KPPU Defends Carrefour Allegations

Irvan Tisnabudi & Teguh Prasetyo

Indonesia’s antitrust watchdog on Thursday denied Carrefour’s claims that its investigation into the French retail giant was “preposterous,” saying it had evidence suggesting that Carrefour had acted to control the nation’s wholesale distribution and retail markets.

“We used credible data for our report and the information we took from two Web sites was only a small part of the information we gathered,” said Ahmad Junaidi, communications director for the Business Competition Supervisory Commission (KPPU), referring to the retailer’s criticism of the KPPU’s sources.

On Wednesday, PT Carrefour Indonesia came out swinging against the KPPU, which this month said it could prosecute the chain for monopolistic behavior.

According to the KPPU report, Carrefour acted to dominate its supplier market by charging high “entry fees” to prospective suppliers, and could now effectively control 48 percent of the wholesale supplier market. It also found the retailer dominated the supermarket sector, with a more than 67 percent share of the retail market nationwide, and that it had forced out competition.

The KPPU plans to take the retailer to its competition tribunal for two alleged breaches of the competition law. Data collection, Ahmad said, included months of monitoring Carrefour’s relationships with suppliers.

Irawan D Kadarman, corporate affairs director of PT Carrefour Indonesia, on Wednesday said the KPPU’s claims were based on unreliable evidence and that it had sourced data from Wikipedia and Google Maps, which can contain inaccurate information.

Carrefour questioned the KPPU’s claim that it was acting to dominate the wholesale market, noting that it had good relationships with most of its suppliers. The retailer then quoted an AC Nielsen Media Research report in February which found that it controlled 17 percent of the market after acquiring PT Alfa Retailindo last year.

“That number leads the market, but it’s still far below what the KPPU says,” Kadarman said. “The KPPU measured both upstream and downstream market shares and both numbers were preposterous.”

Ahmad responded on Thursday by claiming that the numbers in the Nielsen report were incorrect. “It’s because their figures include traditional markets and smaller shops, which should not be included,” he said. Carrefour’s market share would rise to 68 percent if the survey was narrowed to include only large supermarket retailers, he said.

Other large supermarket retailers in the country include Lippo’s PT Matahari Putra Prima, with its Hypermart stores, and the Giant chain, owned by the PT Hero Supermarket retail group. The Jakarta Globe is affiliated with Lippo.

Ahmad said Carrefour had the right to appeal to a court if the KPPU tribunal found it guilty of monopolistic practices.

“Until then, Carrefour will be given time to clarify the charges at the KPPU office. We’ve submitted all of the evidence to our tribunal, both from the KPPU and from Carrefour, which does not have the same members as the investigating team,” he said.

The KPPU’s competition tribunal will announce its verdict on Nov. 6. If found guilty of the two violations, Carrefour could face fines of up to Rp 25 billion ($2.8 million).