Caltex ordered to end contract for unfair practices<\/p>\n
JAKARTA (JP): The antimonopoly commission ordered PT Caltex
\nPacific Indonesia (CPI) on Friday to terminate its steel pipe
\nprocurement contract valued at more than US$15.7 million a year.<\/p>\n
The commission issued its ruling after declaring Caltex in
\nviolation of the new antimonopoly and unfair business practices
\nlaw.<\/p>\n
Soy M. Pardede, a member of the Business Competition Oversight
\nCommission, or KPPU, said the oil giant's tender procedure in
\nprocuring the pipes discriminated against small suppliers.<\/p>\n
\"Caltex must terminate all pipeline procurement contracts
\nwithin 30 days after receiving a notification letter from the
\ncommission,\" he said at a media conference.<\/p>\n
With the commission's verdict, Caltex, which is the country's
\nlargest oil producer, became the first victim of the antimonopoly
\nand unfair business practices law, which was introduced in late
\n1999.<\/p>\n
Soy said the commission would not financially sanction Caltex,
\nwhich operates four major oil blocks in Riau.<\/p>\n
According to Soy, who is also a senior executive of the
\nIndonesian Chamber of Commerce and Industry, Caltex can appeal
\nthe ruling to the Supreme Court within 14 days.<\/p>\n
\"If within 14 days Caltex has not submitted an appeal, and if
\nwithin 30 days it has not halted its procurement contract, then
\nthe commission will take the case to the police,\" Soy said.<\/p>\n
In May last year, Caltex introduced a new tender procedure for
\nthe procurement of low and high-grade steel pipes. Under the new
\nprocedure, bidders were required to supply both grades of pipes
\nin one package.<\/p>\n
Smaller companies, which generally can only provide low-grade
\npipes, were allowed to join the tender only if they could
\nguarantee they would also be able to provide high-grade pipes.<\/p>\n
\"The smaller companies were told to find a bigger company to
\nguarantee them high-grade pipes, but the bigger companies are
\nultimately their competitors, which doesn't make sense,\" Soy
\nsaid, reading from the commission's verdict.<\/p>\n
Four companies took part in the Caltex procurement tender --
\npublicly listed PT Cipta Tubindo and PT Seamless Pipe Indonesia
\nJaya, PT Purna Bina Nusa and PT Patra Indo Nusa Pertiwi.<\/p>\n
Cipta and Seamless should have been the only eligible bidders
\nbecause the other two could only provide low-grade pipes. But
\nPurna and Patra, according to Soy, managed to take part in the
\ntender because Cipta guaranteed it would provide them high-grade
\npipes.<\/p>\n
With this strategy the three bidders were able to arrange
\ntheir bids to the advantage of Cipta, which finally won the
\ncontract.<\/p>\n
\"There was collusion between Cipta Tubindo, Purna Bina Nusa
\nand Patra Indo Nusa to prearrange the winner of the tender, which
\nis unfair business practice,\" Soy said, adding that Caltex should
\nhave known that this type of collusion would result from its
\ntender process.<\/p>\n
Caltex corporate communications manager Harry Bustaman said
\nthe company would study the commission's verdict before deciding
\nwhether to terminate the contract.<\/p>\n
\"We need to study the verdict that has been read. It needs to
\nbe legally scrutinized because the contract itself is legally
\nbinding,\" he said, adding that the 30-day deadline was adequate
\ntime for the company to decide its next move.<\/p>\n
Harry said the oil giant had always supported the commission's
\ninvestigation and would remain consistent in abiding by
\nIndonesian laws.<\/p>\n
The commission was formed by President Abdurrahman Wahid in
\nJune last year in compliance with a 1999 antimonopoly and unfair
\nbusiness practices law.<\/p>\n
The commission is assigned to monitor the implementation of
\nthe provisions of the new law, which was passed by the House of
\nRepresentatives in February l999 and signed into law by then
\npresident B.J. Habibie a month later.<\/p>\n
Soy said that next on the commission's agenda was the verdict
\nin the case brought against retail chain Indomart for alleged
\nunfair business practices. He said the decision would be
\nannounced shortly. (tnt)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/caltex-ordered-to-end-contract-for-unfair-practices-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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