ICC Issued A Decision on The Tulungagung Bid Rigging Case.

Wednesday, February 23, 2022

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Jakarta (25/01) – The Indonesia Competition Commission (ICC) read out its Decision on the Alleged Violation of Article 22 of Law Number 5 of 1999 regarding the Procurement of Revetment Development Packages and Land Acquisition at the Popoh Fishing Port, Tulungagung Regency for Fiscal Year 2017. In the decision number 25/KPPU-I/2020, the Commission Panel decided that the reported parties were proven to have violated Article 22 and imposed a total fine of Rp.2.700.000.000,00 (two billion seven hundred million rupiah) on PT Cipta Karya Multi Teknik.

This case was initiated by ICC in 2017. The case involved various reported parties, namely PT Cipta Karya Multi Teknik (Reported I), PT Bangun Persada Construction (Reported II), PT Wahana Eka Sakti (Reported III), PT Tiara Multi Teknik (Reported IV) and the Working Group (POKJA) 84 Technical Implementation Units for Goods and Services Procurement Services (UPT P2BJ) Investment and Integrated Services Agency One Door of East Java Province (Reported V). The winner of the procurement is PT Cipta Karya Multi Teknik.

Based on the hearing process, the Commission Panel found that there was a pseudo competition through conspiracy carried out by the reported parties horizontally and vertically. Horizontal conspiracy behavior was proven by the existence of a direct relationship (both family, work, and employee relations) among the reported parties I, II, III, and IV, as well as other evidences related to their offer. The vertical conspiracy behaviour was proven by the various neglect efforts made by Reported Party V in the procurement process.

The Commission Panel considered that the various pieces of evidence presented by the prosecution investigator had fulfilled the element of conspiring by the reported parties. So, taking into account the various facts, assessments, analysis, and conclusions that exist, the Commission Panel decided that the reported parties were proven to have violated Article 22 of Law Number 5 of 1999. On this basis, the Commission Panel imposed PT Cipta Karya Multi Teknik, which was the winner of the tender, with administrative fines of IDR 2.700.000.000,00 (two billion and seven hundred million rupiah). The Commission Panel also imposed penalties on reported parties I, II, III, and IV in the form of a prohibition from participating in tenders in the construction sector with funding from the State Revenue and Expenditure Budget (APBN) and Regional Revenue and Expenditure Budget (APBD) for 1 (one) year throughout the territory of Indonesia, since this decision has permanent legal force.

Furthermore, the Commission Panel also ordered the reported parties to implement the decision no later than 30 (thirty) days after the reported parties received the notification of the decision. If the reported parties intend to submit an objection, they must submit a bank guarantee of 20% of the value of the fines to ICC no later than 14 (fourteen) days after receiving the notification of this decision.

The Commission Panel also made recommendations to the Governor of East Java, to impose disciplinary sanctions on Reported Party V and ordered the Budget User or Budget User Proxy in the provincial government to impose blacklist sanctions against Reported Parties I, II, III, and IV. The Commission Panel also recommended that the Head of LKPP, among others, be able to accommodate the authority of the ULP Working Group in the form of providing facilities, facilities and infrastructure, as well as the tools needed to see indications of conspiracy in tender offers. They also suggested to improve regulations related to the procurement of government goods and/or services and provide e-tendering training to the Working Group.