KPPU to examine petrochemical firms' alliance
JAKARTA (JP): The country's antimonopoly watchdog will study the planned alliance of petrochemical manufacturers PT Petrokimia Nusantara Interindo (Peni) and PT Chandra Asri to ascertain if it will hurt competition in the country's polyethylene market.
Syamsul Maarif, a member of the Business Competition Supervisory Commission (KPPU), said the commission had yet to receive a report on the planned alliance.
"But, we're collecting data on the different forms of alliances, mergers and partnerships from various sources to see if such a move will violate the Antimonopoly Law," Syamsul told The Jakarta Post.
Peni, which is partly owned by British energy giant BP Plc, said on Thursday it was considering creating an alliance with PT Chandra Asri in manufacturing, marketing and distribution to boost their competitiveness against foreign players.
Through the alliance, both companies will control a combined 70 percent of the domestic polyethylene market as currently Peni holds 30 percent and Chandra Asri holds 40 percent of it. The remaining 30 percent is filled from polyethylene imports.
The country's polyethylene market demand stands at 700,000 tons a year.
Under the 1999 Antimonopoly Law, a company or business group will be suspected of conducting unfair business practices if it controls more than 50 percent of the domestic market. An alliance of two or three companies will also come under suspect it controls a combined 75 percent of the market.
Peni's president Robert M. Genovese said on Thursday the alliance was crucial for Peni and Chandra Asri to maintain their domestic market share ahead of the implementation of the ASEAN Free Trade Area (AFTA) next year.
In line with AFTA's ruling, Indonesia should slash import duties on polyethylene products to 5 percent from the current 10 percent.
Genovese said the decrease in import duties would result in an influx of imported polyethylene and thus tighten competition in the local market.
Syamsul said the Antimonopoly Law did not ban companies from forming alliances as long as the alliances did their businesses in a fair and transparent way, including not hindering new players from entering the market.
Genovese said the planned alliance would not violate the Antimonopoly Law as it was aimed mainly at improving efficiency and reducing costs.
He said Peni was awaiting approval from the Ministry of Industry and Trade as well as the Indonesian Bank Restructuring Agency (IBRA) to carry out the alliance with Chandra Asri.
Chandra Asri, whose founding shareholders include former president Soeharto's second son Bambang Trihatmodjo and tycoon Prajogo Pangestu, have been taken over by IBRA following its owners' failure to repay Rp 3 trillion (US$348 million) in debts owed to state banks.(dmr)