Friday, March 5, 2021

Tags :

ICC | Cement

The Indonesia Competition Commission (ICC) decided that PT. Conch South Kalimantan Cement (CONCH) as the Reported Party in Case No. 03/KPPU-L/2020 was proven to have violated Article 20 of Law Number 5 Year 1999 in the sales of Portland Composite Cement (PCC) type in the South Kalimantan region in an online hearing for the reading out of the decision by the Commission Panel today. CONCH was fined in the amount of IDR22,352,000,000 (twenty-two billion three hundred and fifty-two million rupiah) for such breach.

The case that came to the fore based on the public report had raised the alleged violation of Article 20 of Law No. 5/1999, especially with regard to the efforts to sell at a loss and/or set a very low price made by PT Conch South Kalimantan Cement in the sales of PCC-type cement in South Kalimantan.

Based on the proceedings of the hearing which began on June 23, 2020 and the instruments of proof obtained, the Commission Panel concluded that CONCH had conducted selling at a loss in 2015, and had set a very low price in 2015 – 2019. Such selling at a loss action was concluded on the basis of the evidence that indicates an average selling price that is lower than the cost of goods sold for PCC-type cement in the region of South Kalimantan. This was also corroborated by the 2015 Financial Statements, wherein CONCH suffered losses as a result of such behavior. In the meantime, the very low-price setting was concluded by means of the instruments of proof indicating lower average CONCH selling price as compared to that of its competing business actors for the sales of the PCC-type cement in the region of South Kalimantan.

The Commission Panel also found that CONCH in terms of ownership was controlled by Anhui Conch Cement Company Limited as the major holding company of multinational companies that have strong financial capabilities and have a great opportunity to dominate the cement industry globally. Based on such support, CONCH has the ability and financial capital strength to conduct business strategies ranging from production to marketing, including pricing strategies so as to make it cheaper as compared to the market prices and/or prices of its competitors. The practice of such various pricing strategies mentioned above has resulted in a significant increase in the market share of CONCH and the kicking out of 5 (five) competing business actors from the PCC-type cement sales market in the region of South Kalimantan in 2015 – 2019. This has made the cement market become increasingly concentrated and has resulted in the occurrence of monopolistic practices and/or unfair business competition.

Based on the facts of the hearing, the Commission Panel handed down a sentence in the form of administrative fine to CONCH in the amount of IDR22,352,000,000 (twenty-two billion three hundred and fifty-two million rupiah) for breach of Article 20 of Law Number 5 Year 1999 which had to be remitted to the State Treasury as a payment of income deriving from fines in the field of business competition. The payment is to be made by no later than 30 (thirty) days as from the decision has had a permanent legal force (inkracht) and is to be reported and a copy of the penalty payment receipt is to handed over to ICC.