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If a market becomes blighted by monopolistic, price-fixing or
other uncompetitive practices at the expense of consumers, the only one
to blame is the market regulator -- which in the case of the economy is
the government, a discussion has been told.
During Monday's discussion, University of Indonesia economist Faisal
Basri said that a "market referee" -- such as the Business Competition
Supervisory Commission (KPPU) in the Indonesian context -- will be of
no use in improving market competition if the market regulator itself
is inconsistent in doing so, a discussion has been told.
"The KPPU only plays a small part in the process of establishing a
healthy and competitive market," he pointed out.
"Most of the problems with market competition are due to the fact that
the government has failed to perform its crucial roles."
The discussion, organized by the Center for Strategic and International
Studies (CSIS) in cooperation with Germany's GTZ development agency, is
the most recent edition of the annual reviews of the 1999 Monopolies
Law and the KPPU's performance that have been held since the
competition watchdog's establishment in 2000.
This year's review has been held against the backdrop of the KPPU's
ruling that the Singapore state holding firm, Temasek Holdings, along
with eight other firms, mostly linked to Temasek, had violated the
Monopolies Law through its cross-ownership of Indonesia's two largest
mobile phone operators, PT Telekomunikasi Selular (Telkomsel) and PT
Indosat.
The ruling, which kicked up a storm, also ordered Temasek to sell its
stake in one of the operators, and each defendant to pay Rp 25 billion
in fines. In addition, Telkomsel, the market leader, was ordered to
lower its tariffs to compensate domestic cell-phone users.
Faisal, who once served as a KPPU member, said that it was the
government that was responsible for "creating, regulating, stabilizing
and legitimizing" a market, with market "monitoring" being the
responsibility of the KPPU.
"The government should not think about creating a market if it is not
fully prepared to carry out its four duties. But that is what has
happened most of the time," Faisal said.
"It's like telling boxers to go fight in a ring that has not been
properly set up, with the rules of the fight still being drafted, and
the jury not really caring about how the referee applies the rules. The
outcome will obviously be messy."
He said that this might have been what happened in the Temasek case,
with the government content to acquiesce in Temasek's cross-ownership
and alleged price-fixing as it was itself enjoying ever larger
dividends from both Telkomsel and Indosat.
The government also owns stakes in the two operators, although the
Monopolies Law expressly exempts it from the ambit of the legislation,
unlike the other defendants.
Ningrum Natsya Sirait, from North Sumatra University, concurred with
Faisal in urging better regulation by the government, as well as
improving the KPPU's human resources.
She said the KPPU urgently needed to equip itself with credible lawyers
and economists who were knowledgeable about market competition, and not
hesitate to become involved in a public debate if this would be helpful
for improving the antitrust legislation.
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