[86-98] Mukti Fajar ND, Diana Setiawati,Yati Nurhayati

Editorial Office: Faculty of Law, Sriwijaya University, Jalan Srijaya Negara, Palembang, South Sumatra 30139, . Phone: +62711-580063Fax: +62711-581179 E-mail: [email protected]| [email protected] ISSN Print: 2541-5298 Website: http://journal.fh.unsri.ac.id/index.php/sriwijayalawreview ISSN Online: 2541-6464

Dispute Settlement between and Indosat: An Analysis on Com- petition of Cellular Operator

Mukti Fajar ND*, Diana Setiawati**, and Yati Nurhayati***

Abstract: Telecommunication advancement has become a central part of human life brought tight competition among cellular operators. On June 2016, there was a case of business com- petition between Telkomsel and Indosat (the big Three Cellular operators in Indonesia) that conduct monopoly practice and predatory pricing. In Indonesia, there are two Institutions that maintain business telecommunication and business competition namely Indonesian Telecom- munication Regulatory Body (BRTI) has mandated by Law number 36 of 1999 and Business Competition Supervisory Commission (KPPU) by Law Number 5 of 1999. The research aims to know how the government regulates on competition of cellular operator in Indonesia and to know the role of Indonesian Telecommunication Regulatory Body (BRTI) and Business Competition Supervisory Commission (KPPU) to settle the cases on competition of cellular operator (Telkomsel and Indosat cases). The study is normative legal research with statute and case approach, by using juridical qualitative approach. The results of this research are, firstly the analysis of regulation regarding on competition of cellular operator. Secondly the analysis of the role of Indonesian Telecommunication Regulatory Body (BRTI) and Business Compe- tition Supervisory Commission (KPPU) to settle the cases on competition of cellular operator (Telkomsel and Indosat cases) that conduct monopoly practice and predatory pricing, regard- ing with Law Number 36 of 1999 on Telecommunication and Law Number 5 of 1999 on the Prohibition of Monopolistic Practice and Unfair Business Competition. Keywords: Cellular Operator; Dispute Settlement; Unfair Business Competition.

ARTICLE HISTORY: *** Lecturer, Faculty of Law, Universitas Islam Kali- mantan MAB, Indonesia. E-mail: yatinurhaha- DOI: 10.28946/slrev.Vol3.Iss1.155.pp86-98 [email protected] Received: Jul 17, 2018; Reviewed: Jan 9, 2019; INTRODUCTION Accepted: Jan 24, 2019; The telecommunication industry is engaged Published: Jan 31, 2019; in the service industry and is currently the * Faculty of Law, Universitas Muhammadiyah Yog- most developed in the last 10 years in Indo- yakarta, Indonesia and Adjunct Associate Profes- sor, Department of Finance and Economic Law, nesia. The government has regulated tele- Asia University Taiwan. E-mail: muktifa- communication on Act Number 36 of 1999; [email protected] this Act gives a significant impact on the de- ** Faculty of Law, Universitas Muhammadiyah Yog- yakarta, Indonesia. E-mail: di- velopment of the telecommunications indus- [email protected] try in Indonesia. Telecommunication is a

