Overview

The Indonesia Competition Commission (locally known as KPPU) recently rendered a decision regarding case concerning an alleged violation of Article 23¹ of Law 5 of 1999 (as amended) (Competition Law) related to a conspiracy to steal PT Chiyoda Kogyo Indonesia (Reporting Party)’s company secrets (Case).

Out of the three reported parties, two were found to have violated Article 23 of the Competition Law, with one being fined IDR3 billion (approx. US$176,820). However, despite these findings, KPPU rejected the Reporting Party’s compensation claim.

What was this Case all about?

To explain the Case in more depth, we provide below a detailed description of the parties involved and their actions, and the Case’s subsequent legal proceedings.

The three reported parties are described as follows:

1. PT Maruka Indonesia (PT MI): a trading company that previously partnered with the Reporting Party in the manufacturing of Special Purpose Machines (SPM).²
2. Hiroo Yoshida (Yoshida): The Reporting Party’s former marketing director and general manager, who later became the advisor of PT MI and subsequently the president director of PT Unique Solutions Indonesia (PT USI).
3. PT USI: A company specialising in the production of SPM similar to those of the Reporting Party. PT USI also employed former employees of the Reporting Party who were persuaded by Yoshida. The shareholders of the company are Maruka Corporation and PT MI.

KPPU found that PT MI and Yoshida conspired to obtain the Reporting Party’s confidential business information, which are classified as company secrets.

The confidential business information comprised documents, data, formulas, and other proprietary information that (i) hold economic value; (ii) are not disclosed to the public; (iii) safeguarded; and (iv) kept strictly confidential from external parties, including but not limited to:

• customer data and their contact information;
• videos (such as pre-product videos, design videos, and videos demonstrating product functionality);
• project names and associated contacts;
• machine manufacturing records;
• design drawings;
• bid prices; and
• employee data and expertise.

(Company Secrets)

The Reporting Party sought KPPU’s acknowledgement of the losses incurred due to the actions of the reported parties and requested compensation for:

1. material losses: IDR63.7 billion (approx. US$3.75 million), attributed to a decline in demand as customers ceased purchasing machinery from the reporting party.
2. immaterial losses: IDR2 billion (approx. US$117.88), arising from the loss of customer trust due to the leakage of confidential customer data, as well as the Reporting Party’s diversion of time, energy, and resources caused by the actions of PT MI and Yoshida.

Although PT MI and Yoshida violated the Competition Law, KPPU rejected the ReportingParty’s compensation claim for both material and immaterial losses. The claim was based on projected estimates rather than actual or verifiable damages. Additionally, the reporting party failed to account for the broader economic impact of the COVID-19 pandemic in 2020, which significantly disrupted business operations and market conditions.

How did the hearing proceedings go?

KPPU commenced the preliminary examination hearings for the reported parties on 22 July 2024, followed by follow-up examination hearings that started from 26 November 2024 and concluded on 9 January 2025.

During these hearing proceedings, KPPU discovered the following new facts:

• Confidentiality obligation: Yoshida had signed a Statement on Company Confidentiality (Statement) which prohibits the disclosure or use of confidential information by third parties. Additionally, Yoshida committed to refraining from engaging in similar business activities as the Reporting Party for one year after his resignation.
• Conspiracy evidence: Yoshida resigned from the Reporting Party and returned to Japan. PT MI exploited this by sponsoring Yoshida to work at PT MI in Indonesia, and together they established PT USI, a competitor in the same sector.
• Misuse of confidential information: Despite being bound by the Statement, PT MI and Yoshida used the Reporting Party’s Company Secrets and recruited its former employees by offering higher salaries for their benefit.

What was KPPU’s decision?

KPPU decided that PT MI and Yoshida were found to have violated Article 23 of the Competition Law, while PT USI was not proven to have committed any violations. KPPU concluded that the conspiracy was orchestrated solely by PT MI and Yoshida to achieve their intended outcomes.

As a result, PT MI was fined IDR3 billion (approx. US$176,820) for its violation, but Yoshida was not fined, as he does not fall under the classification of a business. In contrast, KPPU rejected the Reporting Party’s claim for both material and immaterial losses, as the extent of the losses could not be substantiated during the hearing.

Compensation

A party suffering loss as a result of the violation of the Competition Law may submit a written report to KPPU, which includes: (i) identity of the reporting party; (ii) a complete and clear report statement regarding the occurrence of the violation and the losses suffered. ³

Under Article 47(2)(f) of the Competition Law, reporting party compensation may be imposed as an administrative penalty, requiring reported parties to compensate for damages. While compensation was not granted in this Case, KPPU previously approved a compensation claim related to a violation of Article 23 of the Competition Law. Please see further details in the 2007 KPPU case involving PT Aquarius Musikindo v. EMI Music South East Asia. ⁴

Conclusion

KPPU decision affirms that requests for compensation are permissible under Competition Law. Although, in this particular case, the request for compensation was not granted, KPPU had previously grant compensation to the reporting party. This Case reminds businesses to follow fair competition principles and protect proprietary information. It also highlights the importance of not misusing or taking competitors' trade secrets for personal or corporate gain.