[86-98] Mukti Fajar ND, Diana Setiawati,Yati Nurhayati Editorial Office: Faculty of Law, Sriwijaya University, Jalan Srijaya Negara, Palembang, South Sumatra 30139, Indonesia. 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 Telkomsel 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 Sriwijaya Law Review Vol. 3 Issue 1, January (2019) [86] Dispute Settlement between Telkomsel and Indosat: An Analysis on Competition of Cellular Operator 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 Ooredoo 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). [87] Sriwijaya Law Review Vol. 3 Issue 1, January (2019) Mukti Fajar ND, Diana Setiawati,Yati Nurhayati 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