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strategic industry, and it was important in donesia, it makes the new operators have the opening the isolation, improving the quality spirit to compete with other cellular operator of education, economic development, social companies. Actually, when compared to oth- development, environmental conservation, er conditions in developed countries, like and fulfils the needs of modern lifestyles. Australia only has 3 cellular operators com- Nowadays cellular has become a primary pany. It would be more effective than in In- need for people because the function is very donesia which has more than three cellular important, so people are dependent on tele- operator companies. communication.1 The competition between cellular opera- The existence of cellular operator will tors creates competition on the market share gave a big impact on the social development for all of the cellular operator, and there are in Indonesia. The current number of cellular three (the big three) cellular operator compa- operator companies has been more than one nies which had mastered no less than 75% and has the possibility to lead tight competi- market share, and now rake in 125 million tion between other cellular operators. And in customers. XL has 50 million customers 2010, it was known there were 7 cellular op- while Telkomsel and Indosat have 55 million erators in Indonesia, namely: Telkom, XL, customers.2Even per July 2015, Tri Indosat, Axis, three 3, Cellular-8 and Bakrie Hutchinson the directors of Indosat claimed Telecom. And this time there are three major to have 50 million customers. Because of the service provider companies (the big three), number of cellular operators, the govern- namely Telkomsel, Indosat, and XL Axiata. ments have made the regulation that can reg- If compared to other countries, the number of ulate the competition among cellular operator cellular operators in Indonesia is the numer- companies and can create healthy business ous one. Furthermore, in 2014, Alex Sinaga, competition. the President Director of PT. Telkomsel stat- In the middle of the liberalization of the ed that competition in the telecommunication telecommunications industry, the develop- industry has reached saturation position, ment of cellular operator companies growing where there was a Zero Sum Game. This is rapidly and the competition among operator indicated by the amount of penetration of the cellular companies become more competi- telecommunication market in Indonesia, tive. This has led to unfair business competi- which has more than 200 million customers. tion. June 2016, PT Indosat Tbk In order to get customers, the cellular complained that PT Telkomsel conducts mo- operator companies should have the creative nopolistic practices in markets outside Java.3 strategic on marketing programs, starting This potentially serious accusation does not with the promotion to the addition of innova- only drop Telkomsel but it can also impact tive features or programs. Moreover, with the the Indonesian telecommunications industry. number of cellular operator companies in In- This issue has the damage among the parties

1 Uday, R. (2015) Data dan Fakta Industri Selular, 2 Uday, R. Note 1. Kemegahan vs Kerapuhan. [Online] Available on: 3 Fahmi, R. (2016) Monopoli Telkomsel Benarkah. http://selular.id/kolom/2015/09/data-dan-fakta- [Online] Available on: http://koran.bisnis.com/- industri-selular-kemegahan-vs-kerapuhan/ read/20160711/251/564737/monopoli-telkomsel- (retrieved: September 20, 2016). benarkah/ (retrieved: September 22, 2016).

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of cellular operator companies, and the con- determined by the government. Because of sumers would get the impact too. 4 that, Indosat is assumed to have violated Ar- The complaint of Indosat to Telkomsel is ticle 20 Law Number 5 of 1999, by conduct- very serious because Telkomsel assume con- ing predatory pricing practice.7 Indosat is do- ducts monopolistic practice. The complaint ing a campaign with an intention to promote can be proved by the data obtained in 2012; it the freedom tariff Rp1/s program, but the is known that Telkomsel which dominate the campaign injured Telkomsel. This negative market amounted to 48.10% and followed by campaign has been successful to make Indosat amounted to 21.55%, while in the Telkomsel upset because Indosat has put the following year, in 2013 Telkomsel is still the name of Telkomsel in their promotional ban- market leader.5 In 2016 it is known that ner. This negative campaign action is violat- Telkomsel still dominates the market outside ing the advertisement ethic. of Java amounted to 80%. Based on the data Muhammad Syarkawi Rauf, the Busi- that is the foundation of Indosat to propose ness Competition Supervisory Commission that Telkomsel has conducted monopolistic (KPPU) Chairman, explained both operators practice. Moreover, Indosat assumes that have violated the ethics of competition. So Telkomsel has violated Article 17 and 19b of the Commission will schedule to call both Law Number 5 of 1999 on the prohibition of parties, and then conduct an investigation monopolistic practices and unfair business into the case. Business Competition Supervi- competition. Articles 17 paragraphs 1 men- sory Commission (KPPU) is an independent tion that, "Entrepreneurs are prohibited from agency that regardless of the influence and controlling any production and/or marketing power of the Government and other parties. of goods and/or services that can cause mo- The function is to oversee the implementa- nopolistic practices and/or unfair business tion of Law Number 5 of 1999 concerning competition.” Meanwhile, article 19b ex- the prohibition of monopoly practice and un- plains, “The prohibition for businessman fair business competition. Therefore when does not allow some action that could lead to there are some cases related to business com- a monopoly practice and unfair business petition, the commission which has been competition”. If proven, it will be penalized mandated by law that can settle the cases. 8 in accordance with the Act Number 5 of Those cases have led to the attention of 1999 on the prohibition of monopolistic prac- the researcher to conduct the further study tices and unfair business Competition.6 regarding "Dispute Settlement between On the other hand, Indosat issued a new Telkomsel and Indosat: An Analysis on product that is called Freedom Tariff Competition of Cellular Operator”. Rp1/second to all operators, and the tariffs are set below the market price that has been

