T

he National Economic Committee (KEN) filed on Thursday a recommendation to the Business Competition Supervisory Commission (KPPU) to take action on alleged practices of price fixing in the trade of key food commodities.

Hermanto Siregar, a member of the economic committee, said that based on the committee’s assessment, it found unhealthy levels competition in the trade of five staple foods — rice, sugar, soybeans, sugar and beef — caused by an oligopoly in the domestic market.

“We’ve observed that the distribution of the food commodities is oligopolistic, where a limited number of players can control volumes of supply and prices through artificial scarcity,” he told reporters at the antimonopoly agency’s office.

An oligopoly differs from a monopoly, in which only one company exerts control over most of a market. In an oligopoly, there are at least two firms controlling the market. Due to a limited number of players, they are able to fix prices by controlling the supply.

In its report submitted to President Susilo Bambang Yudhoyono last week, KEN indicated that prices of the five commodities were set up by a food cartel, thus creating an inefficient market structure in the country.

Hermanto further said that the existence of unfair trading practices could be attributed to the
government’s policy to curb imports, despite insufficient domestic production. The fact that the licenses were given only to certain companies made market conditions even worse.

“Import licenses should be obtained through a transparent bidding process so that only those that can provide products at lower prices are allowed to import,” he added.

KEN’s move comes at the time when an alleged bribery case involving the government’s procurement of imported meat has come to the public’s attention.

The Corruption Eradication Commission (KPK) named the chairman of the Prosperous Justice Party (PKS), Luthfi Hasan Ishaaq, a suspect in the case on Wednesday, following its move to arrest directors of meat importing company Indoguna Utama. The company’s executives allegedly tried to bribe Luthfi to assist them in securing a slot for the company to import beef under a government procurement project.

The authority over beef imports currently lies with the Agriculture Ministry, which is led by PKS politician Suswono.

In response to the recommendation, KPPU commissioner Syarkawi Rauf said the antimonopoly body would follow up on KEN’s findings through a series of processes, including market monitoring and investigations.

“We aim to seek evidence whether a few players controlling the commodities’ trade are utilizing their dominant positions to manage supply and prices,” he said.

The commission will conduct a public hearing with related associations to gather input that will allow it to interfere in the case.

Last July, the KPPU initiated its own investigation into alleged unfair practices by major importers of soybeans in the country, following the commodity’s price increase.

Amid a recent leadership shuffle, the commission has vowed to step up its fight against monopolistic practices, particularly in sectors that affect public interests, including the food supply chain, to ease inefficiency in Southeast Asia’s largest economy.