Carrefour & Monopoly

On 3 November, the Commission for Supervision of Business Competition (KKPU) has ruled that PT Carefour Indonesia violated the Anti Monopoly Law year 1999 when it acquired 79% share in local retail company PT. Alfa Retailindo in 2007.

KPPU claimed that the acquisition gave Carrefour a 58% share in the national retail market, therefore against said law. Carrefour was fined Rp 25 billion ($2.6 million) and ordered it to sell its shares in Alfa.

Carrefour rejected said ruling, arguing that its methodology was flawed. Carrefour's official cited an AC Nielsen survey that says the Alfa acquisition only raised Carrefour’s share of the retail market to 17%. He added that KPPU’s ruling was not right and could have an impact on the investment climate and legal certainty, which has been quite conducive in recent years. Due to which it has appealed the ruling to the South Jakarta District Court.

Meanwhile, CEO of the Carrefour Group in France Lars Olofsson has met with President Soesilo Bambang Yudoyono (SBY) on 14 December when SBY stopped in Paris on his way to the UN Climate Change Conference in Copenhagen. According to a director of PT Carrefour Indonesia, Olofsson has asked SBY about KPPU's ruling.

Chairman of KPPU Benny Pasaribu said that the meeting was improper because Carrefour is having a dispute with KPPU.
But SBY's spokesman Julian Pasha explained that SBY met Olofsson during a gathering with businessmen of the French Chamber of Commerce in which Carrefour is a member.

The above KPPU's ruling was questioned by a lawyer specializing in merger and acquisition who said that Carrefour's acquisition of Alfa was right because it has been approved by the Capital Market and Financial Institutions Supervisory Agency (Bapepam-LK) and the Indonesian Investment Coordinating Board (BKPM).

For details on the above, please click here, here, here, here, here, here and here.

Considering that the settlement of this case will consider the fact that Carrefour's acquisition of Alfa has previously been approved by two government agencies.
I also hope that the impact of said acquisition on the market would be re-examined once again so that the truth shall be known. That way, legal certainty can be preserved, and new investors would not hesitate to invest their money in Indonesia.


Image : Courtesy of Wikipedia.

Carrefour's Monopoly

French retail giant Carrefour opened its first supermarket in Jakarta on October 1998, since then it has expanded business very rapidly especially after PT. Carrefour Indonesia acquired 75% equity of PT. Alfa Retailindo, the owner of local Alfa Supermarket chain, on January 2008.

According to The Jakarta Post, local retailers have filed a report with the Business Competition Supervisory Commission (KPPU) saying that Carrefour has conducted monopoly. And the result of KPPU’s preliminary investigation shows that after the acquisition of Alfa, Carrefour’s downstream market share has soared to 48.4% from 38%, while its share on the upstream market has soared to 67%, up from 45%. The latter figure, indicates that Carrefour has violated the Anti-Monopoly Law No. 5 Year 1999, which stipulates that a market share of 50 percent or more may be considered as practice of monopoly.

Due to this fact, on Monday, 13 April, KPPU held a hearing with Carrefour, during which Carrefour denied KPPU’s allegation by saying that based on the result of recent research by AC Niesen, their present market share is only 7%.
KPPU has given Carrefour a chance to change its business practices until 13 May 2009, if they obey, KPPU will stop their investigation.

Considering the above, I hope that KPPU and Carrefour would reach a win-win solution for this problem which would be in accordance with the laws in our country, that way local retailers would not suffer much more.