There is a trade-off between improving efficiency and fostering competition, for which we need a reliable metric to measure the relative magnitude of each force.
fficials are investigating several of Indonesia's major e-commerce players for potential violations related to anti-competitive behavior. Among them is the case implicating the giant marketplace, Shopee Indonesia, suspected by the Indonesia Competition Commission (KPPU) of engaging in anti-competitive business strategies by offering two delivery options, J&T and Shopee Express (SPX), through sellers' dashboards.
Before discussing the issue any further, it might be necessary to look at the key concerns associated with the problem. As a leading e-commerce platform, Shopee's actions significantly impact market dynamics. Its integration and potential preference for its own or specific delivery services may affect consumers' choices, directing them to use certain delivery services and potentially creating barriers for other delivery service providers to compete fairly.
This practice can reduce competition in the delivery services market, impacting service quality and innovation. Therefore, Shopee's action in favoring certain delivery services could be viewed as using its dominant position to stifle competition, which may lead to a monopolistic market where Shopee can dictate terms without fear of competition.
Antitrust regulations are intended to create fair competition and overcome market failure, especially by preventing monopolies with their undesirable welfare-deteriorating effects from taking place. Such measures are necessary when firms engage in discriminatory actions which can potentially hinder competition and harm customers.
While the bigger question is if the practices of e-commerce marketplaces possess sufficient influence to eliminate other market participants, it is equally imperative to critically examine the services they promote on their platforms.
The displacement of inefficient market participants and the emergence of natural monopolies are often inevitable when a firm demonstrates markedly superior efficiency compared with its competitors. Should the courier services preferred by e-commerce platforms indeed exhibit greater efficiency and effectiveness relative to alternative options, these practices might be better understood as catalysts for the development of a natural monopoly rather than as deliberate efforts to impede competition.
In reality, although Shopee favors certain delivery services on sellers' dashboards, other services remain available for customers to choose from, and the competition remains relatively intense. However, due to its dominant market position, Shopee's subsidiary delivery service, Shopee Express (SPX), can offer prices that are only marginally lower than those of its competitors.
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