The Indonesian Competition Commission (“KPPU”) has been scrutinizing several business sectors following the global economic slowdown as a result of the COVID-19 pandemic. These sectors are primarily healthcare services, medical equipment, and essential commodities (food).
One currently booming sector under watch by KPPU is healthcare. On April 14, KPPU issued a press release (Press Release No. 22/KPPU-PR/IV/2020), announcing that it was conducting an investigation into COVID-19 rapid test services being offered by several hospitals. KPPU’s initial findings revealed that these services were expensive because the COVID-19 rapid test was being tied to other health screening kits, including a full blood test, C-Reactive Protein (CRP) test, thorax CT scan, and consultations with an internist and pulmonologist. Patients requiring only the rapid test for the virus were being forced to pay for other health tests they did not want. As a result, the high prices for the bundled packages may be limiting public access to the COVID-19 rapid test services. The focus of the investigation is whether the additional health tests are complementary products to the COVID-19 rapid test.
If KPPU finds that the additional health tests are not needed for a complete diagnosis of COVID-19, then the practice of selling those products could be considered as a “tying” arrangement, which is prohibited under Article 15(2) of Law No. 5 of 1999 on Prohibition on Monopolistic Practices and Unfair Business Competition (Law 5/1999). Article 15(2) of Law 5/1999 prohibits agreements which require the purchaser of certain products to also purchase other non-related products from the supplier. Businesses are not allowed to force consumers to buy unnecessary products that are bundled with the main product they need.
In addition to healthcare service, KPPU has been looking at excessive prices for medical equipment (especially masks) and basic commodities.
The prices of medical masks, especially 3-ply and N95 masks, have been skyrocketing. Based on provisional findings in Greater Jakarta and all working areas of its regional offices, KPPU concluded that the high price of masks was a result of scarcity combined with higher demand. As yet, KPPU has not found any major businesses to be violating Law 5/1999.
With regard to essential commodities, KPPU has carried out regular inspections of the national sugar supply, with sugar prices rising significantly since March 24, 2020. It has been collecting data from 250 businesses, coordinating with relevant ministries and government agencies. Again, KPPU has not yet found any alleged violations of Law 5/1999 in the sugar trade.
In its Press Release No. 16/KPPU-PR/III/2020 issued on March 24, 2020, KPPU reminds businesses not to engage in cartel conduct or enter into agreements that could directly cause excessive prices and/or the stockpiling of Personal Protective Equipment (PPE). This warning covers healthcare services, masks and other health products, and basic commodities needed by the public during the pandemic. If such conduct is found to disrupt product distribution, KPPU has made it clear that it will not hesitate to take legal action against the alleged infringers.
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