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Court digs into alleged Astra-Yamaha cartel
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Hundreds of travelers struggle to move through traffic on the Nagreg-Pamucatan road, which serves as the main access route for travelers heading to Bandung from Central Java, Garut and Tasikmalaya, on Sunday. (JP/Arya Dipa)
T
he Business Competition Supervisory Commission (KPPU) has dug deeper into cartel practices allegedly carried out by motorcycle manufacturers Astra Honda Motor and Yamaha Indonesia by summoning Gunadi Sindhuwinata, chairman of Indonesian Motorcycle Industry Association (AISI).
Gunadi testified before the court on Tuesday in a case that accuses the manufacturers of conspiring to mark up the prices of automatic scooters of 110 cc and 125 cc.
Article 5 of Law No. 5/1999 on prohibition of monopoly and other unhealthy business practices stipulates that businesspeople are prohibited to cooperate with competitors to control prices in a particular market.”
The KPPU claims that the prices of both firms’ automatic scooters surged exponentially in the first half to reach more than Rp 15 million (US$1,155) per unit. Its calculation shows that the prices should have stood at Rp 12.6 million only, considering that production costs hovered at Rp 7.5 million to 8 million per unit.
The KPPU also claims that three price increases in 2014 — which hiked total prices by 400,000 to 600,000 — are unacceptable.
“Prices shouldn’t increase that often. They should only rise once in a year, provided there’s no extraordinary change in raw material prices or labor costs,” KPPU investigator Helmi Nurjamil told reporters after the hearing in the KPPU building in Jakarta.
According to the commission, customers tend to think drastic price changes are normal because the market is dominated by only a handful of firms. It has cited a document that indicates that the two companies had exchanged emails to coordinate price adjustments as evidence.
At present, Astra Honda controls 67 percent market share, while Yamaha holds 29 percent. If proven guilty, the companies face a maximum penalty of Rp 25 billion.
In his testimony, Gunadi attributed the price increases to rising promotion costs as the two firms were entangled in fierce competition, especially during the current economic slowdown.
“Both race to keep launching new models because in this industry, [where] one will be left behind if it stops giving new options to customers,” he added. “I can already see that today Yamaha has spent a lot for TV ads and other promotional tools to gain more of a market share [from Honda].”
He repeatedly voiced that AISI members, including Honda and Yamaha, had complied with existing business guidelines.
In a previous hearing on July 26, both Yamaha Indonesia’s executive vice president Dionisius “Dion” Bety and Astra Honda Motor’s deputy head of corporate communication Ahmad Muhibbuddin also blamed surging promotional costs as the reason behind the price increases.
Both said the email communications between Astra Honda and Yamaha were merely personal as the two high-ranking officials that allegedly conspired to create a cartel used their personal email addresses and not the firms’.
The case was brought to trial on July 19 and no details were immediately available regarding the next hearing.
