RDSP Legal Insights – July 2020
On 2 July 2020, Indonesian Competition Commission (“ICC”) (Komisi Pengawas Persaingan
Usaha – KPPU) has issued a decision under Case 13/KPPU-I/2019 (“KPPU Decision”) and
have imposed administrative fines in the amount of IDR 49 billion against two companies, which
is a record-breaking fine during 20 years of competition law in Indonesia.
Summary of The Case
In their judgment, ICC has stated that the two companies, namely PT Solusi Transportasi
Indonesia (“STI”) – (which later have changed its name to PT Grab Indonesia and is widely
known as the ride-hailing transportation company; and PT Teknologi Pengangkutan Indonesia
(“TPI”), a company that provides rental transportation, have founded guilty in performing
anti-competitive vertical integration and engaged in discriminatory agreement.
This case started in 2018-2019 when ICC initiated investigations in the online transportation
sector. In their findings, ICC declared that the ordering process of transportation via online Grab
-an application owned by STI proved to be discriminatory towards drivers not engaged in
partnership with TPI, thus has violated Article 14 and Article 19 (d) of Law Number 5 Year
1999 on Prohibitions of Monopolistic Practices and Unfair Competition (“Law 5/1999”).
Moreover, their conduct was supported by the facts that there are three people that held the
positions as directors in STI and TPI, therefore both companies should be considered as
affiliated companies and deemed a single economic entity that leads to facilitating practices –
but it is important to note that during the hearing process the directors have resigned from their
respective positions.
The Infringements
Article 14 of Law 5/1999 regulates market control, which stipulated that company are
prohibited from making agreements with other companies with the aim of controlling the production
of certain products which included in a production chain of certain product and services, in
which each production series is the result of end processing or further processing, which may
result in unfair competition and or harm the public.
Article 19 (d) of Law 5/1999 prohibits companies in performing single or several activities,
either independently or jointly with other companies, which may result in monopolistic practices
and or unfair competition, in the form of discriminatory conduct against certain companies.
Meanwhile, ICC has cleared STI and TPI from third accusations namely Article 15 section (2) of
Law 5/1999 on tying agreements and exclusive agreements.
Legal Precedent
Prior to this case, the ICC has never issued an administrative fine exceeding IDR 25 billion,
pursuant to Article 47 Law 5/1999. In this case, the ICC sets out a new approach under
consideration that the two companies have violated two infringements, consequently each
conduct subject to a different amount of fine.
In details, STI has been fined IDR 30 billion, whereas for infringements of Article 14 in the
amount of IDR 7.5 billion; and for Article 19 (d) IDR 22.5 billion.
While the total amount of fine imposed against TPI is IDR 19 billion, in which IDR 4 billion for
infringements of Article 14; and IDR 15 billion for infringement of Article 19 (d).
Under ICC Regulation No. 4 Year 2009, the level of violation is one of the key factors that is
considered in determining the administrative sanctions. Further, each type of violation will be
assessed on a case-by-case basis by considering the overall situation in the relevant case as
well.
It is worth noting that this case is not a cartel case, (in which a cartel is the most offensive
violation in competition law, therefore subject to huge fines), nevertheless ICC has imposed a record-breaking fine in this case.
Implications
Under this KPPU Decision, there is a strong possibility that ICC could adopt a similar approach
in determining administrative fines in future cases, including in non-cartel cases. Further,
companies are urged to be more compliant and careful in conducting their business.
Nevertheless, it is important to note that should STI and TPI file an appeal against the KPPU
Decision, the ICC’s new approach should be examined furthermore by the Court.
(Update: the ICC Decision has been annulled by the South Jakarta District Court. Currently, the case is being examined in the Supreme Court. You can visit the link in our LinkedIn page to take a look on our update on the issue, provided in Bahasa Indonesia https://www.linkedin.com/feed/update/Grab_Court_Case )
Copyrights of Robert Daniels & Partners