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Flashback of 5 Biggest Cartel Cases In Indonesia

Shocking news came from the Business Competition Supervisory Commission (KPPU). It stated that Yamaha Indonesia Motor Manufacturing (YIMM) and Astra Honda Motor (AHM) found guilty of price fixing.

Both companies were convicted of cartel practices in accordance with case 04 / KPPU-I / 2016 about the alleged of cartel on February 22, 2017. YIMM and AHM were proven legally and convincingly guilty for violating Article 5 of Law No. 5 of 1999 on Monopoly Practices and Unfair Competition (Law 5/1999). KPPU also punished YIMM and AHM with a fine of IDR 25 billion and IDR 22.5 billion respectively.

Fines received by YIMM were heavier because the Commission assessed that YIMM had manipulated the data in court. Therefore, the punishment for YIMM was included 50 percent additional amount of the fine proportions. While the fines imposed for AHM had been cut 10 percent because the Commission considered that AHM was cooperative.

Prior to this decision, the Commission also had investigated and decided 5 Cartels Cases which were the highlight of public concern. Those cartels are:

    1. Salt Cartel

In 2005 the Commission revealed the salt cartel practices. This case was related to “game” in the salt raw materials which were supplied in North Sumatra. At that time, the Commission ordered PT Garam, PT Budiono, PT Garindo to provide equal conditions and opportunities to business entities other than PT Graha Mutual, PT Sumatera Palm, UD Jangkar Waja, and UD Sumber Samudra to market salt raw materials in North Sumatra.

In addition, the Commission also prohibited PT Graha Mutual, PT Sumatera Palm, UD Jangkar Waja, UD Sumber Samudra to perform actions that could hinder other business entities to obtain the supply of salt raw materials from PT Garam, PT Budiono, PT Garindo;

The Commission also imposed sanctions against PT Garam, PT Budiono, PT Garindo, PT Graha Mutual, PT Sumatera Palm, UD Sumber Waja, and UD Sumber Samudra  to pay a fine of IDR 2,000,000,000.00 (two billion rupiah) respectively.

    1. Cartel of Determination for Rates of Short Message Service (SMS)

The Commission revealed that the practice was done by six cellular companies from 2004 to 2008. During the period, the cartel set an SMS price rate of IDR 350 / SMS. Consumer losses were estimated at IDR 2.827 trillion.

The sixth mobile cellular operator companies including PT Excelcomindo Pratama Tbk (XL), PT Telkomsel, PT Telkom, PT Bakrie Telecom Tbk, PT Mobile-8 Telecom Tbk and PT Smart Telecom have been fined by the Commission.

    1. Bulk Cooking Oil Cartel

In May 2010 the Commission decided the price parallelism of cooking oil, both bulk and packaging, where 20 oil producers being reported during mid-April to December 2008 has made a price cartel. As a result of these actions, according to the Commission’s assessment, the detriment of society was at least IDR 1.27 trillion for the branded packaging cooking oil products and IDR 374.3 billion for bulk products.

However, the Commission’s verdict was canceled by the Supreme Court (MA) after the objections were filed by 20 reported oil producers in the Commission.

    1. The cartel of ticket price fixing in the Fuel Surcharge

Commission had penalized 9 airlines, those are PT Sriwijaya, PT Metro Batavia (Batavia Air), PT Lion Mentari Airlines (Lion Air), PT Wings Abadi Airlines (Wings Air), PT Merpati Nusantara Airlines, PT Travel Express Aviation Service and PT Mandala Airlines for being guilty running a cartel by agreeing a benchmark price of aviation fuel during 2006-2009. Such practices led to consumers’ loss up to IDR 13.8 trillion. KPPU also punished them with total compensation of IDR 586 billion.
However, those 9 airlined mentione above filed an objection to the court and managed to reap maximum results. At that time, the court assessed many factors that determine the price of fuel, those are international prices and the exchange rate but they bought to the one producer,  Pertamina. So it cannot be ascertained as an agreement that meets the appropriate elements of monopoly under Article 5 of Law No. 5/1999.

    1. Hypertension Drug Cartel for type of amlodipine bisulfate

The Commission stated that the business group Pfizer was convicted of running a cartel. The commission was also punished any member of the group that joined Pfizer business group which was identified as reported, to pay a fine of  IDR25 billion.

While Dexa Medica, according to the Commission Council, was convicted because of price fixing cartel and sentenced to pay a fine of IDR 20 billion to the state treasury and ordered the national pharmaceutical companies to lower the price of Tensivask for 60 percent of net pharmacy prices.

However, the Commission’s decision was eventually overturned by the Supreme Court for it was insufficient evidence to suggest that Pfizer Indonesia and Dexa Medica joined a cartel. Therefore, Many other business entities producing hypertension drugs, were not sued by the Commission.

In addition, the judges also took a decision in favor of the objections of Pfizer Indonesia and Dexa Medica based on the testimony of 3 experts in the supplementary investigation. Those three testimones of expert witnesses based on their respective fields, those were the field of statistics, law, and economics.

3 experts said that there was no upward price trend in hypertension medications as alleged by the Commission. By this decision, Pfizer Indonesia and Dexa Medica was free from the penalty of IDR 25 billion.

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