JAKARTA (Dow Jones)--An Indonesian court Wednesday overturned a regulatory body finding that the local unit of Carrefour S.A. (CRERY) violated anti-monopoly laws, and reversed the commission's ruling that the retail giant must sell its majority stake in a local retailer.
The decision will give a fillip to Carrefour's aim of competing for market share in Indonesia, where a vast consumer base is supported by rising middle-class incomes and an economy that is expanding at one of the fastest rates in the world.
Overall retail sales in Southeast Asia's largest economy are likely to rise to more than $82 billion by 2014 from an estimated $42 billion last year, analysis firm Business Monitor International said in a recent report. But modern retailers like Carrefour account for only around a third of the overall retail market, according to industry data, as many of the country's 240 million people buy rice, vegetables, cigarettes and other goods at traditional markets and street stalls.
"We overturned the case in favor of Carrefour as KPPU misapplied the anti-monopoly rules (in its decision) against Carrefour," the presiding judge, Justice Kusno, said.
KPPU, Indonesia's antimonopoly commission, said in November last year that PT Carrefour Indonesia had violated the anti-monopoly law, and ordered the company to sell its entire majority stake in PT Alfa Retailindo to unaffiliated parties.
The court also overturned KPPU's ruling that Carrefour pay a fine of IDR25 billion ($2.6 million). A lawyer for KPPU said Wednesday that the commission will have 14 days to consider whether it will appeal the decision in a higher court.
Carrefour officials couldn't immediately be reached for comment Wednesday.
After Carrefour acquired 75% in Alfa in January last year for IDR674 billion ($70.9 million), the French retailer's share of supplies to supermarkets and hypermarkets, and its share of sales by such stores to consumers, both rose above 50%, the KPPU said in its November finding.
Carrefour is the second-largest supermarket operator in Indonesia with close to a 14% share of market revenue, according to a 2009 report by Bank Negara Indonesia. Carrefour dominates revenue from hypermarkets--larger stores that combine elements of a department store and supermarket--with close to a 50% share of revenue, Bank Negara said.
Indonesia's economy slowed in 2009 compared to the preceding year as the global economic downturn took hold, but still performed better than most countries.
Gross domestic product rose 4.5% last year compared to 6.1% in 2008, and the government expects growth to reach as high as 5.5% this year and 6% or more next year.
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