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Indonesia – Competition Highlights.

14 April, 2014

 

 
Indonesian Courts Overturn The Indonesian Competition Commission’s (“KPPU”) Decision To Impose A Fine On Pelindo II

On 4 November 2013, the KPPU issued a decision to impose a fine of IDR 4.77bn on PT Pelabuhan Indonesia II (“Pelindo II”), the operator of Teluk Bayur Port in West Sumatra, for abuse of its market power. KPPU found that Pelindo II had entered into lease agreements with various port users which required them to use a stevedoring company owned by Pelindo II to conduct their loading-unloading activities. The KPPU held that these exclusivity agreements left the port users with no choice but to use the stipulated stevedoring company. The District Court of North Jakarta overturned this decision on 14 February 2014 on the following grounds: (i) Port users were only using Pelindo II’s stevedoring company because of the high quality of its services; (ii) Pelindo II had not prevented other companies from conducting stevedoring activities in the port. Given this, the lease agreements were not anti-competitive as they merely reflected the inability of other service providers to meet the standards set by Pelindo II’s company.

The KPPU Gives Green Light To The Proposed Acquisition Of Axis By XL

On 1 August 2013, PT XL Axiata (“XL”) submitted pre-merger consultation before the KPPU in relation to its proposed acquisition of 95% of the shares in PT Axis Telekom Indonesia (“Axis”) for USD 865m. In assessing the proposed acquisition, the KPPU took into account various factors, including the relevant market, market concentration and potential anti-competitive behaviour. A key point was that even after the acquisition, the post-merger entity of XL-Axis would only possess approximately 26% of the market share, which would still be substantially lower than that of the largest operator. On 6 March 2014, the KPPU decided that the proposed acquisition of Axis by XL would not create a monopoly nor result in unfair business competition. However, the decision by the KPPU is subject to 2 behavioral conditions: first, XL is required to provide a market report and information about XL’s products and tariffs every 3 months over a total period of 3 years; second, XL is also required to maintain its commitment to provide competitive tariffs and affordable services to consumers. The merger was subsequently notified to the KPPU for review post-completion, in line with Indonesia’s post-merger notification regime, which requires mergers crossing certain turnover or assets thresholds to be notified within 30 days after completion.

The KPPU Issues Decision On Belawan Port Cartel Case

On 17 March 2014, the KPPU issued its decision on an alleged price fixing agreement involving various freight forwarders operation in the Belawan Port. According to the KPPU, the freight forwarders had entered into a formal agreement which sets out the freight rates for 12 routes to and from Belawan Port for containers of certain sizes. The KPPU held that the agreement infringed Indonesia’s competition law and imposed financial sanctions of between IDR 22m to IDR 463.02m on the parties to the agreement.

 

 

For further information, please contact:

 

Yogi Sudrajat Marsono, Partner, Assegaf Hamzah & Partners

yogi.marsono@aph.co.id
 
Eri Hertiawan, Partner, Assegaf Hamzah & Partners

eri.hertiawan@aph.co.id

 

Rikrik Rizkiyana, Partner, Assegaf Hamzah & Partners

rikrik.rizkiyana@aph.co.id

 

Vovo Iswanto, Partner, Assegaf Hamzah & Partners

vovo.iswanto@aph.co.id

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