Nexus Between Competition and IP Rights in Indonesia

Indonesia’s Law No. 5 of 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition (the Anti-Monopoly Law) exempts agreements related to IP rights, namely licenses and franchises, from the scope of its regulation. This provision is regulated in article 50 of the Anti-Monopoly Law.

For completeness, the Business Competition Supervisory Commission (KPPU) issued Regulation No. 2 of 2009 regarding Guidelines on Exceptions to the Implementation of the Anti-Monopoly Law in Relation to Agreements Related to IP (KPPU Reg 2/2009).

KPPU Reg 2/2009 stipulates that license agreements related to IP are exempted from the Anti-Monopoly Law if they do not contravene the principles and purposes as set out in articles 2 and 3 of the Anti-Monopoly Law, as follows:

• the activities of business actors in Indonesia must be based on economic democracy, with due observance of the equilibrium between the interests of business actors and the interests of the public;
• the purposes of the Anti-Monopoly Law are to:

• • safeguard the interests of the public and improve national economic efficiency for the sake of people’s welfare;
  • create a conducive business climate through the regulation of fair business competition to ensure the certainty of equal business opportunities for large, medium-sized and small business actors in Indonesia;
  • prevent monopolistic practices and unfair business competition by business actors; and
  • create effectiveness and efficiency in business activities.

KPPU Reg 2/2009 further stipulates that the exempted IP-related licenses are those that have met the requirements set out in the IP laws and have been recorded at the Directorate General of Intellectual Property (DGIP).

Notwithstanding the foregoing, please note that the Indonesian House of Representatives is deliberating the draft of a new anti-monopoly law (Draft Anti-Monopoly Law), which would replace the current Anti-Monopoly Law.

The Draft Anti-Monopoly Law in circulation as of this writing does not contain a provision exempting intellectual property agreements, including licenses, patents, trademarks, copyrights, industrial designs, layout designs of integrated circuits and trade secrets. Thus, if the Draft Anti-Monopoly Law is passed in its current form, IP-related agreements will no longer be exempted from the scope of the Anti-Monopoly Law.

Excerpted from Lexology Panoramic: Intellectual Property & Antitrust 2024, published by Law Business Research.

Find Intellectual Property & Antitrust 2024: Indonesia here.

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