KPPU Pushes for Modernization of Competition Law to Address Digital Economy Challenges

Need for Regulatory Update Emphasized

The Indonesian Competition Commission (KPPU) has highlighted the urgent need to modernize the country's competition law to effectively regulate the rapidly evolving digital economy. The current Competition Law, enacted in 1999, is considered inadequate to address the complexities of modern digital platforms and business practices. KPPU Chairman M. Fanshurullah Asa stated that the law has not kept pace with the fundamental changes in market structures since its implementation.

Challenges in Digital Market Regulation

The KPPU identified several challenges in regulating digital markets, including the dual role of digital platforms as both marketplaces and competitors within their own ecosystems. This structure potentially creates new competition risks that are not adequately addressed by current regulations, such as data-based anti-competitive practices and algorithmic discrimination. Fanshurullah warned that without adaptive regulations, these practices could stifle innovation and limit market entry for new businesses, ultimately harming consumers due to reduced choices.

Collaborative Approach to Policy Modernization

To address these challenges, KPPU is taking a collaborative approach by engaging with various stakeholders, including academics, business associations, and strategic partners like PROSPERA. The commission has commissioned four research studies to inform the modernization of competition law, focusing on the evaluation of the current law's effectiveness, gaps with international standards, strategies for legal updates in the digital era, and the relationship between competition policy and consumer welfare.

International Context and OECD Accession

Indonesia's ongoing accession process to the OECD has further emphasized the need to align the country's competition law with international standards. The OECD's legal instruments have highlighted weaknesses in Indonesia's current regulatory framework, particularly in addressing digital market competition and competitive neutrality. KPPU member Eugenia Mardanugraha noted that the research studies conducted with PROSPERA have provided critical insights, including the need for specialized technology expertise within the commission to effectively regulate digital business practices.

Future Directions for KPPU

Academic experts participating in the discussion, including Prof. Mohamad Ikhsan from the University of Indonesia, suggested that KPPU needs to transform its role beyond being merely an enforcement agency. The commission is expected to become an architect of national competitiveness in the digital era, requiring a shift from traditional ex-post enforcement to more proactive regulatory approaches. This transformation is seen as crucial for enhancing Indonesia's competitive landscape and consumer welfare in the digital economy.