7 Priyanto, S. (2016) Tarif Rp 1/detik Murah atau 4 Herning Bany, R. (2016) Tanggapan Pakar tentang Predatory Pricing. [Online] Available on: Tudingan Monopoli Telkomsel. [Online] Available www.kompasiana.com/psukandar/tarif-rp-1-detik- on: http//swa.co.id/swa/trends/tanggapan-pakar- murah-atau-predatory-pricing/ (retrieved: October tentang-tudingan-monopoli-telkomsel/ (retrieved: 14, 2016). September 22, 2016). 8 The 1999 Law No.5 Article 30 point 2 On the Pro- 5 Herning Bany, R. Note 4. hibition of Monopolistic Practice and Unfair Busi- 6 Herning Bany, R. Note 4. ness Competition.

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RESEARCH METHODS ANALYSIS AND DISCUSSION This research is normative legal research 1. Analysis on how the government regu- which focuses on a process to find a legal lates the competition of cellular opera- rule, and doctrines of law in order to address tor 9 It has been discussed initially that Telecom- the legal issues. The researchers have col- munication as a strategic industry and pro- lected data from books, reports, legislation vides a huge advantage to entrepreneurs. In (consist of the law no.5 of 1999 on monopo- Indonesia there are several companies that ly, law no 36 of 1999 on telecommunication) participate in telecommunication industry we the internet, and other assorted secondary called as cellular operator. In 2016 it was materials, as cited the references. 10 known there were 7 cellular operator namely; This study explores the literature re- Telkom, XL, Indosat, Axis, Three, Cellular-8 garding the regulation on competition of cel- and Bakrie Telecom. For every cellular oper- lular operator and factors that cause on unfair ator has their own strategic marketing pro- business competition of cellular operator case gram. This number of cellular operator can (Telkomsel and Indosat) and the role of lead the tight competition.12To control the KPPU and BRTI to settle unfair business competition between cellular operators and competition of cellular operator case which is give legal certainty the government formulat- in Conformity with Law Number 05 of 1999 ed law no 36 of 1999 on telecommunications. on the prohibition of monopoly practices and As mention in law number 36 of 1999 the Law Number 36 of 1999 on Telecommunica- activity of cellular operator is supervised by tion. Indonesian Telecommunication Regulatory The collected data has been analysed by Body. utilizing legislation approach and case ap- 11 Indonesian telecommunication regulato- proach. The case between Telkomsel and ry body is independence body that has au- Indosat on unfair business competition cases thority to controlling the implementation of are analysed by juridical qualitative ap- regulation and to supervised the activity of proach. Which made to various law or regu- cellular operator then facilitating dispute set- lation related with the prohibition of monop- tlement between cellular operator and give olistic practice and unfair business competi- sanction for the parties that conduct viola- tion and telecommunication regulations. Fi- tion. The sanctions are mention in article 46 nally, deductive analysed method has been law number 36 of 1999; (1) administrative use for formulating the conclusion. In this sanction (2) license revocation. study, the researcher did not do any justifica- Telecommunication industry activity tion. can’t be separated with business competition. In Indonesia Business activity must obey the law number 5 of 1999 on prohibition of mo-

9 Noeng Muhadjir, Metodologi Penelitian, Yogya- karta: Rake Sarasin, 2011, p62. 12 Didik, P. (2016) Menkominfo Komentari Perang 10 Bambang Sugiono, Metodologi Penelitian Hukum, antara Telkomsel dan Indosat [Online] Available : Raja Grafindo Persada, 2015, p52. on: https://tekno.kompas.com/read/2016/06/18/15- 11 Mukti Fajar and Yulianto Ahmad, Dualisme- 290097/Menkominfo.Komentari.Perang.antara.Ind Penelitian Hukum, Yogyakarta: Fakultas Hukum osat.dan.Telkomsel/ UMY, 2007, p135. (retrieved: September 20,2016)

