ICC Imposes Sanction of IDR6 Billion on KL–Kepong Plantation Holdings Sdn. Bhd..

Jakarta (24/2) – Indonesia Competition Commission (ICC) has imposed a sanction on KL-Kepong Plantation Holdings Sdn. Bhd., for the delay in the notification of the acquisition of shares of PT. Perindustrian Sawit Synergi and PT. Bumi Makmur Sejahtera Jaya. The Panel of the Commission in its Commission Panel Hearing for the Reading Out of the Decision imposed a sanction in the form of fine of IDR6,000,000,000 (six billion rupiah) on KL-Kepong Plantation Holdings Sdn. Bhd., for such violation today.

This case under register number 08/KPPU-M/2021 had its origin from the pre-investigation of a case that had been previously decided by ICC, namely Case Number 18/KPPU-M/2020 constituting a delay in the notification of the acquisition of shares by a business group of the Ultimate Parent Business Entity of the Reported Party, that is, Kuala Lumpur Kepong Berhad (KL-Kepong), a Malaysian company engaged in the field of plantation (palm oil and rubber). In the aftermath of the pre-investigation of the case, the Reported Party acted in a cooperative fashion and in good faith by notifying ICC of the acquisition of most of the shares of PT. Perindustrian Sawit Synergi (PT. PSS) and PT. Bumi Makmur Sejahtera Jaya (PT. BMSJ).

The acquired company, PT. PSS, constitutes a bonded zone entrepreneur in East Kalimantan engaged in the field of refinery of crude palm oil (CPO) of a bonded stockpile entrepreneur and PT. BMSJ constitutes an oil palm producing company for palm oil management and holds 2 (two) Location Permit certificates for land in an area of 2,336.62 hectares in Kepala Kampit, Belitung Timur (East Belitung) and 4,840 hectares in Gantung, East Belitung. Meanwhile, KL-Kepong Plantation Holdings Sdn. Bhd., (the Reported Party) constitutes a Malaysia-based company engaged in the field of investment advice and conducts palm oil production business activities through its subsidiaries. The Reported Party’s parent company, KL-Kepong, is a Malaysian palm oil giant possessing a total planted area of 223,946 hectares throughout Malaysia, Indonesia, and Liberia.

ICC found that the acquisition of PT. PSS that had been conducted by the Reported Party came into effect as of September 25, 2017 and that of PT. BMSJ came into effect as of May 14, 2018. Therefore, based on the applicable provisions, notification should have been be made to ICC by no later than November 3, 2017 of the acquisition of PT. PSS and July 3, 2018 of the acquisition of PT. BMSJ. Based on the facts revealed in the hearing proceedings, it was evident that the Reported Party had just made the notification on April 15, 2021, it is a 638 (six hundred and thirty eight)-day delay.

Consequently, based on the mandatory notification provision and the various facts disclosed in the hearings, the Commission Panel decides that the Reported Party has been legally and convincingly proven to have violated Article 29 of Law No. 5/1999 jo. Article 5 of Government Regulation No. 57/2010, and sentences the Reported Party to pay for a fine of IDR6,000,000,000 (six billion rupiah) and remits it to the state treasury by no later than 30 (thirty) days after the Decision has had a permanent legal force (inkracht).

The Commission Panel has also specifically recommended the Commission  to provide suggestions and considerations to the President of the Republic of Indonesia so as to make a policy regarding the limitation of the granting of the Rights of Cultivation (HGU) to Groups of Business Entities. This is because the control of assets (land) in certain Business Entity Groups can result in a concentrated market structure.