In order to strengthen the realization of security and business opportunities through the improvement of the investment ecosystem and business activities, conducive business practices are required and encourage fair business competition. One of the strategies to achieve this aim is to overcome the negative impacts that have been caused by the behavior of violating the law in the form of reduced or substantial loss of competition. To assess the negative impact, KPPU has subsequently enacted Negative Impacts of Monopolistic Practices and Unfair Business Competition Guideline that contains the criteria, indicators, tests, as well as steps of measurement that the KPPU can apply to measure and determine the negative impact of an antitrust violation.

1. Legal Brief
Guidelines for Assessing Negative Impact from
Monopolistic and Unfair Business Practices
(“KPPU CR 2/2023”)

2. Law No. 5/1999
General provisions related to the prohibition
of monopolistic practice and unfair business
competition and KPPU’s authority to enforce
fines in the form of administrative actions.
KPPU Reg. No. 2/2021
Further provisions related to the imposition of
fines, one of them are based on the negative
impact caused by competition.
GR No. 44/2021
Regulates the provisions for
determining the number of
administrative actions in the form of
fines.
A H R P L e g a l B r i e f
Legal Framework
KPPU CR No. 2/2023
Further regulation of Article 3
paragraph 2 KPPU Reg. No. 2/2021
and become a guideline related to the
scope of the negative impact of
violations as stated Law. 5/1999.
1. Law Number 5 of 1999 on Prohibition of Monopolistic
Practices and Unfair Business Competition as amended by
Regulation of the Government in Lieu of Law Number 2 of
2022 on Job Creation (“Law No. 5/1999”).
2. Regulation of the Government Number 44 of 2021 on the
Implementation of the Prohibition of Monopolistic Practices
and Unfair Business Competition (“GR No. 44/2021”).
3. Regulation of the Business Competition Supervisory
Commission (KPPU) Number 2 of 2021 on Guidelines for the
Imposition of Fines for Monopolistic Practices and Unfair
Business Competition Violations (“KPPU Reg. No. 2/2021”).
4. Regulation of the Business Competition Supervisory
Commission (KPPU) Chariman Number 2 of 2023 on
Guidelines for Negative Impacrs of Monopolistic Practices
and Unfair Business Competition (“KPPU CR No. 2/2023”).
Terms

3. A H R P L e g a l B r i e f
Definitions and Scope of KPPU CR 2/2023
Definitions in KPPU CR 2/2023
01
Business Competition Supervisory
Commission/Komisi Pengawas Persaingan
Usaha (“KPPU”)
a commission formed to supervise business actors in
conducting their business activities so that they do not
conduct monopolistic practices and or unfair business
competition.
02
Negative Impact:
the impact arising from the behavior of violating the law,
which results in a substantial reduction or loss of
competition.
03
any individual or business entity, either incorporated or
unincorporated as a legal entity, established and
domiciled or conducting activities within the jurisdiction
of the Republic of Indonesia, either independently or
jointly based on an agreement, conducting various
business activities in the economic sector.
In KPPU CR 2/2023 it refers to the Law Number 5/1999
Business Actor: 04
the centralization of economic power by one or more
business actors, resulting in the control of the
production and or marketing of certain goods and or
services, so that resulting in unfair business competition
and potentially harmful to the interests of the public.
Monopolistic Practices:
05
a competition among business actors in conducting
activities for the production and or marketing of goods
and or services in an unfair or unlawful or anti-
competition manner.
Unfair Business:
06
price anomaly that is suspected to have occurred as a
result of monopolistic practices and unfair business
competition.
Unreasonable Prices:
The guideline is an elaboration of basic principles, indicators of
Negative Impacts, and calculations of Negative Impacts.
The guidelines referred to above are one of the bases for
determining or calculating administrative action sanctions in the
form of fines.
Article 1 KPPU CR No. 2/2023
Article 2 KPPU CR No. 2/2023
Scope of
KPPU CR
2/2023

