Reconstruction of Business Competition Supervision in Indonesia: Analysis of Article 86m of Law No. 1 of 2025

The question of harmonisation between the monopoly rights of state-owned enterprises as outlined in Article 86M of Law 1/2025 and the principle of fair competition as set out in Law 5/1999 is of crucial significance in the evolution of Indonesian economic law in the post-reform era. The transition from legislation to Government Regulations, subject to unlimited presidential discretion, has resulted in normative inconsistencies that compromise the KPPU’s autonomy and erode the system of checks and balances. The present study employs a normative-doctrinal juridical approach, underpinned by a statute-based and conceptual framework, to analyse structural conflicts of interest, the efficacy of competition law enforcement, and systemic impacts on MSMEs. The analysis demonstrates that, despite the KPPU’s efficacy in law enforcement, evidenced by a 75 percent success rate in the Supreme Court, this institution lacks ex ante authority to prevent the issuance of monopolies, being confined instead to a non-binding advisory function. The empirical experience of 64.2 million MSMEs demonstrates the significant impact of unregulated monopolies on market access and innovation. The reform of Law 5/1999 in the 2025 Priority National Legislation Program presents an opportunity to strengthen the KPPU’s independence by establishing objective monopoly criteria, a sunset clause mechanism, mandatory competition impact assessments, and a multi-level monitoring system. The integration of the Independent Regulatory Agencies theory, the Principal-Agent Theory, and the Checks and Balances Doctrine produces a reform framework that is consistent with the constitutional values of Article 33 of the 1945 Constitution while maintaining competition, efficiency, and public welfare.