Cartel Case Initiation Plenary I: Overview of Anti-Cartel Enforcement Manual Chapters - Compilation of best practices Cartel Case Initiation Main issues raised in the UNCTAD Cartel Detection and Investigation Manual made for the “Komisi Pengawas Persaingan Usaha” (KPPU) of Indonesia Pierre M. Horna Officer in charge of the COMPAL Programme Competition and Consumer Policies Branch ICN Cartel Workshop, Panama City, 2 October 2012

1. Generalities 2. Cartel Case Initiation 3. Challenges Content of the presentation: 1. Generalities 2. Cartel Case Initiation 3. Challenges

Generalities KPPU undertook a Peer Review in UNCTAD in 2009. One of the recommendations was the need for capacity building to better deal with cartels. The UNCTAD Cartel Detection and Investigation Manual for KPPU was drafted taking into account the special circumstances and challenges of the Agency, particularly in accordance to the limited powers for searches, inspections (dawn raids) of the competition Law. Focus on use of indirect evidence Among other international sources, ICN Anti-Cartel Enforcement Manual chapters (4,5,6 and 8) were relevant for providing the structure of the report adapted to Law #5 on Competition Policy. 3

Generalities (cont’) Each chapter of the Manual contains techniques and suggestions on how to successfully use information to achieve better enforcement results. The manual includes hypothetical cartel scenarios, questions designed to encourage investigators to think about techniques and approaches that might be used to uncover and investigate cartels. It incorporates checklists and workbook-style questions in order to encourage readers to think about practical examples of how to structure an investigation and practice their skills. The manual is divided into four sections: Section I. Methods for Detecting Cartels; Section II. Investigation Strategy; Section III. Investigative Techniques and Section IV, Techniques and Tools for the Future. The central focus of all of them is the same: information.

Generalities (cont’) It is noted that the final section of the manual discusses methods to detect and investigate cartels that are not presently available to the KPPU, but which are anticipated and might be available to the KPPU in the future. In addition, these methods have been already tested in other jurisdictions under the COMPAL Programme. This experience might be also relevant to draw comparisons. The manual was tested and validated during two national workshops: Jakarta, October 2011; and Bandung, September 2012. 5

2. Cartel Case Initiation The ICN Manual addresses the chapter on Cartel Case Initiation has five sections whereby two (Methods of detecting cartel and Pre-investigatory phase of cartel allegations) inspired the drafting of the UNCTAD tailor-made manual for KPPU (Dec 2011). In this process of compiling best practices, the UNCTAD Manual not only addressed the same section on "Methods of detecting cartel" (reactive & proactive methods), but also included a comprehensive analysis of substantive provisions of the relevant competition law of the recipient country and including the classic approach of structural-behavioral analysis for assessing the local dynamics of domestic markets at stake. Methods of Detecting Cartel: Cartels can be detected by using “reactive” methods: Receipt of a complaint: from a disgruntled member of the cartel/ prisoners dilemma; Have a system/process in place to receive complaints; Identification of priority sectors (specific sectors targeted for enforcement focus; Protect the identity of the complainant. 6

2. Cartel Case Initiation (cont’) Receipt of information from informant or whistleblower: from an employee or ex-employee, of a member of the cartel, government; Keep the identity of the informant confidential. They may use intermediates like lawyers or send information anonymously; Seek evidence that can corroborate the information received from an informant; Such information may be used to conduct a raid. 7

2. Cartel Case Initiation (cont’) Cartels can also be detected by using “proactive” methods: Education and outreach; CA’s website, press releases, newsletters, workshop; Cooperation with other agencies (local and international); Analysis of previous cartel cases; Analysis of other competition work; Monitoring of industry activity; Monitoring of the media & internet; Attendance and other contact with industry representatives; Use of economic analysis; Information obtained from interviewing witnesses & respondents; Use of intelligence; Depending on the information obtained through the above methods, the CA may consider initiating a complaint; 8

3. Challenges What are the challenges in conducting the investigation? • The reported parties sometime do not cooperate with KPPU. When they are summoned to come to the offices, they do not show up. The KPPU does not have the power to make them force. Last year, the police began to assist KPPU after the 3rd summon was issued by the KPPU. • When the witnesses provides the statement, they sometime refuse to sign it. KPPU do not have the power to make them do so. • Internal: Lack of capacity of the personnel (personnel is not equipped with sufficient capacity and authority to obtain evidences) • Very limited data on which to base analysis of the complaints and have a better understanding of the market participants. The reason is that they do not have the budget to acquire data and other institutions do not cooperate fully with the KPPU. 9

ICN Cartel Workshop, Panama City, 2 October 2012 Plenary I: Overview of Anti-Cartel Enforcement Manual Chapters - Compilation of best practices Thank you for your attention Pierre.Horna@unctad.org ICN Cartel Workshop, Panama City, 2 October 2012