Teacher’s Summary
In “Competition in Indonesian Law,” Heather Mills expertly explores the complexities of monopolies and business competition through the lens of Indonesian legal frameworks. Drawing parallels between chemical reactions and market dynamics, Mills offers a unique interdisciplinary analysis that highlights the importance of maintaining economic balance. The essay is well-researched and creatively connects concepts from chemistry and business law, demonstrating a strong understanding of both subjects.
Grade: A
Competition in Indonesian Law
By Heather Mills, Double Major in English and Chemistry, The Ohio State University
As a student bridging the worlds of literature and science, I find the study of monopolies and business competition fascinating. It’s like examining a complex chemical reaction where market forces interact, sometimes creating imbalances in the economic ecosystem. Let’s dive into this topic, viewing it through the lens of Indonesian law and my interdisciplinary background.
The Catalyst of Monopoly
A monopoly, in its essence, is like a dominant reactant in a chemical equation. It’s a market condition where there’s only one provider of a particular product or service. This creates an imbalanced reaction, beneficial for the monopolist but potentially harmful to consumers.
Monopolies can form through various mechanisms, much like how different catalysts can influence a reaction:
- Resource control: Like a rare element in a chemical compound
- Unique skills: Akin to a specialized enzyme in a biological process
- Superior product: The most efficient catalyst in a reaction
- Technological innovation: A newly discovered element in the periodic table of business
The Two Isomers of Monopoly
Just as molecules can have different isomers with the same chemical formula but different structures, monopolies in Indonesian law come in two forms:
1. Legal Monopoly (Government-Granted)
This is like a controlled experiment where the government regulates market variables. The state prohibits production of certain goods or services by citizens, often for national security reasons. An example in Indonesia is BULOG’s control over rice imports. It’s analogous to how certain chemical reactions are only allowed in controlled laboratory settings.
2. Illegal Monopoly
This occurs when a private entity gains total control over a product or service, becoming a “price maker.” It’s like an uncontrolled chain reaction in the market, potentially destabilizing the entire economic ecosystem.
The Equilibrium of Fair Competition
Fair competition in business is like a balanced chemical equation. It’s essential for a healthy market, much like how balanced reactions are crucial for life processes. When businesses compete openly and fairly:
- Businesses grow (react) and become more profitable (produce energy)
- Consumers benefit from lower prices, better quality, and more choices (like the products of a successful reaction)
The Contamination of Unfair Competition
Unfair business practices are like contaminants in a chemical reaction. They disrupt the natural market equilibrium. Indonesian law identifies seven types of these “contaminants”:
- Fixed pricing
- Tied selling
- Abuse of dominant position
- Resale Price Maintenance (RPM)
- Bid-rigging
- Misrepresentation in advertising
- Double Ticketing
The Buffer Solution: Law No. 5 of 1999
Just as we use buffer solutions in chemistry to maintain a stable pH, Indonesian Law No. 5 of 1999 acts as a buffer in the economic solution. It prohibits four main “reactive” practices:
- Monopoly (Article 17)
- Monopsony (Article 18)
- Market authority (Articles 19, 21)
- Conspiracy (Articles 22, 23, 24)
These regulations aim to maintain a stable and fair market environment, much like how buffer solutions keep the pH stable in chemical reactions.
A Case Study: The Telekom Malaysia Reaction
While not an Indonesian example, the case of Telekom Malaysia Bhd (TM) provides an interesting study of how a company can achieve near-monopoly status. It’s like observing a dominant species in an ecosystem:
- TM holds a de facto monopoly on Malaysia’s fixed-line telecom market (>4.6 million access lines)
- It’s a leading mobile phone provider
- The company acquired Technology Resources Industry (TRI) and Celcom, further solidifying its position
- TM also dominates as the country’s leading Internet provider
This case demonstrates how strategic acquisitions and market dominance can lead to a near-monopolistic situation, much like how a particularly reactive element might dominate a chemical environment.
Conclusion: The Delicate Balance of Market Dynamics
Studying monopolies and business competition through the lens of Indonesian law reveals the delicate balance in economic ecosystems. Just as in chemistry, where we strive for balanced equations and stable reactions, economic regulations aim to create a fair and competitive market environment.
As we continue to explore these economic phenomena, we must remember that like any complex system – be it chemical or economic – the key lies in understanding the interactions, maintaining balance, and fostering conditions that benefit all participants in the reaction we call the market.
References
1. Ramli, Yusnani, and Arief Ramdhani. Monopolies in the Indonesian Market: Legal Implications and Case Studies. PT RajaGrafindo Persada, 2018.
2.Kurniawan, Hendra. “Unfair Competition Practices in Indonesia: An Overview.” Indonesian Journal of Law and Society, vol. 4, no. 2, 2021, pp. 45-67.
3. Indonesia-Investments. “Indonesia Competition Law: Law No. 5 of 1999.” Indonesia Investments,
4. Taufik, Fahri, and Laras Widya. Competition Law in Indonesia: Theory and Practice. LexisNexis, 2019.