Retail companies, including French retail giant Carrefour, will be required to provide reports on merger and takeover plans to avoid unfair business practices and to help protect small suppliers in the sector.
Business Competition Supervisory Commission (KPPU) member Muhammad Iqbal said Tuesday the commission would issue major retailers next month with a guideline for the "pre-notification" of mergers and acquisitions.
"Such a guideline is part of our authority to supervise business competitions as stipulated in the monopoly and unfair business competition law."
"The commission will slap hefty financial penalties should the retail companies fail to report, especially if the mergers and acquisitions are proven to create an unfair business (climate)," Iqbal said.
The announcement comes during the KPPU's ongoing investigation into alleged unfair practices by PT Carrefour Indonesia over its procurement of a 75 percent stake in local retailer PT Alfa Retalindo in January.
With this acquisition, according to the KPPU, Carrefour now has a total of 58 outlets, 34 of which are owned by Alfa. Last year, Carrefour reported total sales of Rp 7.2 trillion (US$7.8 billion), up from Rp 5.7 trillion in 2006.
The figure dwarfed those of local retailers PT Ramayana Lestari and PT Matahari Putra Prima, which recorded Rp 4.8 trillion and Rp 4.3 trillion, respectively, according to research firm Partisipasi Indonesia.
Carrefour's plans for expansion did not end there. The company is reportedly in talks to purchase a controlling stake in PT Makro Indonesia, a local unit of Dutch retailer Makro.
Should the acquisition be made, Carrefour will dominate the country's hypermarket, supermarket and grocery sectors.
Carrefour corporate affairs director Irawan Kadarman said the company would fully comply with the KPPU's policies.
The company has also attracted criticism from local small and medium retailers, including an operator of traditional markets, which accused it of conducting unfair business practices by setting up most of its outlets in the city center.
However, Irawan denied the accusation, saying the company had secured the necessary legal licenses from relevant authorities to operate its outlets.
The KPPU is also investigating allegations that Carrefour has abused its dominance by charging new local suppliers, especially small ones, with high listing fees, according to Iqbal.
A listing fee is a sum paid by suppliers to retailers to get their products on the retailers' shelves.
The expensive fee has reduce the chances of suppliers in selling their products in the outlets.
"We are collecting some important data to support our investigation slated to be wrapped up this year," said Iqbal.
Finance director of the Indonesian Food and Beverage Association Yusuf Hadi said the association was urging the KPPU to regulate trading terms for suppliers in the event that Carrefour becomes the dominant player.
"The KPPU can possibly determine the percentage of the allowed listing fee. If not, suppliers will have to pay much for small profits," he said. (ewd)