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nopolistic practice and unfair business com- Source: http://swa.co.id/swa/trends/tanggapan- petition. The existence law no 5 of 1999 is to pakar-soal-tudingan-monopoli-Telkomsel create the healthy business competition in Then, in 2016 it is known that Telkomsel has Indonesia. Based on article 30 of law no 5 of dominated the market outside of Java 1999 give mandate to Business Competition amounted to 80%.14 PT. Indosat Tbk propos- Supervisory Commission (KPPU) as an in- es that PT. Telkomsel Tbk has conducted dependent body to supervised the activity of monopolistic practice because Telkomsel has business competition and give sanction for a dominating market outside Java by more the parties that conduct violation. The sanc- than 50%. Indosat assumes that Telkomsel tions are mention in article 47 law number 5 has violated Article 17 and 19b of Law of 1999; (1) administrative sanction (2) li- Number 5 of 1999 on the prohibition of mo- cense revocation. nopolistic practices and unfair business com- 2. Case Analysis petition.15 Article 19b explains "the prohibi- 2.1 Legal Analysis of the Violation of Law tion for businessman does not allow some No. 5 of 1999 by PT. Telkomsel Tbk action that could lead to a monopoly practice On June 2016, PT Indosat Tbk Ooredoo is- and unfair business competition”. If proven, sued a complaint that PT Telkomsel conducts it will be penalized in accordance with Act monopolistic practices in markets outside Number 5 of 1999 on the prohibition of mo- Java Island. It is a potentially serious accusa- nopolistic practices and unfair business com- tion, which will not only drop Telkomsel but petition. also will impact the Indonesian telecommu- Generally, year by year Telkomsel has nications industry. This issue has the damage been increasing not only on their market among the parties of the cellular operator share but also on the number of customers company, and the consumers will get the im- then follows by Indosat. In a fact, the com- pact too.13 The complaint can be proven by petitiveness resulted from the use of Telkom- the data in 2010-2011 by which it is known sel customer service strategy is more superior that Telkomsel dominates the market by compared with that of Indosat's. Additional- amounted to 42% and followed by Indosat ly, Telkomsel has received many awards for amounted to 21%. The data Proven by this its quality customer service, namely Achiev- table. ing Exceptional Total Service Quality Satis- Table 1: Competitive environment on faction Service Quality Award 2015, Indone- Telecommunication Industry sia Golden Ring Award Best Customer Ser- vice in 2015, and Engage Award The Social- ly Devoted Company for Recognizing and

14 Hendra, G. (2013) Telkomsel XL dan Indosat ma- suk Zona Merah Frekuensi. [Online] Available on: http://www.tribunnews.com/bisnis/2013/06/25/ telkomsel-xl-dan-indosat-masuk-zona-merah- frekuensi/ (retrieved: September 20, 2016). 13 Herning Bany, R. Note 4. 15 Herning Bany, R. Note 4.

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Adapting to the Changing Nature of Custom- olistic Practices and Unfair Business Compe- er care, 2015.16 tition as well as the implementation regula- On the other hand, Starting from the tions were already decided in Business Com- year 2010 until 2014 Telkomsel continuously petition Supervisory Commission decree has been increasing on the number of cus- Number 11 of 2011 stated on Guidelines for tomers. The number of Telkomsel Customers the Implementation of Article 17 (Monopoly) it can be proven by this data that showed in Act Law Number 5 of 1999 on Prohibition of the table below: Monopolistic Practices and Unfair Business Competition. Table 2: Telkomsel, XL, and Second, Based on Article 17 Law Num- Indosat Customers ber 5 of 1999 on the Prohibition of Monopo- listic Practice and Unfair Business Competi- tion, Entrepreneurs can be suspected or con- sidered as controlling production and/or mar- keting or goods and/or services as referred to under Paragraph (1) of this article if: The said goods and/or services do not have sub- stitutions at that time; or (2) It causes other Based on the data above the researcher ana- entrepreneurs to not be able to enter business lysed through the regulation; law number 36 competition for the same type of goods of 1999 on Telecommunication; law 5 of and/or services; or (3)One entrepreneur or 1999 on Telecommunication and Business one group of entrepreneurs controls more Competition Supervisory Commission deci- than 50% (fifty percent) of the marketing sion. share of one type of certain goods or ser- First, Based on Article 10 Law Number vices. 36 of 1999 on Telecommunication, monopo- 2.2 Legal Analysis of the Violation of Law Number 5 of 1999 by PT. Indosat ly is prohibited action; (1) in operating tele- This problem began in June 2016 when In- communications it is prohibited to carry out dosat accuse Telkomsel to conduct Monopo- activities which may cause the occurrence of ly practice outside Java. Actually, not only monopolistic practices and unfair business Telkomsel assume violate the regulation on competition among telecommunications op- the prohibition monopolistic practice and un- erators. (2) The prohibition referred to in fair business competition, but Indosat also paragraph (1) shall be in accordance with assumes violate this regulation with conduct- Prevailing statutory regulations. The meaning ing a negative campaign and also Predatory on Prevailing statutory regulations is Law pricing. If this action can be proven by Number 5 of 1999 on Prohibition of Monop- KPPU, so Indosat will be punished based on Law No. 5 of 1999. 16 Dini Turipanam Alamanda, Tamara Fatwa, Grisna The first problem is Indosat assumed to Anggadwita, Hani Gita Hayuningtyas, 2017, conduct predatory pricing. This is because “Bussines Game that won the Larges Telecomunication Provider in Indonesia,” Jurnal Indosat promotes the new product named In- Ilmu Hukum Universitas Telkom, 2304-1269, 6(1). dosat Ooredo freedom free telephone for the pp318.

