Indonesia: A Corporate/M&A Overview

When Fintech Innovation Meets Antitrust Scrutiny: The Alleged Price Fixing of P2P Lending Rates in Indonesia

The development of financial technology (fintech) in the last decade has brought new dynamics to the Indonesian financial industry. One of the most rapidly developing innovations is peer-to-peer lending (“P2P lending”) services, which have been available in Indonesia since 2016.

However, despite the benefits it offers, the practice of P2P lending is now facing a critical juncture from a competition law perspective. The issue came to the fore when 97 P2P lending providers affiliated with the Indonesian Joint Funding Fintech Association (AFPI) were reported to the Business Competition Supervisory Commission (KPPU) for alleged price fixing through the setting of loan interest rates.

These allegations are grounded in Article 5 of Law Number 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition (the “Competition Law”). The KPPU has responded by summoning the providers as respondents in the preliminary examination stage. The first hearing was held on 14 August 2025, with the session focusing on the reading of the Alleged Violation Report.

P2P lending regulations and the role of associations

P2P lending is regulated by, inter alia, Financial Services Authority Regulation Number 40 of 2024 on Information Technology-Based Joint Funding Services (POJK 40/2024). The nomenclature used by POJK 40/2024 for P2P lending is Information Technology-Based Joint Funding Services (LPBBTI). LPBBTI is defined as the provision of financial services to connect lenders with borrowers for funding, whether conventional or based on Sharia principles, directly through an electronic system using the internet.

In the P2P lending scheme, there are three main parties: (i) the provider; (ii) the lender; and (iii) the borrower. In this case, P2P lending providers are required to be registered as members of an association approved by the Financial Services Authority (Otoritas Jasa Keuangan, or OJK). Based on OJK Letter No S5/D.05/2019 dated 17 January 2019, the AFPI is mandated as the official association of P2P lending providers.

The association plays a role in building market discipline-based supervision for the strengthening and/or improvement of providers and in assisting with the management of consumer/public complaints. The association has at least the following duties:

• co-ordinate and establish codes of conduct;
• co-ordinate input from the industry in policy formulation and industry development;
• conduct continuous education and training; and
• other duties as assigned by the OJK.

In carrying out its role, the Association is required to have and enforce a code of ethics and conduct guidelines that P2P lending providers are required to adhere to.

Economic benefit (interest) limit based on OJK regulations

The report against 97 members of the AFPI association relates to the setting of loan interest rates. From a legal perspective, interest in P2P lending is categorised as an economic benefit in facilitating funding.

As for the OJK, it has regulated the maximum economic benefits of P2P lending through OJK Circular Letter Number 19/SEOJK.06/2025 of 2025 on the Implementation of Information Technology-Based Joint Funding Services, as follows:

• For productive financing:
  • where the highest funding value is IDR50 million:
    • a maximum rate of 0.275% per calendar day of the funding amount stated in the funding agreement applies for tenors of up to six months; and
    • a maximum rate of 0.1% per calendar day of the funding amount stated in the funding agreement applies for tenors exceeding six months.
  • where the funding value is greater than IDR50 million, a maximum rate of 0.1% per calendar day of the funding value stated in the funding agreement applies, regardless of whether the tenor is up to six months or over six months.

• For consumer financing:
  • a maximum rate of 0.3% per calendar day of the funding amount stated in the funding agreement applies for tenors up to six months; and
  • a maximum rate of 0.2% per calendar day of the funding amount stated in the funding agreement applies for tenors exceeding six months.

Prohibition of price-fixing provisions in Article 5 of the Competition Law and its relevance in the context of the digital market

The interest rates charged by P2P lending providers have raised antitrust legal issues due to alleged price fixing, as stipulated in Article 5 of the Competition Law.

Article 5 of the Competition Law stipulates that:

1. Business actors are prohibited from entering into agreements with their competing business actors to set prices for goods and/or services that must be paid by consumers or customers in the same relevant market.
2. The provisions referred to in paragraph (1) shall not apply to:
   1. an agreement made within a joint venture; or
   2. an agreement based on applicable law.

In assessing an alleged violation of Article 5 paragraph (1) of the Competition Law, several aspects should be taken into account, as further stipulated under KPPU Regulation No 4 of 2011 on the Guidelines on Article 5 (Price Fixing) of the Competition Law, as outlined below.

Price-fixing agreement

Price fixing is one form of collusion. This means there must be an agreement that results in price equality, where the pricing behaviour of business actors is carried out jointly (concerted). A written agreement is not a requirement to prove the existence of an agreement between business actors.

