T

he anti-monopoly commission has found PT Carrefour Indonesia guilty of unfair business practices after the acquisition of the Alfa retail business, and ordered Tuesday that it sell its subsidiary within a year.

The Business Competition Supervisory Commission (KPPU) also fined the France-based retailer Rp 25 billion (US$2.61 million).

Carrefour is allowed to file an appeal to the Central Jakarta District Court said KPPU commissioner Dedie S. Martadisastra who headed the investigation.

"They have 14 working days since the verdict *to do so*," Dedie said.

Carrefour Indonesia has denied any wrongdoings and considers filing an appeal. Early last year, Carrefour bought 75 percent of PT Alfa Retailindo shares for Rp 675 billion.

The commission believes that Carrefour's acquisition led to monopolistic practices, at upstream (supplier) and downstream (consumer) levels of hypermarket and supermarket activity, prohibited by the Law No. 5/1999 on Monopolies and Unlawful Business Practices.

Dedie said that KPPU investigators had found convincing evidence that Carrefour controlled up to 57.99 percent of the retail suppliers market share (upstream) which violated article 17.

Before the acquisition, Carrefour only controlled 45 percent of the retail suppliers' market.

"The dominating market share has given Carrefour strong bargaining power which has been misused to pressure suppliers to agree with their offers of trading terms," another commissioner Anna Maria Tri Anggraini, said.

KPPU found that Carrefour frequently threatened to cancel its procurement deals if suppliers were unwilling to sign Carrefour's trading terms which were often unprofitable for the sellers.

"Suppliers had no bargaining position as Carrefour dominated their biggest market," Anna said.

According to the commission, Carrefour's retail downstream market share has also exceeded the limitation stipulated by article 25.

The company's downstream retail market stood at 55.9 percent, up from 38 percent before the acquisition.

KPPU's investigators dropped the allegation on predatory pricing practices (article 20) after they failed to find evidence substantiating accusations that the company engaged in a trading scheme that involved lowering prices of goods to hit competitors. Accusations on violations of article 28 were actually proven, the commission said, but had to be dropped due to there not being available any valid implementing regulation explaining how the article was supposed to be carried out.

Irawan Kadarman, Carrefour Indonesia's corporate communications director, said that KPPU's ruling was not fair, insisting that the company had never monopolized the retail market.