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entire operator with the only Rp1/s for voice has been going on for approximately six services.17 Based on general secretary for months. Policy Studies and Regulation of Telecom- Based on Article 20 of Law No. 5/1999 munications, M Ridwan Effendi, said that on price fixing is also stipulated in Article 7 Indosat Ooredo freedom products are as- of Law No. 5/1999 regarding restrictions on sumed as predatory pricing practice because pricing below market prices. However, Arti- Indosat sells their product below the cost of cle 7 and Article 20 of Law No. 5/1999 will production. This obviously could damage the be applied differently by the Commission competition in the cellular market. One char- (KPPU) depending on the facts. Article 7 of acteristic of predatory pricing is selling be- Law No. 5/1999 requires agreements with low the price of production to eliminate the business competitors to set prices below the competitors. And these actions can damage market price, whereas Article 20 of Law No. cellular business competition in Indonesia in 5/1999 does not specify the terms of the the long term. agreement. And in this case based on the Based on the financial memo belonging facts obtained that between Telkomsel and to the three major operators, Telkomsel, In- Indosat did not enter into agreements for fix- dosat, and XL, in the first quarter of 2016, ing prices below market prices, so Indosat revenue per minute of voice services to In- could be punish under Article 20 of Law No. dosat up to Rp136,7/minute. Meanwhile, 5 of 1999 related to a prohibition on predato- Telkomsel amounted Rp168,5/minute, and ry pricing19 XL for Rp213,4/min. If Indosat applied the The second problem is the negative Rp1/s, the price will be Rp60/minute to other campaign conducted by Indosat. Based on operators (of the net) and for the Indosat the opinion of the Secretary-General and Pol- network (on the net). To apply tariff Rp1/s to icy Studies Centre of the Telecommunica- all operators, Indosat is expected to bear the tions Regulatory ITB, M Ridwan Effendi, in loss of Rp190/minute, due to retail tariff un- Jakarta, Friday, June 24, 2016 he found that der the interconnection charge which is the background for the negative campaign amounted to Rp250/minute.18 conducted by Indosat is the effect of the ap- By lowering tariffs Rp1/Sec for all of the plication of tariff Rp1/sec which does not operators, it can be said that Indosat has bad meet the target number of customer. Based intention to conduct predatory pricing to on the facts, implementation of tariff freedom eliminate other competitors. This condition program Rp1/s has been running for about five months, but it seems a million customer acquisition plan expected by Indosat is not 20 17 Hani, N. (2016) Tarif Mahal Telkomsel diserang successful. So, Indosat held such a negative Indosat apa kata Menkominfo. [Online] Available campaign to all customers. A negative cam- on: https://www.cnnindonesia.com/teknologi/2016 paign conducted by Indosat with the tariff 0617161436-213-139004/tarif-mahal-telkomsel- diserang-indosat-apa-kata-menkominfo/ (retrieved: scheme under the production tariff has led to September 20, 2016). an unhealthy competition.21 So the Business 18 Siti, S. (2016) Pengamat Endus Predatory Pricing di Kampanye Rp1/menit Indosat. [Online] Availa- ble on: https://www.viva.co.id/arsip/789920- 19 Siti, S. Note 18. pengamat-endus-predatory-pricing-di-kampanye- 20 Hani, N. Note 17. rp1-indosat/ (retrieved: December 8, 2016) 21 Hani, N. Note 17.

