Garuda fined Rp 1b for violating anti-monopoly law

Evi Mariani, The Jakarta Post, Jakarta

State-owned flag carrier PT Garuda Indonesia was guilty of monopolistic practices in issuing domestic air tickets and must pay a Rp 1 billion (US$117,000) fine, the country's antimonopoly watchdog ruled Monday.

Garuda's spokesperson Pujobroto said it had not yet received a copy of the verdict and could not comment.

"Upon receiving the copy, PT Garuda Indonesia will study the verdict and will decide on any necessary legal action."

Business Competition Control Commission (KPPU) member Mohammad Iqbal, who led the investigation, told The Jakarta Post that it launched the probe following a complaint filed by a unnamed computerized reservation system (CRS) provider.

The provider accused Garuda of hampering fair competition in the domestic ticket reservation business with its exclusive agreement with its subsidiary PT Abacus Indonesia.

"Garuda was proven to have given PT Abacus Indonesia an exclusive right to distribute its domestic flight tickets," he said. "Meanwhile, for Garuda's international flights, the company opens its ticket distribution to all CRS companies."

Iqbal said it reached its decision after summoning 17 witnesses.

"Most of the 17 witnesses we summoned were travel agencies. They complained about the practice, saying that as a result of the exclusive right they had no choice other than to use the system offered by Abacus to process domestic tickets."

Iqbal said that even Abacus itself, which is 95 percent controlled by Garuda, complained about the arrangement because Garuda never paid it any reservation fees.

The Antimonopoly and Unfair Competition Law, passed in 1999, states that a business is forbidden from making deals that aim to control production or services, resulting in an unfair competition and/or violating the consumers' rights.

The KPPU, also established under the law, has the right to investigate businesses suspected of employing unfair practices and imposing sanctions on them.

KPPU last year suffered a blow in its efforts to keep fairness in the country's business competition when the court overturned the commission's decision against a number of parties involved in alleged irregularities in the sale of government's 72 percent stake in car maker PT Indomobil.