ICC Holds Initial Hearing of The Case of Division of Regions In The Supply of Car Air Conditioners by Two Japanese Companies.

Jakarta (10/1) – Indonesia Competition Commission (ICC) has today held the initial Preliminary Examination Commission Hearing of Case Number 16/KPPU-L/2022 regarding Alleged Violation of Article 9 of Law Number 5 of 1999 in respect of the Supply of Car Air Conditioning System and Component Units of Car Air Conditioning System for Car Manufacturers. The case is in respect of an agreement of division of marketing regions or market allocations in Indonesia and Malaysia committed by 2 (two) Japanese companies, namely Denso Corporation (Denso/Reported Party I) and Sanden Holdings Corporation (Sanden/Reported Party II). The agenda of the initial hearing includes the reading out or submission of Alleged Violation Report by Prosecuting Investigator of ICC to the Reported Parties.

The case stemming from a so-called report shows an indication of cooperation between Denso and Sanden in the selection process of the air conditioning system suppliers for the purpose of dividing the air conditioning system supply markets for D80N car type (under the Ayla brand) in Indonesian and D87A car type AC system (under the Perodua Axia brand) in Malaysia perpetrated by Reported Party I and Reported Party II in 2009. The similar case was once decided by the European Commission in 2017 relating to the AC supply cartel and its components by implicating various AC manufacturers, including Denso and Sanden.

Based on the Alleged Violation Report, the event stemmed from and took place at the end of 2008 when Daihatsu Motor Corporation (Daihatsu) planned that it would supply Low-Cost Green Cars (LCGCs) along with their various spare parts, including the AC system to be used by LCGCs in the Asian region including Indonesia and Malaysia. The AC manufacturers conducting business activities in Indonesia and Malaysia back then were Denso and Sanden. In order to select the AC system suppliers in Indonesia, Daihatsu and PT Astra Daihatsu Motor sought and selected the AC system suppliers for the D80N (Ayla) car type in 2010, while the selection of the AC system suppliers in Malaysia was conducted by Perodua (the subsidiary of Daihatsu for Malaysia) in 2013.

ICC found that Denso and Sanden held a meeting on June 22, 2009 to arrange the division of markets/regions for their AC system supplies. The two Reported Parties was found in accord to recognize and comply with their respective markets for the D80N (Ayla) car project in Indonesia and the D87A (Perodua Axia) car project in Malaysia. Denso had its huge sales region in Indonesian and Sanden had its huge sales region in Malaysia.

Such meeting of minds was implemented in the form of commitment of the two sides together not to aggressively making offering in the supplier selection process in the markets controlled by their competitors. Therefore, Denso was determined as the winner for the D80N (Ayla) car type AC system supplier by Daihatsu in the implementation of the supplier selection in 2011, while Sanden was determined as the winner for the AC system for D87A (Axia) car type in Malaysia in the implementation of the supplier selection held by Perodua in 2013.

The Commission Panel gave the opportunity to the Reported Parties to change their behaviors following the reading out and/or the conveying of the Alleged Violation Report  to the Reported Parties in the Preliminary Hearing. Opportunity for Behavior Change is granted if the Reported Parties agree to make a behavior change as set forth in the Behavior Change Integrity Pact signed by the two Reported Parties. The entire Preliminary Examination proceedings will be conducted within 30 (thirty) days at the latest as of the first hearing attended by the two Reported Parties.