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Competition Supervisory Commission dosat is clearly wrong in advertisement eth- Chairman Rauf Syarkawi Commission will ics.23 About the issue of monopoly practice analyse the implementation of Indosat Oore- conducted by Telkomsel, actually Indosat do freedom tariff Rp1/second program. should report directly only to the regulator The poster used at the time of the nega- (BRTI), but Indosat even brought the issue to tive campaign is clearly impolite, and this the media in advance, it seems that Indosat action is clearly violating the code of ethics wanted to influence public perspective on the on competition, these can action injured other lack of Telkomsel service.24 operator cellular especially Telkomsel.22 And 3. The Business Competition Supervisory this action also can impact the consumers. Commission (KPPU) and Indonesian These are the poster that used by Indosat to Telecommunications Regulatory Body do the negative campaign: (BRTI) Settle the Unfair Business Competition Case of Cellular Operator There are two institutions will be able to handle these cases. Related with this cases, In Indonesia has two Institution which one is focusing on maintaining the Telecommunica- tion industry namely Indonesian Telecom- munication Regulatory Body (BRTI) and Source:http://www.cnnindonesia.com/teknologi/20160 other institution focusing on maintaining the 617161436-213-139004/tarif-mahal-telkomsel- business competition activity namely Busi- diserang-indosat-apa-kata-menkominfo/ ness Competition Supervisory Commission From the poster above, we can see clear- (KPPU). These two Institutions will be work ly that the negative campaign conducted by together to create a good environmental Indosat clearly harm the spirit of Law num- business competition in the telecommunica- ber 5 of 1999 to create a healthy competition. tion industry. Promotion action should be promoting the Both Institutions has their own authority product with good intention and fair competi- that regulates in law number 36 of 1999 on tion between cellular operators to give choic- Telecommunication; Telecommunication es to the consumer. ministry decree number 31 of 2003 on Indo- Based on the opinion of the Chairman of nesian Telecommunication Regulatory Body the Institute for Information Society Devel- and law number 5 of 1999 on the prohibition opment and Empowerment (LPPMI) Kami- of monopolistic practice and unfair business lov Sagala, he argued that the actions taken competition. by Indosat against Telkomsel are Very uneth- Actually, when there are cases on Tele- ical. Indosat and Telkomsel have become an communication industry the Indonesian Reg- overlap between a player and a regulator. ulatory body has mandated by the law to ana- This negative Campaigns conducted by In- lyse the case, if the case is related with im- plementation of telecommunication industry, 22 Susetyo, D. (2016) Sudah Bukan Jamanya lagi Operator Lakukan Kampaye Negatif. [Online] - BRTI can settle the case with give adminis- Available on: https://www.cnnindonesia.com/tek- nologi/20160621155253-213-139834/sudah- bukan-zamannya-lagi-operator-lakukan- 23 Susetyo, D. Note 22. kampanye-negatif/ (retrieved: December 8, 2016). 24 Susetyo, D. Note 22.

