SMART said that the Business Competition Supervisory Commission's (KPPU) decision last week that the company and several other cooking oil producers breached the competition law, particularly articles regarding oligopoly and price fixing practices, were baseless because it was determined only on assumptions and economic theories.

"The assumptions and economic theories were not sufficient to be used as evidence to prove the breaching of the articles," the company said in a statement.

On Tuesday last week, the antimonopoly commission imposed a total fine of Rp 290 billion (US$31.60 million) on 20 cooking oil producers (see table) for their involvement in oligopoly and price fixing.

The fine ranges between Rp 2 billion and Rp 25 billion for each company.

According to the commission, 68 percent of the country's cooking oil producers were heavily integrated with crude palm oil (CPO) companies, which are engaged in oil palm plantations and CPO production as well as cooking oil.

KPPU commissioner Didik Achmadi said that the 20 companies had conspired to maintain the prices of cooking oil in the domestic arena at a high level despite the fall in CPO prices.

"In 2008, the prices of CPO, the raw material for cooking oil production, fell significantly," he said. "The price of cooking oil, however, remained high."

The price fixing, which was conducted between April to December, 2008, caused extra costs totaling Rp 1.64 trillion for customers.

SMART stated the integration of the production chains from planting to processing palm-based cooking oil did not breach the oligopoly practice charged by the KPPU.

"New players can still enter the industry as indicated by the presence of more than 100 producers with various brands and product composition in the country," it said.

Beside the SMART company, SIMP, one of the 20 companies imposed with a fine, also objected to the agency's verdict.

Stating almost the same arguments as SMART, SIMP added that the prices of the CPO were determined by international market prices.

SIMP claimed that the company never made verbal or written deals with other companies in the industry to fix the price of cooking oil in the country.

According to the antimonopoly commission, the 20 cooking oil companies were proven to have signed two agreements under which they agreed to set the production level and prices for the cooking oil sold in the domestic market.

The commission said the two agreements were signed in February 2008 and in the same month of last year respectively.

Both SMART and Salim Ivomas plan to appeal.

Fines imposed by the antimonopoly agency

Company---------------------------Fine (in rupiahs)

Sinar Alam Permai------------------20 billion
Wilmar Nabati Indonesia------------1 billion
Multi Nabati Sulawesi--------------25 billion
Agrindo Indah Persada--------------25 billion
Multimas Nabati Asahan-------------25 billion
Musim Mas--------------------------15 billion
Intibenua Perkasatama--------------2 billion
Megasurya Mas----------------------15 billion
Agro Makmur Raya-------------------5 billion
Nikie Oleo Nabati Industri---------20 billion
Permata Sawit Hijau----------------5 billion
Nubika Jaya------------------------2 billion
SMART------------------------------25 billion
Salim Ivomas Pratama---------------25 billion
Bina Karya Prima-------------------25 billion
Tunas Baru Lampung-----------------10 billion
Berlian Eka Sakti Tangguh----------10 billion
Pasific Palmoil Industri-----------10 billion
Asian Agro Agung Jaya--------------10 billion
Indo Karya Internusa---------------15 billion

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