KPPU Determines that Aqua Danone and its Distributor Breached the Competition Law

 

Overview

On 19 December 2017, Indonesia’s Commission for the Supervision of Business Competition (KPPU) concluded that PT Tirta Investama, a company producing “AQUA Danone” bottled water (Aqua) and PT Balina Agung Perkasa (BAP or Distributor) had breached the provisions of exclusionary conduct under Law No.5 of 1999 on Prohibition of Monopolistic and Unfair Business Competition Practices (Competition Law).

After a series of investigations and hearings that lasted more than a year, KPPU found that Aqua and BAP had violated Article 15(3) and Article 19(a) and (b) of the Competition Law.  KPPU imposed a fine of Rp13.8 billion and Rp6.3 billion respectively, on Aqua and BAP.

The latest KPPU decision sends a strong message that every business actor must comply with the prevailing laws and regulations, including the Competition Law.

Background

The initial case started with a summation (Somasi) made by Aqua’s competitor, Le Minerale (PT Tirta Fresindo Jaya).  The Somasi was published in several national newspapers, demanding that Aqua and its Distributor stop forcing outlets not to sell Le Minerale’s products.  KPPU kept an eye on this news by closely monitoring, and then initiating its own investigation in this case.

During its investigation, KPPU discovered evidence supporting its findings, including conduct in the form of threatening or downgrading the outlets, from a star outlet (SO) to becoming a wholesaler (WS), if they continued to sell Le Minerale’s products.  This downgrading from SO to WS resulted in the outlets paying 3% more when receiving Aqua’s products.  In order to avoid paying 3% more, the outlets (had to) follow Aqua and BAP’s instructions, which have caused a decrease in Le Minerale’s sales in specific areas. 

KPPU findings were also supported by emails from Aqua and BAP or agencies to the outlets, indicating that these instructions were effective in the field.  KPPU considered that the instructions were effective due to Aqua’s domination in the bottled water market shares in Indonesia.

Based on the market share report from Goldman Sachs, in 2015, Aqua occupied more than 46.7% of the bottled water market share in Indonesia, followed by Club 4% (Indofood), 2Tang 2.8% (PT Tang Mas), Oasis 1.8% (PT Santa Rosa Indonesia), Super O2 1.7% (Garuda Food), and Prima 1.4% (PT Sosro).[1]

BAP is Aqua’s exclusive distributor for 12 specified areas, including Cikampek, Cikarang, Bekasi, Babelan, Pulo Gadung, Sunter, Prumpung, Kiwi, Lemah Abang, Cibubur, and Cimanggis.

Exclusionary conduct

In its decision, KPPU considered that Aqua and BAP breached the provisions on exclusionary conduct (e.g. Articles 15(3) and 19(a) and (b)).

Article 15(3) of the Competition Law, stipulates that:

Business actors shall be prohibited from entering into agreements concerning prices or certain price discounts for goods and or services, setting forth the condition that the business actor receiving goods and or services from the supplying business actor:

a.      must be willing to buy other goods and or services from the supplying business actor; or

b.      will not buy the same or similar goods and or services from other business actors that are competitors of the supplying business actor.”

Article 19(a), (b) of the Competition Law, stipulates that:

Business actors shall be prohibited from engaging in one or several activities, either individually or jointly with other business actors, which may cause monopolistic or unfair business competition practices, such as:

a.      refusing to allow and or impeding certain other business actors in conducting the same business activity in the relevant market; or

b.      impeding consumers or customers of their competitors in engaging in a business relationship with such business competitors.

KPPU found that the “exclusionary practices” conducted by Aqua and BAP have satisfied the elements of Articles 15(3) and 19(a) of the Competition Law, which generally prohibits  exclusionary conduct, if it prevents actual or potential com­petitors from supplying the same products or prevents consumers from obtaining similar products that are competitive in price or quality.

This case serves as a reminder of past KPPU cases on exclusionary conduct, as follows:

Arta Boga Cemerlang (ABC, 2004)

In the ABC case, KPPU determined that ABC had breached Article 25 of the Competition Law by engaging in exclusionary practices towards its competitors and entering into agreements with its wholesalers and grocers, which provided that:

•   a 2 per cent discount would be given, if they agreed to sell ABC’s batteries; and 
• an additional 2 per cent discount would be given, if they agreed not to sell ABC’s competitors’ products.