The same relevant market

A violation of Article 5 of the Competition Law only occurs if there is a price-fixing agreement between business actors within the same relevant market.

The price paid by consumers

The price referred to here is not just the final price, but also the agreement on the price structure or scheme. Pricing does not mean setting the same price. For example, if colluding companies have production with different grades, the price agreement can be on the margin (the difference between the price and the cost of production). As a result, the market price can vary for companies with different production grades, but the margin earned by companies in the market will be the same.

Analysis in the digital market

In the context of digital markets like fintech, the issue of pricing cannot be separated from the use of algorithms, big data, artificial intelligence (AI), and machine learning. An algorithm itself can be understood as a set of instructions or rules that are executed automatically by a computer system to process data, make decisions, or provide recommendations. In the technology-based financial industry, algorithms can influence price behaviour, match supply and demand, and shape business strategies.

On the one hand, algorithms can improve market efficiency and transparency. On the other hand, algorithms have the potential to be used as instruments to strengthen or conceal cartel practices, for example, through automated pricing, market or consumer segmentation, and real-time monitoring of cartel compliance. The impact of algorithms in the context of business competition is highly dependent on how operators or business owners use them, whether to drive efficiency and innovation (positive) or to exploit them for anti-competitive purposes, such as direct or indirect price co-ordination (negative).

Therefore, when assessing alleged price fixing in the P2P lending industry, it is also important to consider whether there is a role for algorithms and digital technology that accelerates or smooths out price uniformity in the market. Consequently, the analysis of business competition in this sector should not be confined to conventional agreements among providers but must also encompass the potential misuse of technological instruments that enable or reinforce price co-ordination.

Intersection of financial legal aspects of P2P lending with business competition legal aspects

In the reported case of alleged interest rate fixing, the relevant price element is reflected in the interest rate itself, with the implicated business actors being P2P lending providers who are AFPI members.

The procedural agenda involves: (i) a preliminary examination with an agenda for presenting the alleged violation report; (ii) a follow-up examination that provides the respondent with the opportunity to submit a response; (iii) a reading of the Commission’s decision; and (iv) the implementation of the decision.

In reviewing the case, the KPPU will need to determine the following:

• Is there an agreement among P2P lending providers who are members of the AFPI to determine P2P lending interest rates?
• Can the guidelines established by the AFPI and followed by P2P lending providers be qualified as an agreement among P2P lending providers?
• Is the setting of interest rates a form of collusion aimed at disrupting competition among P2P lending providers and creating barriers for others?
• Can the interest rate set by referring to OJK regulations be categorised as an agreement based on law, as an exception to Article 5 paragraph (1) of the Competition Law?

If a violation of Article 5 of the Competition Law is proven, the KPPU can impose sanctions in the form of:

• cancelling all or part of the agreement, in which case the interest rate set in the P2P lending operation can be cancelled;
• ordering the payment of compensation;
• imposing an administrative fine of at least IDR1,000,000,000 with the following provisions:
  • a maximum of 50% of the net profit earned by the business actor in the relevant market during the period of violation of the law; or
  • a maximum of 10% of total sales in the relevant market, during the period of violation of the law.

Conclusion

The alleged interest rate fixing case involving AFPI-affiliated P2P lending providers places the fintech industry at a crossroads between compliance with financial sector regulations and the principles of healthy business competition. On the one hand, the OJK has set a maximum limit on economic benefits, which can serve as a justification that the practice of determining interest rates is carried out in accordance with the applicable legal framework. On the other hand, the potential for a mutual agreement among the providers raises indications of price fixing, which is prohibited under Article 5 of the Competition Law.

The preliminary examination is crucial to determine the extent to which the provider's application of interest and reference to OJK regulations can be qualified as a violating agreement. The KPPU’s decision will not only impact stakeholders in P2P lending activity but also set an important precedent for regulations and business practices in the fintech sector, particularly in maintaining a balance between consumer protection, industry stability, and upholding the principles of healthy business competition.

Additionally, in the context of the digital market, technological advancements such as algorithms and big data add a new dimension to assessing the potential for unfair business competition. It is no longer sufficient to simply look at the existence of explicit agreements between business operators; attention must also be given to how technology influences pricing behaviour and market dynamics. This highlights the need for a competition law approach that is more adaptable to the characteristics of the digital economy.

The KPPU’s decision in this business competition case in the digital era is expected to bring justice to consumers while also maintaining a business climate conducive to the growth and innovation of business actors.