The Business Competition Supervisory Commission, or KPPU, plans to investigate allegations of monopolistic practices by the local arm of French retail giant Carrefour SA, especially accusations that the retail giant charged the supermarket’s stall-holders “excessive” rental fees.
The chain is also alleged to have gained an unfair advantage through its acquisition of mini-market retailer PT Alfa Retailindo Tbk.
“From our investigative reports we have obtained data that show Carrefour has allegedly provided more and more space leased at expensive rates and charged expensive trading terms for suppliers of goods and vendors at their outlets,” KPPU chair Benny Pasaribu said on Friday.
There was a danger that Carrefour, which has enjoyed great success in Indonesia in the past few years, would shut out all competition in the sector, Benny said.
Carrefour, he continued, was increasing its acquisitions of smaller retailers to bring them under the popular Alfamart chain, which could result in a monopoly in the modern mini-market sector.
Alfamart’s competitors include the Indomaret and Circle K brands.
“The commission has found sufficient evidence that Alfa’s acquisition by Carrefour has increased the retailer’s total market share [of supermarkets and mini-markets] to more than 30 percent nationwide, and this is worrying,” Benny said.
In 2004, the KPPU fined Carrefour Rp 1 billion ($87,000) for unhealthy competition, after wholesalers supplying the supermarket chain complained about its “minus margin” system, which allowed the retailer to demand a lower price from wholesalers if it discovered lower prices for similar goods at competing supermarkets.
The KPPU argued that this provision was anticompetitive.
Responding to the KPPU’s move, PT Carrefour Indonesia’s corporate affairs director, Irawan D. Kadarman, said on Friday that “Carrefour management itself has yet to receive any official letters from KPPU, so we cannot give a proper response as we need to learn first the main ideas behind the commission’s allegation.”
In terms of rents and trading terms, Irawan said Carrefour was in full compliance with a 2008 Trade Ministry decree on the management of traditional markets and modern retail outlets.
He denied Benny’s claim that Carrefour’s market segment after acquiring Alfa Retailindo was 30 percent. He instead put the figure at about 7 percent, citing research from the Neilsen Company.