Telkom (2005)

In the Telkom case, the Supreme Court determined that Telkom had breached Article 15(3)(b) of the Competition Law by providing exclusive rebates to hotels and offices on the condition that these hotels and offices would not use international telecommunications services offered by Indosat, a competitor.  With its dominance in the public switched telephone network market, Telkom thereby also abused its dominant position, in contravention of Article 25 of the Competition Law.

Appeal

After KPPU issues its decision, the relevant business actors concerned (in this case, Aqua and BAP) would be obliged to abide by the decision and report to KPPU within 30 days after receiving formal notification of the KPPU decision.[2]  However, the business actors may decide to appeal the decision to the District Court, in which case they must file the appeal no later than 14 days after being notified of the decision.[3] The District Court is then obliged to examine the appeal within 14 days of the filing of the appeal,[4] and must make a decision within 30 days from the date of commencement of the appeal hearing.[5]

Conclusion

KPPU’s decision went against Aqua and BAP, stating that they were proven to have breached the provisions on exclusionary conduct in the distribution and selling of Aqua Danone bottled water.  We note that on 31 January 2018, the appeal has filed by Aqua and we will see that the District Court will review the KPPU findings and determination whether it had correctly applied the provisions on Competition Law.

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[1] https://katadata.co.id/berita/2017/12/20/divonis-kppu-aqua-terbukti-larang-toko-jual-produk-le-minerale accessed on 15 January 2018.

[2] Article 44(1) of the Competition Law

[3] Article 44(2) of the Competition Law

[4]  Article 45(1) of the Competition Law

[5]  Article 45(2) of the Competition Law

Capitalism at Its Finest

Old posting... but still it will make you laugh.

CAPITALISM AT ITS FINEST

TRADITIONAL CAPITALISM:

You have two cows. You sell one and buy a bull.

Your herd multiplies, and the economy grows.

You sell them and retire on the income.

AN AMERICAN CORPORATION:

You have two cows.

You sell one, and force the other to produce the milk of four cows.

You are surprised when the cow drops dead.

ENRON VENTURE CAPITALISM:

You have two cows.

You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank, then execute a  debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. The milk rights of the six cows are transferred via an intermediary to a Cayman Island company secretly owned by the majority shareholder who sells the rights to all seven cows back to your listed company. The annual report says the company  owns eight cows, with an option on one more. You sell one cow to buy a new president of the United States, leaving you with nine cows. No balance sheet is provided with the release. The public buys your bull.

A FRENCH CORPORATION:

 You have two cows.

You go on strike because you want three cows.

A JAPANESE CORPORATION:

You have two cows.

You redesign them so they are one-tenth the size of an ordinary cow and produce twenty times the milk.

You then create clever cow cartoon images called Cowkimon and market them World-Wide.

A GERMAN CORPORATION:

You have two cows.

You reengineer them so they live for 100 years, eat once a month, and milk themselves.

A BRITISH CORPORATION:

You have two cows.

Both are mad.

AN ITALIAN CORPORATION:

You have two cows, but you don't know where they are.

You break for lunch.

A RUSSIAN CORPORATION:

You have two cows.

You count them and learn you have five cows.

You count them again and learn you have 42 cows.

You count them again and learn you have 12 cows.

You stop counting cows and open another bottle of vodka.

A SWISS CORPORATION:

You have 5000 cows, none of which belong to you.

You charge others for storing them.

A HINDU CORPORATION:

You have two cows.

You worship them.

A CHINESE CORPORATION:

You have two cows.

You have 300 people milking them.

You claim full employment, high bovine productivity, and arrest the newsman who reported the numbers.

AN ISRAELI CORPORATION:

So, there are these two Jewish cows, right?

They open a milk factory, an ice cream store, and then sell the movie rights.

They send their calves to Harvard to become doctors. So, you should complain?

AN ARKANSAS CORPORATION:

You have two cows.

That one on the left is kinda cute...

Hello...

It's been a while no posting. Even blogger needs a holiday.

International Conference on Competition Law & Policy 2010

Pada tanggal 9-10 Juni 2010 bertempat di Bali Dynasty Hotel & Resorts berlangsung Konferensi International tentang Hukum dan Kebijakan Persaingan Usaha. Hal ini juga dimaksudkan sebagai perayaan dari ulang tahun ke-10 KPPU: satu dasawarsa Menata Persaingan Usaha di Indonesia. (www.kppu.go.id)

Hadir dalam konferensi tersebut beberapa negara yg telah lebih dahulu menerapkan rezim hukum dan kebijakan pesaingan usaha antara lain: Amerika Serikat (US-FTC), Japan (JFTC), Korea (KFTC), Australia (ACCC), Jerman (Bundeskartelamt) dan beberapa negara asia tenggara lainnya Malaysia, Singapore, Brunei, Vietnam dan Kamboja.

