Make or Buy Policy in the Manufacturing Industry in Connection with Most Favored Customer Clauses in Vertical Integration Under the Indonesian Competition Law

Making the decision to make or buy a component is a crucial matter for manufacturing company. Those activities carried out both in-house and out-house require significant efficiency results. One of the goals is to ensure supply ability from suppliers with certain quantities and specifications. Decision making with the “Make or Buy policy” is related to the provisions of MFC (Most Favoured Customer) clauses, which can lead to lessening competition among business actors and impact to consumer welfare. This article will further discuss the potential competition problems associated with MFC, which will be discussed into three categories: (1) Reducing Competition (2) facilitating collusion between competitors, and (3) exclusive impact on competitors at the buyer level. This research focuses on creating a decision-making model in the backward supply chain of the manufacturing industry. The ultimate purpose of this research is to provide benefits for previous research regarding make or buy decision models and vertical integration within the scope of business competition law in Indonesia.