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.