Soraya Permatasari, Jakarta – An Indonesian commission said there were signs that some listed firms, including noodle giant Indofood and some cement companies, might be in violation of an anti-monopoly law that took effect on Tuesday.

The new law imposes limits on market share and stipulates other fair competition measures in an economy dominated by a number of conglomerates – many of which may have to reorganise or spin off profitable units to comply, analysts say. Many of those conglomerates had close ties with disgraced former President Suharto, who stepped down in 1998.

The Business Competition Supervisory Commission, known by its Indonesian initials KPPU and which also started work on Tuesday, has the power to conduct investigations and punish businesses which have violated the anti-monopoly law.

Officials had previously said the law would take effect on June 1. It was unclear why there has been a delay. "The commission's decision is legally binding, but a company can appeal to the Supreme Court if it does not accept our decision," KPPU Chairman Bambang Purnomo Wiyoto told reporters.

Wiyoto said the commission would start investigating a company by conducting a preliminary examination for 30 days. "Afterwards, there would be a further investigation which could take up to 90 days before the commission reaches its final decision," Wiyoto said, adding the company then has 14 days to consider it and another 30 to execute the decision.

The commission already has some firms in its sights, including PT Indofood Sukses Makmur, which controls around 90 percent of the country's instant noodle market, and 70-80 percent of the flour market through subsidiary PT Bogasari Flour Mills.

Didik Rachbini, a member of the commission, told reporters Indofood was among a number of companies that might be in violation of the anti-monopoly law. Indofood closed up five rupiah on Tuesday, at 4,110 rupiah.

Cement firms were also targeted. "We have early indications that some companies such as cement producers have the power to control price and distribution of products along with supply, therefore creating unhealthy business competition," Rachbini said.

PT Semen Gresik, PT Indocement and PT Semen Cibinong control more than 90 percent of the domestic market. Under the Indonesian Cement Association, they have the power potentially to control the price and supply of cement.

Analysts have previously said Indofood could be hit by the law due to its vertically integrated business activities, from producing flour to noodles, the end product.

Paper and stationary firm Tjiwi Kimia and its parent the Sinar Mas Group and tobacco firm Gudang Garam were other companies the commission said might be in violation of the law due to dominant market share. Non-clove cigarette maker PT BAT Indonesia was also mentioned because of its power to determine tobacco prices among farmers.

The commission has also been referred to accusations by the country's tempe and tofu federation, Inkopti, that foreign trading companies were dumping soybeans in the local market.