ICC Holds First Hearing on Alleged Violations in PT Kobe Boga Utama Distribution Agreement.

Jakarta (15/9) – ICC conducted the first hearing of Case Number 11/KPPU-L/2023 concerning Alleged Violation of Law Number 5 Year 1999 (“Law 5/1999”) in the Distribution Agreement of PT Kobe Boga Utama (“KOBE”) yesterday on September 14, 2023 in the Courtroom of ICC Jakarta Office. The hearing which was held offline had the agenda of exposure of Alleged Violation Report (“LDP”) by the Investigator and examination of the completeness and suitability of evidences supporting the LDP. In the hearing led by Yudi Hidayat as Chairman of the Commission Panel and accompanied by Commissioner Chandra Setiawan and Commissioner Dinni Melanie as Members of the Commission Panel, the Investigator mentioned KOBE as the Reported Party, allegedly violating several provisions in Law 5/1999, namely Article 8, Article 15 (1) and (3), and Article 19 letter c*.

KOBE is a seasoning flour manufacturer located in Tangerang since 1995. Starting in 2006, it launched its Food Service division to serve food industry and retail customers. In 2009, through its marketing team, they sought and offered cooperation to businesses to become their distributors with standardized terms in a distribution agreement. The provisions and implementation of this distribution agreement are the origin of the case. It is alleged that these provisions are contrary to Law No. 5/1999, including the requirements that (i) the selling price of the products is set by KOBE; (ii) distributors are not allowed to distribute, market, and sell similar products owned by other parties that are competitive; and (iii) to distribute, market, and sell with a coverage of modern and traditional outlets in the distribution area/territory given by KOBE. The distribution agreement started in 2009, and based on the evidence documents owned by the Investigator, the provisions in the agreement are still valid until 2022.

The relevant market in this case is the market for seasoned flour, non-seasoned flour, and Boncabe produced by KOBE and/or marketed through the distribution agreement between KOBE and its distributors throughout Indonesia. During the hearing, the Investigator stated that during the investigation process, KOBE admitted that the distribution agreement contained various provisions that intersected with the provisions of Article 8, Article 15 paragraph (1) and paragraph (3) and Article 19 letter c of Law 5/1999, but KOBE emphasized that the agreement was an old agreement because they did not have a legal team. KOBE has started to change its distribution agreement template and at least at the time of the inspection, it was using a distribution agreement template that had removed these provisions. Therefore, KOBE expressed its readiness to change its behaviour.

After hearing the LDP, the Commission Panel provided an opportunity for KOBE to prepare a response to the LDP which will be submitted at the Preliminary Examination Session on September 26, 2023. Furthermore, the Commission explained that the response can be in the form of a rebuttal to the alleged violation by attaching evidence, a list of witnesses and experts who will corroborate the rebuttal. In addition, KOBE may also admit the alleged violations mentioned by the Investigator in the LDP by making a written statement that KOBE accepts all allegations of violations and will not submit evidence to refute the LDP and submit a request for a change of behaviour. For information, as stipulated in ICC Regulation Number 2 Year 2023 Article 64 paragraph (1), if KOBE admits and accepts the alleged violation report, the Commission Panel will make a conclusion to continue the case with the Quick Examination procedure.