Hints of unfair practices found in Indomaret operation<\/p>\n
JAKARTA (JP): The Indonesian antimonopoly watchdog said on
\nTuesday it had found indications of unfair business practices by
\nretail chain Indomaret.<\/p>\n
Didik J. Rachbini, a member of the Business Competition
\nSupervisory Commission (KPPU), said that after conducting a
\nthorough three-month investigation, the commission had found
\nindications that Indomaret had forced other small retailers out
\nof business.<\/p>\n
Indomaret has been accused, among other things, of controlling
\nmore than 50 percent of the small retail market and killing off
\nsimilar retailers in the process. It also has been accused of
\nsolely marketing products from its parent company, publicly
\nlisted PT Indofood Sukses Makmur.<\/p>\n
Indofood's control of upstream and downstream industries
\nthrough Indomaret is not the real issue, Didik said, explaining
\nthat this type of practice is not a major facet of the Indonesian
\nantimonopoly law.<\/p>\n
\"Indomaret's problem is really with competition at the retail
\nlevel,\" he said.<\/p>\n
Didik explained that the retail industry was a highly
\ncompetitive industry where companies competed head to head.<\/p>\n
\"So the problem is more about policies; it's a social problem,
\nwhich the KPPU has no jurisdiction over,\" he said.<\/p>\n
Paper<\/p>\n
Didik was speaking on the sidelines of KPPU's initial hearing
\nwith representatives of the Indonesian pulp and paper industry.<\/p>\n
The commission has received reports of unfair business
\npractices by the pulp and paper industry, including price-fixing.<\/p>\n
The commission's newly appointed vice chairman, Pande Radja
\nSilalahi, said the initial hearing was needed to gather
\ninformation about the alleged unfair business practices.<\/p>\n
\"We need to know whether there is vertical integration, the
\nshare compositions (of companies in the industry), whether there
\nis cross-ownership within the same business,\" he said, explaining
\nthat such practices demanded closer scrutiny as they often
\nindicated unfair business practices.<\/p>\n
Pande said, however, that controlling both the upstream and
\ndownstream industries, or vertical integration, was not in itself
\na crime, as long as it did not cause to unfair business practices
\nand did not harm the interests of consumers.<\/p>\n
Pande was appointed vice chairman for the 2001-2002 period,
\nreplacing Syamsul Maarif. Mohammad Iqbal replaced Bambang
\nAdiwiyoto as the commission's chairman.<\/p>\n
The newly appointed chairman said that from the initial
\nhearing the commission would decide whether there was a need for
\nfurther investigation.<\/p>\n
Iqbal also said the commission would examine allegations of
\nunfair business practices by the Sinar Mas Group and indications
\nof price-fixing by the Indonesian Pulp and Paper Association.<\/p>\n
The president of PT Royal Standard, Untung Sastrawijaya, which
\nproduces continuous computer paper, has alleged that the Sinar
\nMas Group sells its pulp products at a lower price to its
\nsubsidiaries than to other companies.<\/p>\n
Untung said Sinar Mas sold continuous computer paper to its
\nsubsidiaries for Rp 104,400 (about US$9) a box, only 4.5 percent
\nhigher than the price it charged other companies for the
\nequivalent raw materials.<\/p>\n
\"This is quite impossible, considering the cost of
\nproduction,\" he said, adding that Royal sells its continuous
\ncomputer paper for Rp 123,000 a box.<\/p>\n
However, Sinar Mas vice director Hugeng Haryantho denied any
\nwrongdoing.<\/p>\n
\"Why would we sell at a loss? Even to our own subsidiaries?
\nWhy have a subsidiary at all if we have to continue to subsidize
\nit?\" he said.<\/p>\n
Hugeng questioned the motive behind Royal's allegations,
\nsaying that before Sinar Mas began to produce computer paper,
\nRoyal enjoyed vast profits through its majority share of the
\nmarket.<\/p>\n
\"When we entered (the market), of course its market share
\ncontracted, that's why they are upset,\" he said. (tnt)<\/p>",
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