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Jakarta Post

KPPU investigates alleged cartelization in tire industry

  • Arya Dipa

    The Jakarta Post

Bandung   /   Tue, October 14, 2014   /  11:00 am

Business Competition Supervisory Commission (KPPU) head M.Nawir Messi said the commission was investigating nine car tire manufacturers allegedly involved in cartel practices.

'€œMost of the manufacturers are foreign companies that have factories in Indonesia,'€ he said on Monday.

Messi said the manufacturers set prices of 13-, 14- and 15-inch tires higher in Indonesia than in markets outside the country. '€œTheir selling prices in Singapore and other markets are between 20 and 25 percent lower than in Indonesia even though they are made here,'€ said Messi.

The KPPU says that preliminary hearings have begun in similar cases implicating six car tire manufacturers that are members of the Indonesian Tire Producers Association (APBI). They are accused of fixing prices of four-wheel passenger vehicle products.

The producers are PT Bridgestone Tire Indonesia, PT Sumi Rubber Indonesia, PT Gajah Tunggal, PT Goodyear Indonesia, PT Elang Perdana Tyre Industry and PT Industri Karet Deli.

'€œThey are suspected of carrying out cartel practices for 13-, 14-, 15-, and 16-inch ring tires during the period of 2009-2012.'€

In a hearing led by commissioner Kamser Lumbanradja, investigators presented a number of violations, including that the producers fixed the prices in an APBI meeting. It was reported that during the meeting, all APBI members were requested to present production, export, raw material use and selling reports. They were also requested to control their tire production, which according to the association, was a crucial move to ensure that markets remained favorable.

The APBI requested its members to practice self-restraint and not slash prices of their products, saying that if the market was flooded with cheap products, prices would fall, making it difficult for the APBI members to accelerate prices in the future.

KPPU investigators suspect that the producers violated Article 5 (1) on price formation and Article 11 on cartel of Law No.5/2009 on the prohibition against monopolistic practices and unfair business competition.

Messi said the KPPU proposed increases in fines to Rp 500 billion (US$40.97 million) from Rp 25 billion. '€œThis is what we are proposing in the amendment to the 2009 law,'€ he said. (ebf)



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