DELIMITATION TO FREEDOM OF CONTRACT IN LICENSING AGREEMENT: EXEMPTED SECTION LEAD TO MONOPOLY (Part 1)

Licensing agreements are exclusive right given by law. In theory, exclusive right is another name of justified monopoly. The licensor entitled to use his right to make an agreement with licensees to gain benefit from it. In practice, the licensing agreements are allegedly distorted the competition and attempts to gain monopoly in unfair way. One of it is tying agreement. This agreement is distorting not just the competition itself but the most important is confining the freedom of contract of the licensee. The licensor make agreement with the licensees containing provisions that the licensees receiving the goods and/or services shall only supply or shall not re-supply the aforementioned goods and/or services to certain parties and/or in certain places. The licensees are not able to make agreement freely with the licensor. Of course this breaks the contract principles.
The licensing agreements as privilege right itself are exempted from Law No. 5 Year 1999. Lately, the Commission of Competition Law issued Peraturan Komisi No. 2 Year 2009 concerning to Licensing agreements which are excluded from Section 50b Law No.5 Year 1999. This is something incompatible.