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trative sanction. If the case is related to the is stated that any parties cannot hold more business competition, the case is given to the than 50% of market share. However, the Business Competition Supervisory Commis- amount of market share of more than 50% is sion (KPPU) to settle/examine the case, but seen based on the national scale, not seen when the case is related to criminal action, from Java or outside Java. While in fact, the the case given to the executor to settle the market share held nationally by Telkomsel case, as like as in the penal code, Because was not more than 50%, but just around 45%; BRTI and KPPU didn’t have executor func- whereas, the rest of the market share was tion. held by other operators. 3.1 The Business Competition Superviso- On the other hand, Indosat applied for ry Commission (KPPU) Settle the Un- the Ooredo freedom program with tariff of fair Business Competition Case of Cel- Rp1/sec for all operators, and this tariff is far lular Operator below the price of production; this can be If there is a report letter on the violation of proven by the financial memo owned by the Law Number 5 of 1999, then KPPU should big three major operators, Telkomsel, Indos- examine that case in order to determine that at, and XL, in the first quarter of 2016, reve- the parties have violated the regulation or nue per minute of voice services to Indosat not. The preliminary process takes 30 work- was Rp. 136,7/min.26 Meanwhile, Telkomsel ing days after the report letter is received. In amounted to Rp168,5/min, and XL for Rp. this issue, the Business Competition Supervi- 213,4/min. If Indosat rates apply Rp1/sec, it sory Commission (KPPU) can proceed to the will result in the price of Rp60/minute to next process if it can prove that the parties other operators (off the net), and the same have conducted the unfair business competi- thing will happen for Indosat's call numbers tion. In this preliminary process, KPPU may (on the net). To apply Rp1 rates to all opera- bring witnesses if necessary. tors, Indosat is expected to bear the loss of Preliminary process is already starting Rp. 190/minute due to retail tariff under the by calling both parties in advance. On June interconnection charge which is amounted to 24, 2014, the Commission already succeeded Rp. 250/minute. Based on this fact, Indosat is in calling both parties for an investigation. in violation of Article 20 (predatory pricing) The Commission has managed to get infor- Law Number 5 of 1999. mation from both sides. This investigation 3.2 The Indonesian Telecommunications process was represented by Gopprer Regulatory Body (BRTI) Settle the Panggabean as enforcement director of the Unfair Business Competition Case of Commission. He said that they already re- Cellular Operator ceived an explanation from both parties, In- Preliminary process is already starting by dosat and Telkomsel. calling both parties in advance. Monday, As an investigation result, it is known June 27, 2016. BRTI has collected some in- that Telkomsel dominance outside of Java formation from Indosat about the truth of the has amounted to 80%.25 Based on Law No. 5 negative campaign conducted by Indosat. of 1999 on the Prohibition of Monopolistic Harsyo, the member of BRTI, sees these cas- Practices and Unfair Business Competition, it es as mild cases, and do not need to impose

25 Hendra, G. Note 14. 26 Hendra, G. Note 14.

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tough sanctions. So, BRTI did not impose is subject to a criminal fine in the amount of hard punishment. at least Rp. 5,000,000,000 (five billion rupi- Indonesian Telecommunication Regu- ahs) and in the amount of latory Body (BRTI) claimed to have dropped Rp. 25,000,000,000 (twenty-five billion rupi- a decision to respond to the chaotic between ahs) at the most, or imprisonment at a maxi- Indosat and Telkomsel. The finalized sanc- mum period of 5 (five) months. tions warning were posted by Indonesian The Negative campaign conducted by Telecommunication Regulatory Body to In- Indosat is obviously a very unethical thing to dosat on Monday, June 27, 2016. According do. The negative campaign conducted by In- to the Associated General the sanctions that dosat is a clear violation of point 1:20 of the will be given for the company is in the form Indonesian advertisement Ethics amendment of a warning because Indonesian Telecom- 2014. Furthermore, BRTI sees this case of munication Regulatory Body (BRTI) sees negative campaign does not require severe that this case of negative campaigning does sanctions, so BRTI only gives remain letter not require severe sanctions, so BRTI only to Indosat. gives remain letter to Indosat. REFERENCES CONCLUSION Books Prayoga, Ayuda. 1999. Persaingan Usaha Based on the previous discussion, it can be dan Hukum yang Mengaturnya di Indonesia. concluded that Telkomsel did not conduct Jakarta: Elips. Monopolistic practice. Because regarding Siswanto, Arie. 2002. Hukum Persaingan Article 19b Law Number 5 of 1999 the Usaha. Jakarta Selatan: Ghalia Indonesia. amount of 50% market share is seen based on the national scale, not seen from Java or out- Sitompul, Asril. 1999. Praktik Monopoli dan Persaingan Tidak Sehat. Bandung: Citra Ad- side Java. While in fact, the market share itya Bhakti. held nationally by Telkomsel was not more than 50%, but just around 45%; whereas, the Sugiono, Bambang. 2015. Metode Penelitian Hukum. Jakarta: Grafindo Persada. rest of the market share was held by other operators. Blinder, et al. 2001. Monopoly Principle and For Indosat cases it can be conclude that policy. Chicago: Thomson South-Western. conducts Predatory Pricing practice. Because Lubis, et al. 2009. Hukum Persaingan Usaha based on the analysis of the author, Indosat Teks dan Konteks. Jakarta: ROV Creative has done predatory pricing which is prohibit- Media. ed under Article 20 of Law No. 5 of 1999. Fajar, Mukti and Yulianto Achmad. 2007. This is proven by the fact that Indosat Oore- Dualisme Penelitian Hukum. Yogyakarta: do applied for freedom program with the tar- Fakultas Hukum UMY. iff of Rp1/sec to all providers is indeed far Friedman, Milton. 1999. VII: Monopoly and below the production price. So Indosat will the Social Responsibility of Business and La- get punish based on article 48 Paragraph 2 bor. Chicago: The University of Chicago. which state that Violations to the provisions Fuady, Munir. 1999. Hukum Anti Monopoli. under Article 5 through 8, Article 15, Arti- Bandung: Citra Aditya Bhakti. cles 20 through 24, and Article 26 of this law

