Denso and Sanden Comply with The Changes in Behavior, ICC Issues Their Stipulation.

Friday, May 26, 2023

Tags :

Jakarta (23/5) – The Commission Panel of the Indonesia Competition Commission (ICC) issued the Stipulation for the Change in Behavior on Case Number 16/KPPU-L/2022 concerning the violation of Article 9 of Law Number 5 of 1999 related to the Provision of Car Air Conditioning Systems and Component Units from Automobile Air Cooler Systems to Car Manufacturers. The Stipulation was issued along with the implementation of Integrity Pact for the Change in Behavior by both Reported Parties, namely Denso Corporation (Reported Party I) and Sanden Corporation (Reported Party II). The Stipulation was announced on 23 May 2023 at the ICC Office by the Commission Panel chaired by Commissioner Kurnia Toha, accompanied by Commissioner Chandra Setiawan and Commissioner M. Afif Hasbullah as members.

The violation started at the end of 2008 when Daihatsu Motor Corporation (Daihatsu) planned to supply the Low-Cost Green Car (LCGC) cars with various parts, including an air conditioning system, which will be used in LCGC cars in the Asian region including Indonesia and Malaysia. At that moment, air conditioning manufacturers operating in Indonesia and Malaysia were included Denso and Sanden. For the selection of the supplier of air conditioning systems in Indonesia, Daihatsu and PT Astra Daihatsu Motor conducted a selection process for the supplier of air conditioning systems for car type D80N (Ayla) in 2010. Meanwhile in Malaysia, the selection process was conducted by Perodua (a subsidiary of Daihatsu for Malaysia) in 2013.

ICC found that on June 22, 2009, Denso and Sanden held a meeting to arrange a market/territory division to supply their air conditioning system. Both Reported Parties found agreed to respect each other’s market, for the project of the D80N (Ayla) car in Indonesia and the D87A car (Perodua Axia) in Malaysia. Denso has Indonesia as their biggest territory sales, and Sanden has Malaysia. The agreement was implemented in the form of commitment of both parties that they will not be aggressive in submitting offers in the selection process for suppliers in the market, which controlled by its competitors. So that in the selection of supplier by Daihatsu in 2011, Denso was set to become the winner for the supplier of air conditioning system car for D80N (Ayla). Meanwhile, in the selection of supplier made by Perodua in 2013, Sanden was set as the winner of the air conditioning system for D87A (Axia) in Malaysia.

ICC follows up on this activity through an enforcement process until the Preliminary Examination on January 10, 2023. At this stage, both Reported Parties submit a change in behavior proposal during the hearing and were accepted by the Commission Panel. After the monitoring process on change in behavior counted from February 13, 2023, until May 17, 2023, ICC concluded that both Reported Parties have met the change in behavior conditions outlined in the Integrity Pact.

With the implemented change in behavior, ICC stipulated that Reported Party I and Reported Party II have carried out the Integrity Pact on the Change in Behavior for Case Number 16/KPPU-L/2022 so that Examination of such case is discontinued. Furthermore, both Reported Parties are required to register their subsidiaries in Indonesia to enter the ICC’s Compliance Program within 30 (thirty days) after the announcement of the Stipulation, and this requirement must be completed no later than 6 (six) months. If within the period, the Reported Parties do not register, then this Case will proceed to the Advanced Examination phase.