ICC Read Out the Decision On Packaged Cooking Oil Case in Indonesia.
Jakarta (27/05) – Indonesia Competition Commission (ICC) read out Decision on Case Number 15/KPPU-I/2022 regarding Alleged Violation of Article 5 and Article 19 Sub-article c in the Sales of Packaged Cooking Oil in Indonesia at the Head Office of ICC in Jakarta on May 26, 2023. The Commission Panel stated in its Decision that the 27 Reported Parties in the said case were not proved in violation of Article 5 (in respect of price fixing). However, the Commission Panel decided that 7 (seven) Reported Parties, namely Reported Party I, Reported Party II, Reported Party V, Reported XVIII, Reported XX, Reported Party XXIII, and Reported XXIV were legally and convincingly proved in violation of Article 19 sub-article c (in respect of the restriction of the circulation/sales of goods). Based on the abovementioned violation, ICC imposed various amounts of fines on the 7 (seven) Reported Parties, in a total amount of fines of IDR71,280,000,000 (seventy-one billion two hundred and eighty million rupiah).
This case is an initiative of ICC with regard to an alleged violation of Article 5 Law Number 5 of 1999 by the Reported Parties within the period of October 2021 to December 2021 and the period of March 2022 to May 2022 for your information. The Reported Parties were also alleged of violating Article 19 sub-article c of Law Number 5 of 1999 within the period of January 2022 to May 2022 in the sales of packaged cooking oil in Indonesia. The case proceeded with the examination process by the Commission Panel. The Preliminary Examination of this case has been conducted by the Commission Panel since October 20, 2022 and has been continued with Follow-up Examination since November 25, 2022 as well as the extension of the Follow-up Examination up to April 4, 2023.
Findings in Hearings
The Commission Panel explained in its Decision that the relevant market in the case a quo was the sale of packaged cooking oil with oil palm raw materials throughout Indonesia. The market structure in the cooking oil industry is summed up as a tight oligopoly with a high market concentration (namely with a concentration ratio of four business actor groups of 71.52%), possessing homogeneous products and various barriers to market entry. This affects the behavior of business actors and market performance including a potential occurrence of cooking oil price fixing which is allegedly perpetrated by the Reported Parties.
The Commission Panel found at the hearings that based on the ratio of inputs and outputs in the said sector, the ratio was larger within the violation period than that of before the violation period. This indicates that the increase in prices during the violation period occurred due to the increase in input prices so that the profit margin obtained became smaller. Thus, it can be summed up that the Reported Parties did not fix prices for simple packaged cooking oil and packaged cooking oil.
The Commission Panel also found that the Reported Parties did not comply with the government policy on the highest retail price (HET), namely by reducing the production volume and/or sales volume during the violation period. Such action was taken on purpose to influence the HET policy. The fact is that when the HET policy was repealed, the supply of the packaged cooking oil was immediately available again in the market at a relatively higher price as compared to the price prior to the issuance of the HET policy. Such noncompliance has given rise to a scarcity of cooking oil resulting in a deadweight loss of the public. The behavior of decrease in production volume and/or sales volume during the violation period despite the availability of the raw materials, constitutes a behavior of business actors who are not honest and hinders business competition in conducting packaged cooking oil production and/or marketing activities. Thus, the Commission Panel summed up that the impacts of the violation of Article 19 sub-article c of Law Number 5 of 1999 had taken place.
Based on the result of the hearings, the Commission Panel decided several matters as follows:
- All the Reported Parties are not proved in violation of Article 5 of Law Number 5 of 1999;
- Reported Party III, Reported Party IV, Reported Party VI, Reported Party VII, Reported Party VIII, Reported Party IX, Reported Party X, Reported Party XI, Reported Party XII, Reported Party XIII, Reported Party XIV, Reported Party XV, Reported Party XVI, Reported Party XVII, Reported Party XIX, Reported Party XXI, Reported Party XXII, Reported Party XXV, Reported Party XXVI, and Reported Party XXVII are not proved in violation of Article 19 sub-article c of Law Number 5 of 1999;
- Reported Party I, Reported Party II, Reported Party V, Reported Party XVIII, Reported Party XX, Reported Party XXIII, and Reported Party XXIV are legally and convincingly proved in violation of Article 19 sub-article c of Law Number 5 of 1999;
- Sentencing Reported Party I PT Asianagro Agungjaya to pay for a fine of IDR1,000,000,000.00 (one billion rupiah);
- Sentencing Reported Party II PT Batara Elok Semesta Terpadu to pay for a fine of IDR15,246,000,000.00 (fifteen billion two hundred and forty-six million rupiah rupiah);
- Sentencing Reported Party V PT Incasi Raya to pay for a fine of IDR1,000,000,000.00 (one billion rupiah);
- Sentencing Reported Party XVIII PT Salim Ivomas Pratama, Tbk to pay for a fine of IDR40,887,000,000.00 (forty billion eight hundred and eighty-seven million rupiah);
- Sentencing Reported Party XX PT Budi Nabati Perkasa to pay for a fine of IDR1,764,000,000.00 (one billion seven hundred and sixty-four million rupiah);
- Sentencing Reported Party XXIII PT Multimas Nabati Asahan to pay for a fine of IDR8,018,000,000.00 (eight billion and eighteen million rupiah);
- Sentencing Reported Party XXIV PT Sinar Alam Permai to pay for a fine of IDR3,365,000,000.00 (three billion three hundred and sixty-five million rupiah);
- Instructing Reported Party I, Reported Party II, Reported Party V, Reported Party XVIII, Reported Party XX, Reported Party XXIII, and Reported Party XXIV to pay for the fines not later than 30 (thirty) days since the Decision has had a permanent legal force (inkracht), as well as reporting and handing over a copy of the receipt of the payment of the fines to ICC. The Reported Parties are also instructed to pay for the delayed penalty of 2% (two percent) per month of the value of the fines, if delayed in making the payment for the fines. When lodging an objection, then the seven Reported Parties must hand over bank guarantee of 20% (twenty percent) of the value of the fines to ICC not later than 14 (fourteen) days following the acceptance of the notice of Decision.
One of the Members of the Commission Panel, namely Ukay Karyadi, S.E., M.E., gave a dissenting opinion which basically stated that all the Reported Parties were worthy of declaration in violation of article 5 of Law Number 5 of 1999 in the Decision-making process.