Encouraging healthy competition

Oct 13, 2025 by talynt.org 54 views

The Takeover of Shares by an Affiliated Company: A Threat to Monopolistic Practices and Unfair Business Competition

Introduction

As the business landscape continues to evolve, the trend of share acquisitions between companies has become increasingly popular as a strategy for business expansion. However, this phenomenon has raised concerns about its impact on business competition in the market. The acquisition of shares by an affiliated company poses a significant threat to monopolistic practices and unfair business competition, which can have far-reaching consequences for consumers and the community as a whole.

The Case of PT Indosat: A Warning Sign

One notable case that drew attention was the acquisition of the majority of PT Indosat's shares, the second-largest telecommunications company in Indonesia, by Qatar Telecom in 2007. Qatar Telecom was an affiliate company of Temasek Holding. The Business Competition Supervisory Commission (KPPU) at the end of November 2007 concluded that Temasek Holding had violated Article 27 of Law Number 5 of 1999 concerning Prohibition of Monopoly Practices and Unfair Business Competition. KPPU deemed the acquisition to have increased share ownership and potentially reduced competition in the market.

The Role of KPPU in Assessing Share Acquisitions

As a business competition supervisory agency, KPPU plays a crucial role in evaluating every share acquisition that has the potential to influence competition in the market. This research aims to answer three essential questions:

*** How is the acquisition of stock acquisitions for private companies according to Law Number 40 of 2007 concerning Limited Liability Companies? *** *** How is the acquisition of stock acquisitions for public companies according to Law Number 8 of 1995 concerning the Capital Market? *** *** How the acquisition of shares by affiliate companies can lead to monopoly practices and unfair business competition according to Law Number 5 of 1999 concerning Prohibition of Monopoly Practices and Unfair Business Competition? ***

Methodology

This study employs normative legal research methods with an analytical descriptive approach. Secondary data obtained through literature research are analyzed qualitatively to draw deductive conclusions.

Regulations Governing Share Acquisitions in Indonesia

The acquisition of shares in Indonesia is regulated in Article 125 and 126 of Law Number 40 of 2007 concerning Limited Liability Companies. In general, the acquisition of shares can be carried out by legal entities both in part and the majority, resulting in changes in company control. In the capital market, the acquisition of shares is regulated in Law Number 8 of 1995 along with its implementing regulations issued by the Stock Exchange and the Capital Market Supervisory Agency and Financial Institutions (Bapepam-LK). Bapepam-LK regulations related to the acquisition of shares by public companies and Tender Offers need to be considered.

The Acquisition of Shares by Affiliate Companies: A Threat to Competition

The acquisition of shares by an affiliate company that has the potential to lead to monopolistic practices and unfair business competition is an acquisition that results in an increase in market strength or market concentration and dominant position, leading to monopolistic practices and unfair business competition. To determine whether the acquisition by an affiliate company is detrimental to competition or not, there are two aspects that need to be considered:

*** First, whether the acquisition company is the controlling shareholder. *** *** Second, how is the relationship between the parent company and the subsidiary. ***

The Importance of KPPU's Assessment

KPPU must conduct a comprehensive assessment of every corporate action, such as the acquisition of shares, before deciding whether the action violates Law Number 5 of 1999 or not.

Conclusion

Business expansion through the acquisition of shares must be in line with the principle of healthy business competition. A clear arrangement and strict law enforcement are needed to prevent monopolistic practices and unfair business competition that harm consumers and the community as a whole.

Recommendations

Strengthening regulations: The government should strengthen regulations governing share acquisitions to prevent monopolistic practices and unfair business competition.
Enhancing KPPU's role: KPPU should be empowered to conduct thorough assessments of every share acquisition to ensure compliance with laws and regulations.
Promoting transparency: Companies should be required to disclose information about share acquisitions to ensure transparency and accountability.
Encouraging healthy competition: The government should promote healthy competition by implementing policies that encourage fair business practices and prevent monopolistic practices.

By implementing these recommendations, Indonesia can ensure that business expansion through share acquisitions is conducted in a fair and transparent manner, promoting healthy competition and protecting consumers and the community as a whole.
Frequently Asked Questions: The Takeover of Shares by an Affiliated Company

Q: What is the main concern about the takeover of shares by an affiliated company?

A: The main concern is that it can lead to monopolistic practices and unfair business competition, which can harm consumers and the community as a whole.

Q: What is the role of KPPU in assessing share acquisitions?

A: KPPU is responsible for evaluating every share acquisition that has the potential to influence competition in the market. They must conduct a comprehensive assessment of every corporate action, such as the acquisition of shares, before deciding whether the action violates laws and regulations.

Q: How is the acquisition of shares regulated in Indonesia?

A: The acquisition of shares in Indonesia is regulated in Article 125 and 126 of Law Number 40 of 2007 concerning Limited Liability Companies. In general, the acquisition of shares can be carried out by legal entities both in part and the majority, resulting in changes in company control.

Q: What are the two aspects that need to be considered when determining whether the acquisition by an affiliate company is detrimental to competition or not?

A: The two aspects are:

*** First, whether the acquisition company is the controlling shareholder. *** *** Second, how is the relationship between the parent company and the subsidiary. ***

Q: What is the importance of KPPU's assessment in preventing monopolistic practices and unfair business competition?

A: KPPU's assessment is crucial in preventing monopolistic practices and unfair business competition. They must conduct a thorough evaluation of every share acquisition to ensure compliance with laws and regulations.

Q: What are the consequences of monopolistic practices and unfair business competition?

A: The consequences of monopolistic practices and unfair business competition can be severe, including:

Reduced competition in the market
Increased prices for consumers
Decreased innovation and quality of products and services
Harm to the community and consumers as a whole

Q: What can be done to prevent monopolistic practices and unfair business competition?

A: To prevent monopolistic practices and unfair business competition, the government should:

Strengthen regulations governing share acquisitions
Enhance KPPU's role in assessing share acquisitions
Promote transparency and accountability in business practices
Encourage healthy competition through policies that promote fair business practices

Q: What is the significance of this issue in Indonesia?

A: This issue is significant in Indonesia because the country has a large and growing economy, with many companies operating in various industries. The takeover of shares by an affiliated company can have far-reaching consequences for consumers and the community as a whole, making it essential to address this issue through effective regulations and enforcement.

Q: What are the potential consequences of not addressing this issue?

A: The potential consequences of not addressing this issue include:

Reduced economic growth and development
Increased inequality and poverty
Decreased consumer welfare and satisfaction
Harm to the community and consumers as a whole

By understanding the concerns and implications of the takeover of shares by an affiliated company, we can work towards creating a more competitive and fair business environment in Indonesia.