4. Physical
Attuned to other
people’s physical
symptoms and tend to
absorb them into your
body.
Purpose of Guidelines on KPPU CR 2/2023
1 2 3
Clarify the interpretation of the KPPU in
examining a substantial reduction in
competition and the factors tested by
the KPPU in assessing the Negative
Impact of violations of Law No. 5/1999.
Making the Negative Impact
assessment method of anti-competitive
behavior used as the basis for adding
or reducing fines.
Provide a clear understanding of
the definition of Negative Impact
according to Law No. 5/1999.
Article 3 KPPU CR No. 2/2023
A H R P L e g a l B r i e f
1 3
2 2

5. A H R P L e g a l B r i e f
Violations of Law
No. 5/1999
inflict
Substantial
reduction or loss of
competition
cause
The number of
competitors
decreases or
disappears
An obstacle for other
companies to use their
market power
a condition where
which is considered
1
3
4
5
Negative Impact
2
Basic Principles of Negative Impacts
Flow of Negative Impacts
Competitors from Business Actors who engage in Monopolistic Practices
and Unfair Business competition in the relevant market
Potential Business Actors in the relevant market
Other Business Actors
Consumer
Parties Receiving Negative Impacts
Article 4 (1) and (2) KPPU CR No. 2/2023
Article 4 (3) KPPU CR No. 2/2023
KPPU uses the Substantial
Lessening Competition
(SLC) approach

6. 5
2
4
more concentrated market structure
Other Indicators
of Negative
Impacts
barriers for competing business actors or potential business actors to enter
the market
reduction of business actors providing goods and/or services in the market
collusive behavior between business actors
the choice or variety of goods and/or services is reduced
production becomes inefficient
inefficient market
The main indicator in assessing negative impact is to recognize the unfair prices that may be caused by:
A. Abuse of market power; and/or
B. Anti-competitive behavior aimed at inhibiting, reducing or eliminating competition in the market.
Negative Impact Indicator
Article 6 (1), (2), and (3) KPPU CR No. 2/2023
Article 6 (4) and Article 7 KPPU CR No. 2/2023
Fair pricing is pricing made based on business considerations reasonable determined based on
activity or behavior competitive business that is not against the law.
In addition, to determine the characteristics of competition in the market before and after the violation of the Law, the Commission may use other
indicators, as follows
6
3
1
A H R P L e g a l B r i e f

7. As previously explained, the
Commission uses SLC to determine
the purpose of a reduction in the
level of competition and the extent
to which such a reduction reduces
the incentives for the remaining
supplier undertakings to compete in
the relevant market.
Based on the previous example, it is
known that the behavior of reducing
competition in the market can be
performed by identifying the following
motives:
a. to increase market power or to
b. maintain market power.
For example, unlawful behavior that
eliminates a business with a small market
share is likely to have a minor impact on
competition. However, if the infringing
behavior eliminates a potential business
actor, it may result in a substantial
reduction or loss of competition.
The with and without test is a counterfactual test used by the commission to assess Negative Impact. This test method compares the picture of the
level of competition in the market due to the behavior of the alleged violation of the law. The with and without test involves assessing the following
factors:
“With and Without Test” for Law Offending Behavior
The structure and nature of competition existing in the market
Potential competition, including barriers to entry or expansion and
the height of such barriers
Other sources of competitive constraints, including the existence or
strength of buyers
Section III appendix of KPPU CR No. 2/2023
Section IV appendix of KPPU CR No. 2/2023
SLC is a common international economic term meaning a substantial reduction or loss of competition or negative impact. SLC is an important
approach because the reduction or loss of competition will ultimately impact consumer welfare. For that reason, the commission will recognize the
lessening or loss of competition using the SLC approach.
Subtansial Lessening Competition (SLC)
A H R P L e g a l B r i e f

