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Free Market Competition Takes a Back Seat in South Bali

Bualu Compels Hotels at Nusa Dua to Agree to Block Online Transportation. But is this Legal?

Bali News: Bali, Indonesia, Bualu, Wayan Solo, UU No 5 Antimonopoly 1999, anti monopoly, Online Transport, Kooperasi Taxi Bali
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DenPost reports that the three traditional villages in South Bali -  Bualu, Peminge and Kampial in the sub-district of Benoa at Nusa Dua have put forth for signature a Memorandum of Understanding (MoU) with local hotels at the Indonesian Tourism Development Corporation Complex (ITDC) that will prohbit hotels from allowing online transport operators to operate at Nusa Dua.

The MoU was presented at a meeting coordinated by the District Chief of Benoa, Wayan Solo, held in the Wantilan hall of ITDC.

Although the MoU has yet to be signed by all parties, Wayan Solo has declared the agreement has power with immediate effect. Under the still-to-be-signed agreement there are areas of Nusa Dua that will be declared off-limit to online transportation operators picking up passengers. The online operators will, however, be allowed to drop off passengers in these areas.

The rational given by Wayan Solo is that the security of hotel guests can be guaranteed by limiting the movement of online taxis, allowing drivers living in the area to be called to account when complaints over security or safety are received.

Solo said he hoped that local taxi operators would register under one of the conventional taxi operators serving Nusa Dua.

What sanctions will be imposed on online drivers who disregard the MoU remains unclear and is still under discussion. These matters and the actual implementation of the new rules are still under discussion with tourism and transportation officials in Bali.

Hotels in Nusa Dua are being asked to install banners and distribute pamphlets to their guests explaining the "no online taxi" policy.

Meanwhile, Made Gunawan, who represents online drivers living in the Nusa Dua region said his group has some 40 members who serve online requests from guests and earn their income in doing so. He insists that his drivers should also be allowed to serve the public staying in Nusa Dua.

Indonesia’s Anti-Monopoly Law

It is unclear why some hotels remain reluctant to sign the MoU fashioned by the District Chief at Benoa.

Some, in fact, suggest that the MoU between the hotels and the Benoa district represents a violation of The Anti Monopoly and Fair Trade Act No. 5 of 1999 that carries hefty fines and penalties for those entering agreements that limit free trade and access to markets.

The areas of concern under the 1999 Anti-monopoly law include:

  • Chapter III, Article 4, (Subsection 1) that expressly outlaws agreements between businesses to control services in such a way as to limit competition or (subsection 2) that seeks to forbid agreements between 2 or 4 businesses to control more than 75% of the market for a product or service.
  • Chapter III, Section III, Article 9 forbids entering into agreements between businesses intended to allocate exclusive control over certain market areas for goods or services that effectively result in a monopoly and that limit market access.
  • Chapter III, Section IV, Article 10 (Subsection 1) forbids agreements between business groups that will limit others from participating in the same field of enterprise in order to seize control over a particular market.
  • Chapter III, Section IV, Article 10 (Subsection 2) forbids businesses from entering or instituting agreements that cause losses to competing businesses or limit access of competing businesses to the marketplace.
  • Chapter III, Section VII, Article 13 (Subsections 1 & 2) that forbids collaboration between two or three entities to control the price of products or services that result in an effective monopoly by controlling more than 75% of a market and thereby limiting market access. 
The Anti-monopoly law No. 5 of 1999 provides for strong administrative remedies for violators that include the revocation of businesses licenses and fines of between Rp. 1 billion and Rp. 25 billion.

Under the terms of the anti-monopoly law, any member of the public can bring an action against those deemed to be violating the terms of the law by filing a formal complaint with the Commission on Competitive Practice that must be adjudicated within set limits of time by the Commission.

If, in fact, the MoU put on the table at Nusa Dua is formally found in violation of the Anti-monopoly law this could have far-reaching legal implications, possibly calling into question exclusive transportation agreements in place at Bali’s Ngurah Rai Airport.

Anti-monopoly Law No. 5 of 1999 (Indonesian)

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