Download arranging production and or marketing

A CARTEL BY SALT SUPPLIER
Case No. 10/KPPU-L/2005
ARTICLE 11: CARTEL
Business Actors shall be prohibited from
entering into agreements with their
competitors,
with
the
intention
of
influencing prices by arranging production
and or marketing of certain goods and or
services, which may result in monopolistic
practices and or unfair business competition.
ARTICLE 9: DIVISION OF TERRITORY
Business Actors shall be prohibited from
entering into agreements with their
competitors, which have the purpose of
dividing marketing territory of allocating
the market for goods and or services,
potentially resulting in monopolistic
practices and or unfair business
competition.
ARTICLE 22: CONSPIRACY
Business Actors shall be prohibited from
entering into conspiracies with other
parties in order to determine awardees of
tenders which may result in unfair
business competition.
IN BRIEF:
This case began from a report that the raw material salt supply in North
Sumatera had been controlled by 3 companies known as G3 (PT. Garam,
PT. Budiono, and PT. Garindo) which have 100 % of market share in
North Sumatera in 2005.
In Indonesia, almost 90% supply of raw material salt came from Madura
Island.
Based on the government regulation, raw material salt must be purified
from sands, rocks, and other dirt in site. PT. Garam is the only company
that have purifying facilities where PT. Budiono and PT. Garindo utilized it
also.
G3 entering into an agreement which are :
- arrange the supply quantity of raw material salt to North
Sumatera;
- distribute it with a price fixing to a certain business actors
Product Market : Raw Material Salt,
derived from the sea shore evaporation process
and increase its quality by purifying.
Geographical Market : North Sumatera
North Sumatera’s Demand for Raw Material Salt
on 2005 is 131.500.000 kgs
Supplied by:
PT. Garam
67.366.214 kgs
PT. Budiono
23.940.000 kgs
PT. Garindo
26.690.020 kgs
G3’s Buffer stock
13.503.766 kgs
SALT SUPPLIER
18%
52%
20%
10%
PT. Garam
PT. Budiono
PT. Garindo
G3's buffer stock
The agreement between G3:
1. Set the PT. Garam price’s ± 0.95% higher than other 2, because
PT. Garam has a better quality of product and larger market share
(52%)
PRICING POLICY
500
450
400
350
300
250
200
150
100
50
0
January
Ferbruary
M arch
April
June
PT. Garam
July
PT. Budiono
August
September
PT. Garindo
October
November
December
The agreement between G3:
2. Supply to PT. Graha Reksa, PT. Sumatera Palm, UD. Jangkar Waja
and UD. Sumber Samudera (known as G4) with lower price and
based on G4’s demand.
G4 sell the raw material salt directly to:
•
industries;
•
Salt fish industries;
•
Ice industries.
beside as traders, G4 also a salt iodized processing company.
G4’s competitors are able to buy raw material salt from G3, but
they will be offered with G4’s selling price.
Even G4’s competitors are able to buy directly, they won’t be
always supplied, because G3’s supply to north sumatera are based
on G4’s demand.
COMPETITION IMPACT
•
Sham Competition
G3 (PT. Garam, PT. Budiono, PT. Garindo) has the same business
activities and they should be compete each other in supplying raw
material salt to north sumatera, but in fact, G3 controlled their
supply to north sumatera and set their selling price together.
•
G4’s Competitor
G4’s Competitor won’t be able to compete with G4 because of G3
won’t offer the same price as they giving to G4.
•
Public Interest
Because of the arrangement in supply and price of raw material
salt by G3, causing higher price of product that using salt, means
the consumer should pay more.
RESULT
G3 (PT. Garam, PT. Budiono, and PT. Garindo)
are proven violating article 11 Law No. 5/1999.
They have to pay a fine of Rp. 2.000.000.000
(± 200.000.000 Won)