French retail giant Carrefour’s Indonesian operation has won an appeal at the South Jakarta District Court against the anti-monopoly watchdog’s accusations that it employed unfair business practices.
The court ruled Wednesday the claims by the Business Competition Supervisory Commission (KPPU) that PT Carrefour Indonesia had “abused its dominant power” and engaged in “monopolistic practices” after acquiring local retailer PT Alfa Retailindo were based on weak arguments and inconclusive evidence.
In November, the KPPU accused Carrefour of unfair business practices, and ordered it to sell Alfa within a year. It also fined the retailer Rp 25 billion (US$2.7 million).
Carrefour acquired 75 percent of Alfa from PT Sigmantara Alfindo and Prime Horizon Pte. Ltd. for Rp 675 billion in January 2008.
The KPPU said the acquisition had led to monopolistic practices at the upstream (supplier) level and an abuse of dominant power at the downstream (consumer) level of the retailing business.
It claimed that with Carrefour’s share of the upstream market increasing from 45 to 57.99 percent after the acquisition of Alfa, product suppliers were put in a disadvantageous bargaining position to the retailer.
The commission also said Carrefour was at fault for controlling more than 50 percent of the market share at the downstream level.
However, it dropped an allegation of predatory pricing practices after failing to find any evidence showing the retailer was engaged in a trading scheme that involved lowering prices of goods to undermine competitors.
The judges at the South Jakarta District Court said all of the KPPU’s accusations were unsubstantiated, thus freeing the company of all obligations stemming from the watchdog’s charges.
The KPPU will have a 14-day window in which it may choose to appeal to the Supreme Court.
The commission was also fined Rp 221,000 by the district court.
Carrefour Indonesia corporate secretary, representing the company at Wednesday’s hearing, said the ruling had come as a relief.
“We’re so thankful,” he said.
“All the workers at Carrefour Indonesia prayed for this.”
KPPU spokesman Ahmad Junaidi said the commission would study the ruling before considering appealing to the Supreme Court. “We have to examine the court’s verdict thoroughly before we can prepare our legal position for the appeal.”
He added past experiences showed the anti-monopoly commission had won 70 percent of appeal filed with the Supreme Court.
Meanwhile, in an unrelated development, the KPPU says it is drafting a regulation that will oblige all non-banking firms with more than Rp 2.5 trillion in assets or Rp 50 trillion in annual revenue to seek approval from the commission prior to carrying out mergers or acquisitions.
Source: The Jakarta Post