8. A H R P L e g a l B r i e f
Behaviors that Cause Negative Impact and Their Measurement
Prices remain
artificially high
The customer has
no option/choice
Innovative
behavior
Degree/level of
cartel organization
Everyone is paying more
than they should.
Collusive businesses cause
customers to have no other
alternative, so businesses
cannot compete on a level
“playing field”.
Businesses that compete
fairly can choose to carry out
innovation strategies that
can provide business
advantages.
Cartel classification: (i) hard-
core: namely, price fixing; or
(ii) soft-core: sharing price
list information.
Behaviors that Cause Negative Impact
Section VI.2 appendix of KPPU CR No. 2/2023
involved in or impacting agreements with other parties
decisions on pricing
decisions about marketing products or services
decisions to supply or not to supply products or services
decisions about the quality of products or services offered
mergers or acquisitions.
Such behavior includes commercial or other activities undertaken by business actors in the relevant market, including, for
example:
01
02
03
05
06
04
1
2
3
the nature of the conduct;
the circumstances of the conduct, including the decision-making
process leading to the conduct and its commercial context;
the impact of the conduct.
The Commission assesses conduct based on actions taken by
business actors that potentially have a negative impact on competition
in the market. Meanwhile, in assessing the purpose of a business
actor's behavior, the Commission pays attention to direct evidence of
purpose or may infer purpose from various factors, including:
Section VIII appendix of KPPU CR No. 2/2023
Negative Impact Measurements
The Commission assesses conduct based on actions taken by
business actors that potentially have a negative impact on competition
in the market. Meanwhile, in assessing the purpose of a business
actor's behavior, the Commission pays attention to direct evidence of
purpose or may infer purpose from various factors, including:

9. Negative Impact Assessment
Negative Impact Assessment Stages
Monopolistic Practices Raise prices
Consumer
experience
indirect evidence
Must be based on a fair price for
production costs, marketing costs,
market share, and other aspects.
Reason
KPPU must know
Unbeknownst to
the KPPU
Unreasonable
Prices
Could occur
Decreased level of
welfare
violation period
price anomaly
The indicator of
Negative Impact
KPPU will identify and determine the
conditions of price anomalies
Survey of
customers
Through Administrative
sanctions for
Business Actors
KPPU did
investigation
Unreasonable Prices
detected!
Negative Impact Assessment by KPPU
Section VI.1 appendix of KPPU CR No. 2/2023
Dominant Positioning
KPPU considers whether a business
actor has a dominant position or not
as well as the ability of the business
actor as a decision maker even
though it does not have a dominant
position.
KPPU considers the product, spatial,
geographic, and functional dimensions
of multi-sided markets.
1. 2.
Definition of Relevant Market
KPPU assesses the future state of
competition in the market using a with and
without test, an assessment of the reduction
of competition, especially a substantial one,
and a determination of the conduct of the
infringement.
3.
Assessment of Business Behavior
Based on Article 5 of KPPU CR No.
2/2023, KPPU in assessing the Negative
Impact considers case by case in the
article that was violated in Law No.
5/1999.
Noteworthiness In the right of dominant business actors, KPPU
determines the impact of behavior that substantially
reduces competition. However, if the business actor
is not dominant, then KPPU determines the purpose
of the business actor's behavior to substantially
reduce market competition.
Determination of the Negative Impact and its
influence on the amount of administrative action
sanctions in the form of fines may be assisted by
experts in the field of business competition.
Article 9 of KPPU CR No. 2/2023
Section VII appendix of KPPU CR No. 2/2023 A H R P L e g a l B r i e f

10. We will continue to follow the developments on this topic and provide additional information as it
becomes available. If you have any questions on this topic, please contact:
Tariq Hidayat Pangestu
tariq@ahrplaw.com
Marion Mutiara
marion@ahrplaw.com
Dinda Maylinda Suhendra
dinda@ahrplaw.com
This publication has been prepared by AHRP for educational and informational purposes only. The information contained in this publication is not
intended and should not be construed as legal advice. Due to the rapidly changing nature of law, AHRP makes no warranty or guarantee concerning
the accuracy or completeness of this content. You should consult with an attorney to review the current status of the law and how it applies to your
circumstances before deciding to take any action.
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