Court lessens punishment for Temasek

The Jakarta Post ,  Jakarta   |  Sat, 05/10/2008 10:34 AM  |  Headlines

The Central Jakarta District Court on Friday upheld KPPU rulings against Temasek Holdings and subsidiaries for an antitrust violation, but revised the penalties.

"Since the KPPU (Business Competition Supervisory Commission) is the only commission in this country able to sentence businesses for uncompetitive acts, it should have been able to prevent such monopolistic practices from occurring in the first place," judge Andriani Nurdin told the appellate court.

"It is in this court's opinion, then, that its sentence for Temasek and its subsidiary companies is too harsh," he said.

The judges gave Temasek Holdings a choice to relinquish at least 50 percent of its shares in both PT Telkomsel and PT Indosat Tbk or let go all shares in either company within one year as ordered by the KPPU.

Judges added that the divested shares could be sold for up to 10 percent to each buyer, higher than the maximum of 5 percent mandated by the KPPU.

Judges fined Temasek and eight subsidiaries, plus the largest market shareholder Telkomsel, Rp 15 billion (US$1.6 million), which was less than the Rp 25 billion fine set by the KPPU.

On Nov. 19, 2007, the KPPU announced that Temasek, Singapore Technologies Telemedia Pte. Ltd. (STT), STT Communications Ltd., Asia Mobile Holdings Company Pte. Ltd., Asia Mobile Holdings Pte. Ltd., Indonesia Communication Limited., Indonesia Communications Pte. Ltd., Singapore Telecommunications Ltd. and Singapore Telecom Mobile Pte. Ltd. all breached anti-monopoly laws, particularly on cross-ownership.

Temasek owns a 54.14 percent stake in SingTel group, which holds a 35 percent stake in Telkomsel. Temasek also has complete ownership of STT, which owns a 75 percent stake in Asia Mobile Holdings, which owns 41.9 percent of Indosat.

On Dec. 12, Temasek and Co. filed an appeal to the district court, claiming the decision had endangered the business climate by creating legal uncertainties.

After the verdict, KPPU legal representative Muhammad Mukhlis said the decision showed how safe it was to invest in Indonesian companies.

"This decision shows there are definite legal certainties. Indonesia does not condone monopolistic practices. It is safe to invest here," Muhammad said.

Temasek lawyer Todung Mulya Lubis said: "It's the other way around.

"Now who will want to become a strategic investor when they suddenly have to give up all their shares? This decision sends a bad signal to businesses, especially foreign ones, because there is still no guarantee of legal certainty," Todung said.

Todung said Temasek would appeal to the Supreme Court next week, after which the court would have 30 days to respond. (anw)

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