Carrefour objects to KPPU ruling

Carrefour objects to KPPU ruling

Anissa S. Febrina, The Jakarta Post, Jakarta

French giant retailer Carrefour denied in its first trial at the
South Jakarta District Court on Thursday that it has applied
illegal trading terms as previously ruled by the Business
Competition Supervisory Commission (KPPU).

Carrefour legal representative Timur Sukirno said the
commission had misinterpreted one of its trading terms as an
unfair business practice and had imposed a groundless sanction.

KPPU declared on Aug. 19 that Carrefour had carried out an
unfair business practice by applying a minus margin policy in its
contracts with suppliers.

The commission imposed a Rp 1.5 billion (US$148,515) fine on
the company and demanded it stop the much-disputed terms of
trade.

Carrefour filed an appeal to the ruling at the district court
on Sept. 13.

Minus margin is one of the trading terms the giant retailer
applied to 99 of its 2,500 suppliers, in which Carrefour could
pose sanctions if the suppliers violated their best price
guarantee.

Carrefour has inserted the minus margin policy in its trading
terms since early 2004 and said that it was a negotiable term.

Timur argued that the policy was legal and therefore the
company had not committed any unfair business practice. However,
the company chose to no longer apply the minus margin policy.

"We feel that it has been misunderstood and feel that this is
not a good time to apply such a policy," said PT Carrefour
Indonesia spokesman Joseph Buntaran, adding that his company had
erased the term before KPPU handed down its ruling.

He also refused to mention whether similar trading terms had
been applied in the retailer's branches abroad.

Carrefour is the second largest retailer in the world with
operations in 29 countries and global sales of 70.5 billion euro
(US$91.65 billion) in 2003.

It entered Indonesia in 1998, opening its first hypermarket
outlet in Kuningan, South Jakarta. Today, there are 15 Carrefour
hypermarkets in the country with a total sales of Rp 3 trillion
in 2004.

Following its success, five hypermarket operators have opened
54 outlets in Greater Jakarta alone.

Carrefour has been under the spotlight since the Association
of Modern Market Suppliers (AP3MI) filed a complaint with the
KPPU under allegations of unfair competition.

The issue, however, has been widened into protection of the
country's traditional markets from rapidly-growing hyper markets,
which have been blamed for causing smaller retail outlets to go
out of business.