"Competition brings prosperity"


Sent from my BlackBerry® smartphone from Sinyal Bagus XL, Nyambung Terus...!

The newborn: Yasmina Fahira Iskandar
Lahir : Medan, 13 Mei 2010
Berat : 3255 Gram
Panjang : 51 Cm

Smg kelak kau akan menjadi orang yg berguna bagi sesama, nak. Penyejuk mata hati dan kebanggan orang tua. Amien.


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Duka Andalas Duka Kita Semua

Semoga para korban mendapat tempat terbaik di Sisi Allah, Tuhan Yang Maha Kuasa. Para keluarga yang ditinggalkan mendapatkan kesabaran atas ujian yang datang ini. Amin.

Who Watch the Guardian?

Kasus suap Anggota KPU, Mulyana Wira Kusuma (MWK), memasuki babakan baru setelah diperiksa berkali-kali oleh KPK. Ternyata aliran dana tersebut mengalir sampai kepada BPK, DPR, Dirjen Anggaran Departemen Keuangan. Banyak pihak sekarang seperti saling lempar tanggung jawab, takut kena getahnya. Bahkan KPK beberapa kali menerima pengembalian uang arisan rekanan KPU senilai 20 M dari berbagai pihak.

Ironis memang, kinerja sukses KPU yang berhasil menyelenggarakan dua kali Pemilu secara langsung seperti hilang dan tidak ada apa-apanya dibanding dengan riuh rendahnya gelombang dan isu negatif yang sekarang menerpa KPU. Ibarat pepatah, panas selama setahun dihapus hanya dengan hujan sehari. Lebih ironis lagi jika BPK yang sejatinya merupakan pemeriksa yang diberi tugas untuk melakukan audit investigasi terhadap KPU kini malah akan diperiksa oleh KPK karena diindikasikan menerima aliran suap. Nah lho....

Pemeriksa (BPK) diperiksa oleh pemeriksa (KPK). Itulah yang terjadi sekarang. Memang sejak dari dulu Lord Acton sudah lantang berteriak: power tends to corrupt, and absolute power corrupt absoultely . Kekuasaan memang selalu melenakan siapapun juga, karena itu, demi hukum (eh.. demi keadilan) kekuasaan itu harus diawasi, dijaga, dievaluasi, diperiksa. Maka mungkin itulah filosofi dari banyak dibentuknya lembaga pengawas dan pemeriksa di negeri ini.

Jika kita amati, dalam waktu dekat akan ada banyak tambahan komisi-komisi pengawas baru. Contohnya seperti Komisi Kejaksaan yang bertugas mengawasi Kejaksaan, Komisi Kepolisian yang bertugas mengawasi Polri, Komisi Komisi Yudisial yang tugasnya mengawasi kinerja para hakim.

Sebenarnya jika dilihat, kurang apa lembaga pengawas internal yang ada di dalam masing-masing lembaga tersebut. Di Kejaksaan ada Jaksa Agung Muda Pengawasan (Jamwas), di Kepolisian ada Provost atau internal affair, di Kehakiman ada Hakim Agung bidang Pengawasan. Muncul lembaga pengawas eksternal yang terpisah dari sistem memang ide yang bagus. Dengan begitu, sejatinya pengawas dapat bersifat independen, bebas dari pengaruh dan tekanan pihak manapun, termasuk terhadap pihak yang diawasi.

Kekuasaan memang harus diawasi, karena itu tugas utama lembaga pengawas, pemeriksa, tetapi apa jadinya kalo lembaga pengawas, pemeriksa justru melakukan dosa seperti lembaga yang diawasinya. Seperti yang terjadi pada BPK, apakah kita harus membentuk lembaga pengawas lagi untuk mengawasi kerja dari lembaga pengawas tersebut. So, who watch the guardian?

Eh.. mong-ngomong, saya juga kerja di lembaga pengawas lho.. KPPU (Komisi Pengawas Persaingan Usaha) . Namanya juga pengawas, ya kerjanya mengawasi donk, khususnya mengenai persaingan usaha. Dan, nampaknya memang tidak ada yang mengawasi. Hi..hii.. ngeri!