ICC HAND DOWNS SANCTIONS ON GRAB AND TPI.
The Indonesian Competition Commission (ICC) has tonight handed down a sanction for the violation of Article 14 and Article 19 (d) of Law No. 5/1999 on PT Solusi Transportation Indonesia (GRAB) and PT Teknologi Pengangkutan Indonesia (TPI) in special rental transportation services relating to the provision of Grab App software applications operated in the Greater Jakarta areas (Jakarta, Bogor, Depok, Tangerang, and Bekasi), Makassar, Medan, and Surabaya. Based on such violations, GRAB is subject to a fine of IDR7.5 billion for violating Article 14 and IDR22.5 billion for violating Article 19 (d), meanwhile TPI is subject to a fine of IDR4 billion and IDR15 billion for violating the two articles.
This case under Number 13/KPPU-I/2019 stems from the initiative of ICC and is followed up to the pre-investigation stage regarding alleged violation of the vertical integration (Article 14), tying-in (Article 15 paragraph 2), and the discriminatory practices (Article 19 sub-article d). At the beginning of the case, ICC alleged that there had been several violations of business competition taking place through priority orders given by GRAB (Reported Party I) to the driver partners under TPI (Reported Party II), which were allegedly related to the dual position between the two companies.
In the hearing proceedings, the Commission Panel presided over by Dinni Melanie, S.H., M.E. as the Head of the Panel, along with Dr. Guntur S. Saragih, M.S.M., and Dr. M. Afif Hasbullah S.H. M.Hum., as Members of the Panel, respectively, judged that the cooperation agreement for the provision of services by GRAB as an application provider company and TPI as a company engaged in the field of special transportation rental services, aimed at controlling service products for the provision of special technology-based rental service transportation applications in Indonesia and resulting in a decline of the percentage of the number of partners and the decrease in the number of orders from non TPI partner drivers.
The Commission Panel judged that there was no tying-in attempt being conducted by GRAB for the services provided by TPI. However, the Panel valued that there had been a discriminatory practice being perpetrated by GRAB and TPI against individual partners as compared to the TPI partners, such as, the granting of priority orders, suspension periods, and other facilities. Such practice has resulted in the occurrence of a monopolistic practice and unfair business competition for non TPI partners and individual partners.
With due observance of the various facts and findings in the hearing, the Commission Panel decides that GRAB and TPI are legally and convincingly proven to have violated Article 14 and Article 19 sub-article “d”, but are not proven to have violated Article 15 paragraph (2) of Law No. 5/1999. Based on such violations, the Commission Panel has handed down a sanction in the form of fine on GRAB amounting to IDR7.5 billion for the violation of Article 14 and IDR22.5 billion for the violation of Article 19 sub-article “d”. Meanwhile, TPI is subject to a fine of IDR4 billion for the violation of Article 14 and IDR15 billion for the violation of Article 19 sub-article “d”. The Commission Panel has also instructed the Reported Parties to pay for the fine by no later than 30 days after the Decision has had a permanent legal force.
The Commission Panel has also given recommendations specifically to ICC in order to give recommendations and considerations to the Ministry of Transportation to conduct an evaluation with regard to the implementation of the special rental transportation quota policy with due observance of the principles of fair business competition; and to the Ministry of MSMEs and Cooperatives to provide advocacy for drivers categorized as MSMEs with regard to the implementation of the agreement between the drivers and the application provider company and the agreement between the drivers and the special rental transportation company.
Notes to the Journalist:
- Article 14 of Law Number 5 Year 1999 reads; “Business actors shall be prohibited from entering into agreements with other business actors with aim of controlling the production of several goods constituting products which are included in the production chain of certain related goods and or services whereby each production series is the end product of processing or further processing, either in a direct and indirect series, which may potentially cause unfair business competition and or may be harmful to society.”
- Article 15 paragraph (2) of Law Number 5 Year 1999 reads; “Business actors shall be prohibited from entering into agreements with other parties setting forth the condition that the party receiving certain goods and or services must be prepared to purchase other goods and or services from the supplying business actors.”
- Article 19 sub-article d of Law Number 5 Year 1999 reads; “Business actors shall be prohibited from engaging in one or several activities, either individually or jointly with other business actors, which may cause monopolistic practices and or unfair business competition, in the form of: (d) doing a discriminatory practice against certain business actors.”
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Published on July 2, 2020 by the Public Relations and Cooperation Bureau of the Secretariat of the Indonesian Competition Commission of the Republic Indonesia.