Analysis of Internal Procurement Regulatory Compliance in State Owned Enterprise Subsidiaries with the Principles of Fair Business Competition and Business Law Risks

Abstract

This study aims to analyze the compliance of internal procurement regulations implemented by subsidiaries of Indonesian State-Owned Enterprises (SOEs) with the principles of fair business competition and to identify the business law risks arising from non-competitive procurement practices. The research is motivated by the growing implementation of SOE synergy policies through direct appointment mechanisms and preferential cooperation among affiliated enterprises, which have attracted scrutiny from the Indonesia Competition Commission due to their potential to create market discrimination and impede fair competition. The research addresses two principal issues: the extent to which internal procurement regulations of SOE subsidiaries comply with the principles of fair business competition and the forms of business law risks resulting from such non-compliance. This study employs a normative legal research method using statutory, conceptual, and case approaches. The data were collected through a comprehensive literature review of legislation, scholarly publications, and relevant media reports. The findings indicate that the implementation of internal procurement regulations within SOE subsidiaries has not fully complied with the principles of transparency, openness, and fair competition, as procurement practices continue to demonstrate a preference for affiliated SOE entities. Such practices create significant business law risks, including administrative sanctions, legal disputes, reputational damage, and potential business inefficiencies. This study recommends harmonizing internal procurement regulations with competition law principles while strengthening procurement oversight mechanisms and enhancing transparency across the SOE sector.