The Implementation of Competition Law Principles in E-commerce Business Operations Through Tiktok Platform Based on Law Number 5 of 1999 Concerning the Prohibition of Monopolistic Practices and Unfair Business Competition

Abstract

The emergence of TikTok Shop, an online shopping platform integrated with the TikTok social media application, has raised significant concerns regarding fair business competition principles in Indonesia. This study analyzes potential violations of Law Number 5 of 1999 concerning the Prohibition of Monopolistic Practices and Unfair Business Competition, focusing on TikTok Shop’s practices, such as predatory pricing and potential abuse of dominant market position. First, instances of predatory pricing are evidenced by consumer reports indicating that TikTok Shop offers products at considerably lower prices compared to conventional stores and other e-commerce platforms for the same items. This suggests TikTok Shop’s possible intent to eliminate competitors through extremely low pricing and seller subsidies, potentially infringing Article 20 of Law No. 5 of 1999. Additionally, the integration of TikTok Shop with TikTok’s social media features, along with the acquisition of Tokopedia, suggests a dominant market position that risks being exploited. This integration raises concerns of consumer lock-in, restricting consumer choice and impeding fair competition, and may contravene Article 25 of the law. Furthermore, the platform's burdensome requirements for small businesses to join indicate non-compliance with the objectives and principles of fair competition as defined in Law No. 5 of 1999. This study applies a normative legal approach by analyzing secondary legal materials to assess how Law No. 5 of 1999 applies to e-commerce practices. Findings indicate that TikTok Shop may violate fair competition principles through practices such as predatory pricing, abuse of a dominant position leading to consumer lock-in, and onerous conditions for small businesses. To align with fair competition principles and prevent further issues, TikTok Shop should remove these burdensome requirements for small enterprises. Additionally, the Indonesian Competition Commission (KPPU) is encouraged to enforce stricter supervision within the e-commerce sector to deter and penalize violations of Law No. 5 of 1999.