DETERMINATION OF THE RELEVANT MARKET IN COMPETITION LAW IN THE DIGITAL ECONOMY, PARTICULARLY RELATED TO ONLINE TRADING OF GOODS AND SERVICES ON DIGITAL PLATFORMS

A. Introduction

In a business activity, the most ideal market condition is a perfectly competitive market in which there are many sellers and buyers and prices for a particular product competing fairly which results in profits for consumers. However, in real life a perfectly competitive market is quite difficult to actualize, if we do not want to say that it is impossible. This is because every business actor is competing to get rid of their competitors and become the dominant player in the relevant market.

Under Article 1 point 10 of Law Number 5 of 1999 on The Prohibition of Monopolistic Practices and Unfair Business Competitions as amended by Law Number 6 of 2023 on the Determination of Government Regulation in Lieu of Law Number 2 of 2022 on Job Creation (hereinafter referred to as “Law No.5/1999”), definition of the relevant market is a market that is related to a certain marketing range or area by business actors for the same or similar goods and services or substitutes for the goods and/or services.

Determining the relevant market is very important to decide whether a business actor is dominant, which is therefore vulnerable to abusing their position as a dominant player. Given the definition of the relevant market, then how do you determine the relevant market for goods and services traded on digital platforms, in which these activities do not recognize a specific marketing reach or area?

This time, the author intends to discuss a little about the relevant market in the digital economy, particularly regarding online trading of goods and services on digital platforms.

B. Discussion

It was previously explained that determining the relevant market is very important to decide whether a business actor is classified as a dominant player, which is therefore vulnerable to abusing their position as a dominant player in the relevant market. Dr. Ir. Sutrisno Iwantono., SH., MA in a training for participants of Indonesian Competition Lawyers Association (ICLA) which was held on 4-6 December 2023, in one of his presentation slides on page 13 explained that the relevant market is the most important analysis in business competition. Even before starting an investigation/examination of a case, a prior analysis of the relevant market must be conducted:

a. to determine similar goods/services;
b. to decide which market it is in;
c. to provide limits on market share; and
d. even to calculate the fines which is also based on the relevant market.

KPPU as the business competition regulator and supervisor then issued guidance in the form of Regulation of the Chairman of the Business Competition Supervisory Commission Number 4 of 2022 on Determining the Relevant Market (“KPPU Chairman Reg. No.4/2022”). 

In the Attachment to KPPU Chairman Reg. No.4/2022, KPPU states that the relevant market is determined to define the market size of a product (goods and/or services). Defining the Relevant Market is useful for identifying Business Actors and their competitors, and setting a limit in measuring the extent of the impact of anti-competitive actions that occur.1

Further, KPPU Chairman Reg. No.4/2022 also states that determining the relevant market is the results of analysis of product market and geographic market, and it may include temporal dimension analysis2. The product market includes similar products or substitutes for these products3, while the geographic market includes product marketing or sales areas4, and the temporal dimension relates to time that characterizes competitive conditions in a particular market, which may change over a certain period of time5. In principle, the determination of the relevant market in KPPU Chairman Reg. No.4/2022 still reflects the definition of the relevant market in Law No.5/1999 with the addition of a temporal dimension. 

Then how to determine the relevant market for the digital economy, particularly online trading of goods and services through digital platforms? In trading goods and services online using a digital platform, the existence of a digital platform is important because the digital platform determines the type and number of business actors, as well as the goods and services that can enter the digital platform it manages. 

Attachment to KPPU Chairman Reg. No.4/2022 provides a definition of a digital platform, namely that it is an information technology-based media that can facilitate the delivery of services or the combination of services/content, exchange information between platform users, and/or facilitate social interaction between users6. In the relevant market in which there is a digital platform, there are business actors who act as transaction managers on a facility/media, and serve more than two different groups of consumers or users to provide added value for the parties involved in the market7. In this case, determining the relevant market is not sufficient only by approaching the product market, geographic market and the temporal dimension, but it must also include aspects of the existence of digital platforms. 

Therefore, KPPU’s step to determine the relevant market by considering digital platforms is progress. Going further, KPPU through KPPU Chairman Reg. No.4/2022 also provides additional analysis, in addition to multi-sided market analysis8, to determine the relevant market in the event of a digital platform, namely as follows9:

  1. Demand substitution analysis can be carried out by taking into account Platform functions, business models, user groups, the existence of online sales and offline transactions;
  2. Supply substitution analysis can be carried out by taking into account market entry barriers, technical barriers, network effects, lock-in effects, or switching costs that consumers must pay;
  3. Determining the product market in a Digital Platform can also consider competition between platforms, level of differentiation, economies of scale, innovation and technological developments;
  4. Geographic market analysis in the Digital Economy can use the nature of goods or services marketed on platforms (durable or non-durable or having a delivery or service period),
  5. Platform user information, provisions of the relevant laws and regulations, and online and offline integration; and or;
  6. In the event that a suspected competition case concerns a global Business Actor that operates in Indonesia but does not have a representative office in Indonesia, the determination of the geographic market is conducted casuistically.

C. Closing

In the future, analyzing the relevant market will be increasingly challenging considering that there are still many business methods or digital business activities that no longer rely on trading goods and/or services, but have shifted to the number of views, subscribers, engagements, interactions, and others, which are quite difficult to measure using current analysis of the relevant market. Not to mention that in the future, the widespread use of artificial intelligence in determining algorithms for which goods and services will be seen as substitute products for customers, or which products and services in geographic areas will be displayed to customers, hence it will make analysis of the relevant market even more complicated. 


  1. Attachment to KPPU Chairman Reg. No.4/2022, point I.1 
  2. Attachment to KPPU Chairman Reg. No.4/2022, point I.2
  3. Attachment to KPPU Chairman Reg. No.4/2022, point III.1
  4. Attachment to KPPU Chairman Reg. No.4/2022, point IV.1
  5. Attachment to KPPU Chairman Reg. No.4/2022, point V.1
  6. Attachment to KPPU Chairman Reg. No.4/2022, point VII.2
  7. Attachment to KPPU Chairman Reg. No.4/2022, point VI.4
  8. Under Attachment to KPPU Chairman Reg. No.4/2022, point VI.6, in a multi-sided market there are two or more parties who need each other to have a Multi-Sided Platform to bridge the parties. Multi-sided platforms provide services to these parties
  9. Attachment to KPPU Chairman Reg. No.4/2022, point VII.4

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