KPPU issued its Decision on Cartel in ScooterMatic by Two Multinational Companies.

Tuesday, February 21, 2017

Tags :

Indonesia’s competition commission passed a Decision on price fixing cartel in motorcycle industry of scootermatic class 110-125cc in 20 February 2017 at their head-quarter in Jakarta. Under case register No. 04/KPPU-I/2016, the Commission Case Council (“Council”) assigned to the case (lead by Prof. Dr. Tresna P. Soemardi together with other Commissioners, Munrokhim Misanam, PhD., and R. Kurnia Sya’ranie) has decided that the reported parties (PT. Yamaha Indonesia Motor Manufacturing/YIMM and PT. Astra Honda Motor/AHM) to breach article 5(1) on price fixing and imposed a financial penalty amounting IDR 25 billion to YIMM and IDR 22.5 billion to AHM.

 

The case was started from a research which followed by an investigation on article 5(1) of Indonesian competition law, the Law No. 5/1999, suspected to be done by two multinational companies, YIMM and AHM, on the marketing of scootermatic class 110-125cc. Article 5(1) stipulates that enterprise is prohibited to establish an agreement with its competing enterprise to fix price on certain good and or service which shall be paid by consumer or customer in the same relevant market.

 

Before put its decision, the Council considered several behaviours by the reported parties from several sources, namely (i) a meeting at the golf course; (ii) an email dated 28 April 2014; and (iii) an email dated 10 January 2015. From the three sources, the Council was in the position that based on the hearing facts, an email dated 10 January 2015 is an email sent by the witness (Mr. Yutaka Terada) whom served as the Marketing Director of YIMM with the email address teradayu@yamaha-motor.co.id and sent to Mr. Dyonisius Bekti, Vice President Director of YIMM. The Council considered that this e-mail is an official communication tool done between top level managements of YIMM. Hence, considering the capacity of sender and e-mail recipient as well as the media used (official company’s e-mail address), then the Council cannot deny such fact as evidence.

 

The relevant market to this case is marketing of the scootermatic class 110cc – 125cc in Indonesia. The Council declared that the designation of 110cc – 125cc was in line with the concept of product definition in the applicable anti-trust theory, where a product shall be defined as narrow as it can be, and by considering product characteristics, marketing reach, and behaviour of the reported parties in question.

 

In addition to the price fixing, the Council also concluded that YIMM has intentionally and systematically served misleading facts to built perception which in favour of YIMM’s interest. They have provided data which fraudulently showed the following price decline:

  1. Time series of Xeon and Xeon RC product in 2013;
  2. Price comparison of Yamaha Mio product with Honda Beat product in 2013 and 2014;
  3. Price of scooter with 125cc in 2013; and
  4. Price of scooter with 110cc in 2014.

 

Based on the facts gathered from the Hearing, the Council decided that the YIMM and AHM have breached article 5(1) of the Law No. 5/1999, and thus, imposed maximum financial penalties amounting IDR 25 billion to YIMM, and lower financial penalties amounting IDR 22.5 billion to AHM for their cooperative behaviour during the process.

 

Moreover, the Council also recommended the Chairman of KPPU to advise Indonesian Minister of Industry to promote the use of local component industry (including small and medium industries), so that the main components of motorcycle (engine, transmission, frame, and electrical) can be produced by national industry.