We would like to ensure that you are still receiving content that you find useful – please confirm that you would like to continue to receive ILO newsletters.
20 April 2006
The Business Competition Supervisory Commission has found Indonesia's leading cement producer PT Semen Gresik Tbk guilty of unfair business practices which breach the Anti-monopoly and Unfair Business Competition Law. The case differed from most such investigations in that no complaint was filed against Semen Gresik by its business rivals; the commission conducted the investigation on its own initiative.
The commission found that Semen Gresik had violated price-fixing regulations and applied a vertical marketing system in one of its eight marketing areas in East Java, designated by the company as Area 4. For the purpose of distributing its cement products, Semen Gresik had established a network of distributors and, by applying a strict vertical marketing system, had restricted its distributors' trade by allowing them to supply only certain merchants and regular customers. By the terms of its supposedly free sale and purchase agreement with the distributors, Semen Gresik had also required the distributors to sell its products at a fixed price and prevented them from selling other producers' cement products.
As Semen Gresik operates in seven other areas of East Java, many suspect that a similar marketing system applies in the rest of the territory. The commission did not mention this in its findings or elaborate on how or why the practices in the other marketing areas were regarded differently from those applied in Area 4.
The commission's ruling stated that Semen Gresik's vertical marketing system resulted in unfair business competition among distributors and prevented regular customers from purchasing cement from other distributors. The distributors' fixed sale price and the lack of alternative suppliers also prevented customers from obtaining Semen Gresik's products at a lower price. The situation was compounded by the fact that Semen Gresik holds a 70% share of the cement market in Area 4, which effectively created a dominant position in the market. The commission ordered Semen Gresik to:
In considering the case, the commission applied the following provisions of the Anti-monopoly and Unfair Business Competition Law:
Semen Gresik has denied the commission's findings on its price-fixing and distributor restriction practices. It has indicated that it did not impose restrictions on its distributors, and that it will appeal the commission's decision to the district court. It has 14 days from receipt of the decision in which to file an appeal; the court has 30 days to issue its decision.
For further information on this topic please contact Theodoor Bakker or Zacky Husein at Ali Budiardjo, Nugroho, Reksodiputro by telephone (+62 21 250 5125) or by fax (+62 21 250 5122) or by email (email@example.com or firstname.lastname@example.org).
The materials contained on this website are for general information purposes only and are subject to the disclaimer.
ILO is a premium online legal update service for major companies and law firms worldwide. In-house corporate counsel and other users of legal services, as well as law firm partners, qualify for a free subscription.
Zacky Z Husein