Monopoly Watch files a petition against Indofood

Sari P. Setiogi, The Jakarta Post, Jakarta

Monopoly Watch, a non-governmental organization on the look out for monopoly practices, filed a petition on Tuesday to the Indonesian Commission for the Supervision of Business Competition (KPPU) against PT Indofood Sukses Makmur Tbk over suspicions of monopoly.

"We have just asked KPPU to audit the company and find concrete evidence of its monopolistic practices and concurrent positions in its management," executive secretary Samuel Nitisaputra told the media following a meeting with KPPU executives.

Monopoly Watch claimed that Indofood, a leading Indonesian food producing company, was involved in monopolistic practices because the company and its sister companies dominate a vertical chain of business beginning from the production of raw materials to packaging and distribution.

It also said that Indofood dominated the instant noodle market by 75 percent, wheat by 66.7 percent, cooking oil by 60 percent, industrial margarine by 50 percent and snacks by 55 percent.

"A director of Indofood also holds similar positions or at least top management positions in sister companies," said Samuel, "Or if it is not at the director or top-level management level, at least the person has access to sister companies' bank accounts."

He said such conditions were tantamount to unfair business practices, especially in pricing, which hit competitors in the industry.

Such practices violate Law No. 5/1999 on monopolistic practices and unfair business competition. The law states that a business or group of business institutions which dominate more than 50 percent of a product's market share would be considered a monopoly, which is not allowed.

The law also forbids the practice of holding concurrent management positions in affiliated companies which operate in the same market segment.

KPPU's director of communications Murman Budijanto told The Jakarta Post that the commission would study the petition and consider all the evidence gathered by Monopoly Watch. "We will respond at least within the next 10 days," he said.

When contacted, a media relations officer of Indofood said the company could not make any comment yet because the executives in charge were not available for consultation.