ICC COMMENCES LUBRICANT CASE HEARING INVOLVING PT ASTRA HONDA MOTOR.

The Indonesian Competition Commission (ICC) has today (14/7) commenced the hearing of the Commission Panel involving the alleged tying and bundling perpetrated by PT Astra Honda Motor (AHM) in marketing two-wheeler lubricants. The Prosecution Investigator of ICC submited a Report on the Alleged Violation before the Commission Panel and the Reported Party, AHM in the Preliminary Examination hearing of the case under case number 31/KPPU-I/2019 regarding Alleged Violation of Article 15 paragraphs (2) and (3) of Law Number 5/1999.

This case constitutes a case initiated by ICC based on the development of the automatic scooter cartel case in 2016. ICC found an alleged violation of exclusive agreement committed by AHM in the process. The exclusive agreement covers an agreement between the main dealer and/or the Astra Honda Authorized Service Station (AHASS) workshop and AHM containing a requirement that any party wishing to own an AHASS workshop must receive strategic tools from AHM and is obligated to purchase other spare parts (among other things lubricants) from AHM. In addition to the above, there is also an exclusive agreement relating to the discounted spare parts (including lubricants) obtained by AHASS workshop owners, if they merely sell genuine AHM spare parts and/or if they do not sell other brands of lubricants.

As we know it, AHASS constitutes a trademark owned by AHM and does not constitute an agent and can be owned by individuals or business entities. AHM, the shares of which are owned by PT Astra Internastional, Tbk and Honda Motor Company, Ltd, is the sole agent for the brand holders, manufacturers, assemblers, and distributors of Honda brand motorcycles. AHM also distributes and markets motorcycle spare parts, among other things, AHM Oil lubricants. AHM distributes and markets its products through main dealers, in the form of motorbikes and their spare parts. The products are marketed from the main dealers by sales dealers, AHASS workshops, and spare parts dealers.

For any purchase of motorcycle by consumers, AHM generally grants guarantees in the form of engine, frame and electrical guarantees, as well as digital electronic fuel injection system components. These guarantees only apply if periodic maintenance is conducted in accordance with the schedule at AHASS workshops. One of the periodic maintenance forms is the replacement of lubricants, where specifically for Honda brand automatic scooters, the lubricants used have special automatic motor oil specifications, namely 10W-30, JASO MB, and API SG above (SH, SJ, SL, SM, SN ).

During the pre-investigation, ICC Investigators found in the provisions that in order to be able to establish AHASS workshops, there are arrangements that AHASS is entitled to AHASS standard exteriors/interiors, minimum initial equipment price subsidies (strategic tools) that must be owned by any AHASS workshop, discounts or incentives to purchase motorcycle spare parts, human resources training, business expansion and development, and the like. The content of such provisions also states that AHASS only promotes and/or uses and/or sells Honda Genuine Parts and Honda Value Line, as well as spare parts that are in accordance with the standards as set by AHM and the published prices. These are in addition to the possibility for AHASS to fit out other tools and equipment at AHASS.

Investigators have found in the provisions that AHASS is obliged to supply strategic tools as a workshop facility. AHASS is not permitted to conduct tests towards spare part products other than those as stipulated by AHM. Nor they are permitted to conduct or help conduct any form of activity aimed at producing or distributing products in violation of the AHM’s copyrights, both motorcycle products and their spare parts, either. With regard to lubricant products, Investigators have also found that AHASS workshops can only sell lubricants owned by AHM. Lubricants produced by other brand manufacturers, especially those with similar specifications (SAE 10W-30, JASO MB, API SG or above) may not be sold at AHASS.

The agenda of the hearing will be continued with the second Preliminary Examination on July 30, 2020 to hear the Reported Party’s response to the Report on Alleged Violation as submitted by the ICC Prosecution Investigators.