Danone subsidiary denies wrongdoing after US$1m fine by Indonesian watchdog

By Lester Wan

- Last updated on GMT

The Supervisory Commission for Business Competition (KPPU) penalised two companies. ©Danone
The Supervisory Commission for Business Competition (KPPU) penalised two companies. ©Danone

Related tags Retailing

Indonesia’s business watchdog fined Danone subsidiary PT Tirta Investama (TIV) close to US$1m after ruling it sought to stifle competition, but the firm is challenging the charge.

The Supervisory Commission for Business Competition (KPPU) has penalised TIV and Aqua water distributor PT Balina Agung Perkasa (BAP), saying that it punished two sub-distributors or retailers for selling rival product Le Minerale, in 2016.

TIV was fined Rp13.84b (close to US$1m) while BAP was fined Rp6.29b. However, the Danone subsidiary TIV expressed its disappointment, arguing it was the distributor which had acted incorrectly.

The case started from a complaint to the KPPU by a retailer and retail merchants. The retailer claimed to be blocked by TIV to sell Le Minerale, produced by PT Tirta Fresindo Jaya (Mayora Group).

“One of the clauses of the retail agreement says, if the merchant sells Le Minerale product, then the status will be derived from Star Outlet to Wholesaler (retail),” ​stated the KPPU. This would also mean the shops would have to buy Aqua at higher prices.

Danone subsidiary to file appeal

Rikrik Rizkiyana, who represented TIV, stated his concern that this could set a dangerous precedence in the country as “a principal now has to be responsible for their distributor's actions"​.

He said they would study the verdict documents before making an official legal response to the decision.

Nonetheless, the KPPU claimed it found “strong evidence to support the violation”​.

“The E-mail (between TIV and BAP) subject to ‘Star Outlet Degradation Being a Wholesaler’ contained sanctions applied by BAP to Star Outlet retailer. In fact, BAP was said to have executed the sanction to one of the Star Outlets,” ​the KPPU said in a statement.

Aqua has the largest market share of bottled water in Indonesia, at 46.7%. Its competitors include Club (PT Indofood Sukses Makmur) at 4% and Prima (Sosro) at 1.4%, among others.

PT Tirta Investama, through its subsidiaries, manufactures and bottles drinking water in Indonesia and Brunei. It also distributes bottled water such as Aqua.

Indonesia's Business Competition Law was introduced in 1999, concerning the prohibition of monopolistic practices and unfair business competition.

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