who makes an agreement with another business player with a goal to influencing prices by regulating the production and marketing of goods and or services that result in monopolistic practices and unfair business competition.

There were the cartel who determined the tariffs of Short Message Service (SMS), Garlic Cartel, Four Wheel Vehicle Tire Cartel, and Imported Cattle Trade Cartel in Jakarta, Bogor, Depok, Tangerang and Bekasi.

The cartel practices of the business players have a direct effect on reducing the welfare of the people, because the people or consumers must pay more than they should for the goods and/or services they buy. The cartel perpetrators conspire to set the prices higher than fair in order to get maximum profit. For example the cartel who determined the tariff of Short Message Service (SMS). KPPU succeeded in dismantling the cartel practices carried out by six cellular operator companies during the period of 2004-2008 who set the SMS tariff at Rp350/SMS, causing an estimation of Rp2.827 trillion losses suffered by consumers.

Conclusion; The Consumer Protection Law and the Business Competition Law are two regulations that are interconnected and mutually supportive. Low prices, high quality and good service are three things that are fundamental to the consumers and fair business competition is the best way to guarantee it.

The positive impact of healthy competition for the society is welfare, with the indicators: affordable prices, availability of products/services, better product quality, and better product range. Meanwhile the positive impact for the business players are as follows: the barriers to enter and exit the market are lower, abuse of dominant position is avoided, discrimination in business processes is avoided, competitors’ conspiracy is avoided, policies that can distort competition are avoided.

By Chandra Setiawan (Commissioner of KPPU)