The Online Transportation Network in Indonesia: A Pendulum between the Sharing Economy and Ex Ante Regulation

Abstract

The prominent role of innovation in the emerging digital market in Indonesia presents new challenges for current competition law and policy. Traditionally reliant on market definition for the analysis, the present competition law may not yet have sufficiently taken innovation into consideration. In the competition policy area, while innovation has not taken a clear role in tailoring suitable regulations or approaches, markets have attempted to adapt themselves to the new changes in order to meet rising demand. The present state of policy is illustrated by the development oj online transportation networks like those provided by Uber and GrabCar, services similar to those that have been traditionally offered by taxi companies. While regulation asymmetry has been accused of not allowing a level playing field for conventional taxis versus online transportation networks, the concept of the sharing economy seems to address today's policy approach in Indonesia, which favors ex ante regulation on public transportation service provision in the country. This paper examines the applicable regulations in the transportation network industry and discusses how competition policy might cope with this issue and in what cases competition law might deal with innovation brought by online transportation network in the public transportation industry in Indonesia.