Carrefour fined Rp 1.5b for unfair competition

Urip Hudiono, The Jakarta Post/Jakarta

The Business Competition Supervisory Commission (KPPU) ruled on Friday that PT Carrefour Indonesia was guilty of misusing contract terms with its suppliers in order to obstruct the latter's businesses, and fined the French-affiliated retailing giant Rp 1.5 billion (US$1.5 million).

The KPPU, however, dropped other charges from the Association of Modern Market Suppliers (AP3MI) that Carrefour had also misused its "minus margin" terms and had taken advantage of its dominant market position to exert unfair "listing fee" terms on its suppliers.

A "minus margin" is a penalty Carrefour imposes on its suppliers if any competitor using the same supplier manages to sell its product at a cheaper price. The "listing fee" is a sum suppliers have to pay to get their products displayed on Carrefour's shelves.

KPPU's panel for the case -- Tadjuddin Noer Said, Bambang Purnomo Adiwiyoto and Mohammad Iqbal -- concluded after examining 17 witnesses, five experts and related documents that Carrefour had breached Article 19 of Law No. 5/1999 on anti-monopoly.

"Evidence of this is that the 'minus margin' terms had resulted in one of Carrefour's suppliers terminating its business with its competitors for fear of being penalized under these terms," panel chairman Tadjuddin said, adding that KPPU also ordered Carrefour to terminate use of such conditions.

The legal dispute between Carrefour and AP3MI began last October when the hypermarket decided not to display two products supplied by PT Sariboga Snacks for reasons that they failed to meet Carrefour's standards, even though Sariboga had already paid Rp 47.3 million as a listing fee.

The AP3MI, on behalf of Sariboga, then filed a complaint against the hypermarket after Sariboga went bankrupt and was refused a refund of the listing fee.