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[Online] Available at: tion Number KM.21/2001 on Telecommuni- http://www.cnnindonesia.com/teknologi/201 cation Provider. 60621155253-213-139834/sudah-bukan- Business Competition Supervisory Commis- zamannya-lagi-operator-lakukan-kampanye- sion Decree (KPPU) Number 1 of 2006 Con- negatif/ [retrieved: December 8, 2016] cerning the Guidelines to settle the case in Siti, S, [2016] Pengamat Endus Predatory KPPU. Pricing di Kampanye Rp 1/ s Indosat. Business Competition Supervisory Commis- [Online] Available at: sion Decree (KPPU) Number 01 of 2010 http://www.viva.co.id/haji/read/789920- Concerning Dispute Settlement Procedure. pengamat-endus-predatory-pricing-di- kampanye-rp1-indosat/ Business Competition Supervisory Commis- [retrieved: December 8, 2016]. sion Decree (KPPU) Number 06 of 2010 Concerning the Guidelines for the Implemen- Syakur, U, [2016] Bantah Monopoli ini tation of Article 25 on Abuse of Dominant Alasan Telkomsel Mendominasi di Luar Position. Jawa. [Online] Available at: https://www.merdeka.com/teknologi/bantah- Business Competition Supervisory Commis- monopoli-ini-alasan-telkomsel- sion Decree (KPPU) Number 03 of 2011 mendominasi-di-luar-jawa.html/ Concerning the Guidelines for the Implemen- [retrieved: December 6, 2016]. tation of Article 19D on Discrimination Prac- tice. Uday, R, [2016] Data dan Fakta Industri Seluler, Kemgahan Vs Kerapuhan. [Online] Business Competition Supervisory Commis- Available at: sion Decree (KPPU) Number 04 of 2011 http://selular.id/kolom/2015/09/data-dan- Concerning the Guidelines for the Implemen- fakta-industri-selular-kemegahan-vs- tation of Article 5 on price fixing. kerapuhan/ [retrieved: September 20, 2016]. Business Competition Supervisory Commis- Laws sion Decree (KPPU) Number 06 of 2011 The 1999 Law No. 05 on the Prohibition of Concerning the Guidelines for the Implemen- Monopolistic Practices and Unfair Business tation of Article 20 on Predatory pricing. Competition. Business Competition Supervisory Commis- The 1999 Law No. 36 on Telecommunica- sion Decree (KPPU) Number 11 of 2011 tion. Concerning the Guidelines for the Implemen- tation of Article 17 on Monopolistic practice. The 2000 No. 52 on Government Regulation Telecommunication. Business Competition Supervisory Commis- sion Decree (KPPU) Number 1 of 2006 Con- The Communication and Information Minis- cerning the Guidelines to settle the case in ter Regulation (Menkominfo) Num- KPPU. ber1/PER/M.KOMINFO/01/2010 on the date 25 January 2010 on Telecommunication Pro- The Decision of the Minister of Transporta- vider. tion Number KM. 33/2004 Concerning Su- pervision of Healthy Competition in the fixed The Decision from Minister of Transporta- Network and the Basic Telephone Services tion Number KM.21/2001 on Telecommu- Provider. nication Provider which already changed to the Regulation of the Minister of Information The Decision of the Minister of Transporta- and Informatics Number 31/PER/M.- tion NumberKM.4/2001 on the date 16 Janu- KOMINFO/09/2008 on the Third Changes ary 2001 on Determining of the Basic Plant of the Decisions of Minister of Transporta- in National Technical of 2000 development

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of National Telecommunication which al- ready changed to the Regulation of the Min- ister of Information and Informatics Number 09/PER/M.KOMINFO/06/2010 on the dated 9 June 2010 on the six changes of the Deci- sions from Minister of Transportation Num- ber KM.4/2001 on Determining of the Basic Plant in National Technical of 2000 Devel- opment of National Technical.

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