Antitrust body challenged<\/p>\n
The enforcement of Law No. 5\/1999 on the prohibition of
\nmonopolies and unfair business practices is under threat by
\neither technically incompetent or corrupt district courts.<\/p>\n
That is how we read the district courts' decisions in Jakarta
\nlast week, which overturned rulings made in May by the Business
\nCompetition Supervisory Commission (KPPU) against three of six
\nbusiness parties it found to have colluded to determine the
\nwinning bidder for the government's 72 percent stake in Indomobil.<\/p>\n
Our concern arose not because the courts decided in favor of
\nthe business parties implicated in the sham competition, but more
\nfor the quality of the courts' judgments.<\/p>\n
The Central and West Jakarta District Courts separately found
\nthat the definition of conspiracy used by the supervisory
\ncommission in ruling against Deloitte Touche FAS, PT Bhakti Asset
\nManagement and businessman Pranata Hajadi was not in accordance
\nwith Article 22 of Law No. 5\/1999.<\/p>\n
However, whether due to gross technical incompetence or
\nbecause of tremendous financial lobbying by the business parties,
\nthe courts did not go far enough to rebut the points of
\nconsideration or to deny the well-documented and rightly
\nconstructed material evidence used by the commission as the basis
\nfor its 114-page ruling.<\/p>\n
The courts' failed to distinguish between the articles that
\ngovern market abuse, or conspiracy to gain control of the market,
\nfrom Article 22, which specifically regulates business conduct
\nwithin an open tender for goods or services.<\/p>\n
Article 22 stipulates that business actors are prohibited
\nfrom conspiring with other parties in order to arrange and\/or
\ndetermine the winner of a tender, which could result in the
\noccurrence of unfair business competition.<\/p>\n
That is the letter of Article 22. Its spirit means a collusive
\ntender is one in which competitors agree to influence the result
\nof the tender for the benefit of one of the participants, either
\nby not submitting tenders or by filing fake tenders.<\/p>\n
The applicability of this article does not necessarily depend
\non a written or oral agreement, but also arrangements, whether
\nthey are legally binding or not, through communications or shared
\nknowledge of business decisions that lead to concerted action or
\nparallel behavior on the part of the players.<\/p>\n
After speaking to dozens of witnesses from the business
\nparties and government institutions involved in the tender for
\nthe government's 72 percent stake in PT Indomobil Sukses
\nInternational, and examining 170 documents related to the tender
\nprocess, the commission built up a body of material evidence
\nproving that the bidders were involved in a concerted action to
\ncreate a sham competition.<\/p>\n
The commission also found strong evidence that some government
\nofficials involved in the tender condoned the violation of basic
\nbid procedures and major tender rules.<\/p>\n
All of this proved that the three final bidders were not
\nqualified, according to the procedures and requirements set by
\nthe Indonesian Bank Restructuring Agency (IBRA) for the
\nsubmission of bids.<\/p>\n
The commission also found that Deloitte, as the financial
\nadviser to PT Holdiko Perkasa, the nominated government owner of
\nIndomobil, did virtually nothing to prevent the sham competition,
\nthereby failing to protect the interests of the seller (Holdiko),
\nand by association the interests of the Indonesian government.<\/p>\n
The commission proved that one bidder, Bhakti Asset
\nManagement, signed the confidentiality agreement that allowed it
\naccess to information, memos, procedures for the submission of
\nbids, and the draft conditional share purchase and loan transfer
\nagreement on Dec. 4, 2001, only one day before the deadline for
\nthe submission of bids.<\/p>\n
Even though Indomobil is a publicly traded company, it is hard
\nto believe that Bhakti could have made a proper assessment and
\nfiled a viable bid, given the size and complexity of Indomobil
\nand its many subsidiaries, convertible bonds and contracts with
\noverseas car principals, without more than one day of access to
\nthat confidential information.<\/p>\n
Businessman Pranata Hajadi was found to be an investor in two
\nbidders, PT Alpha Sekuritas Indonesia and PT Cipta Sarana Duta
\nPerkasa, which was eventually declared the winning bidder.<\/p>\n
The commission also proved that the three final bidders
\nrecommended to Holdiko the same amendments to several major
\nrequirements for the submission of bids, and found more than 20
\nsimilar markups in the tender documents filed by Alpha and Cipta
\nSarana.<\/p>\n
Holdiko required the resubmission of binding bids if the price
\ndifference between the winning bid and others was less than 5
\npercent, but the bid prices of the two losing bidders was just
\nsightly more than 5 percent lower than the winning bid price.
\nCoincidence or conspiracy?<\/p>\n
There are numerous other pieces of evidence that point to
\nconspiracy, and other indications of bid rigging outlined in the
\ncommission's ruling, as elaborated on in another article on this
\npage. Yet the courts seemed to simply ignore all of this evidence
\nin making their decisions.<\/p>\n
The final judgment on the matter will come from the Supreme
\nCourt, because the commission has decided to appeal the district
\ncourts' decisions. Whatever the Supreme Court's decision, it will
\ngo a long way in determining whether the law can be properly
\nenforced to maintain fair market and business competition.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/antitrust-body-challenged-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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