Monopoly: Why the Law Dismantles What the Game Celebrates

“As kids, ‘monopoly’ meant plastic hotels and sweet victory. So why does the same word strike fear into economists and regulators today?”

As children, we saw Monopoly as a fun board game — a race to buy properties, collect rents, and bankrupt our friends. In reality, monopoly is no game. It has serious implications for economies, consumers, and society at large. A monopoly occurs when economic power is concentrated in the hands of one or a few business actors. Just like in the game, real companies aim to dominate markets — not through dice rolls, but by mergers, acquisitions, and exclusive agreements.

While a monopoly may benefit the dominant firm through high profits and market control, it often comes at a cost to consumers: higher prices, fewer choices, and stagnant innovation. Recognizing this, over 130 countries — including Indonesia — have implemented legal frameworks to prevent monopolistic behavior and promote fair competition.

Monopoly in Indonesia: A Legal Perspective

Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition marked a turning point in Indonesia’s economic policy. In the pre-reform era, monopolies were not just tolerated — they were often state-supported, benefiting politically connected elites. This crony capitalism contributed to Indonesia’s 1998 financial crisis, leading to a $43 billion IMF bailout. One of the IMF’s conditions? Stronger market regulations — including antitrust laws.

The law defines a monopoly in Article 1(1) as:

"The control over the production and/or marketing of goods and/or the use of certain services by one business actor or a group of business actors."

To qualify as a monopoly under this law, two key conditions must be met:

1. Dominant control over a product or its substitutes.

2. Exclusive control by a single entity or a coordinated group.

Articles 27 and 28 further detail the forms of monopolistic behavior, while Articles 47 and 48 outline penalties:

• Administrative penalties: Cancellation of business deals and fines between IDR 1–25 billion.

• Criminal penalties: Fines between IDR 25–100 billion or imprisonment up to six months.

KPPU: Indonesia’s Competition Watchdog

To ensure enforcement, the law also established the KPPU (Komisi Pengawas Persaingan Usaha) — Indonesia’s Business Competition Supervisory Commission. This independent body plays a critical role by:

• Investigating monopolistic practices

• Issuing binding decisions

• Recommending policy reforms

• Conducting market surveillance

One landmark case was KPPU v. Temasek Holdings (2007). The Singaporean investment firm was found to control over 50% of Indonesia’s cellular market through cross-ownership in Telkomsel and Indosat — a clear violation of Article 27. Despite Temasek’s appeal challenging the KPPU’s jurisdiction, the case set an important precedent on the extent of “control” and foreign ownership oversight.

More recently, in 2022, KPPU cracked down on an alleged cooking oil cartel, which manipulated prices of a basic household staple. This case demonstrated KPPU’s ongoing commitment to consumer protection and market fairness, even amidst supply chain challenges and price volatility.

Challenges in Enforcement

Despite its proactive stance, KPPU faces ongoing challenges:

• Legal ambiguity around terms like “control” and “dominance”

• Resistance from powerful corporate interests

• Limited extraterritorial reach in foreign-influenced cases

Nevertheless, the commission’s progress reflects a broader shift toward economic democratization and accountability.

Conclusion

Indonesia’s journey from a monopoly-fueled economy to one governed by competitive market principles is a testament to reform and resilience. Law No. 5/1999 is not just a legal document — it’s a safeguard for consumers, small businesses, and the broader economy. Through the tireless work of KPPU, Indonesia is creating a more transparent, competitive, and fair economic landscape.

While the game of Monopoly rewards domination, the real world relies on balance, fairness, and oversight — not to spoil the fun, but to ensure everyone has a chance to play and thrive.