Tirta Investama, a local unit of French consumer giant Danone and the producer of Indonesia's oldest bottled water product, Aqua, announced on Tuesday (28/02) that it has received a B Corp certification from non-profit organization B Lab for meeting the highest social, transparency, accountability and environmental standards. (Antara Photo/Emral Firdiansyah)

KPPU's Aqua Antitrust Ruling Stokes Concerns Over Investment Climate

BY :IMAN RAHMAN CAHYADI & DION BISARA

DECEMBER 20, 2017

Jakarta. An antitrust ruling against Tirta Investama, the local unit of French consumer goods giant Danone, may have set a dangerous precedent that could undermine investment climate in Indonesia, experts warn.

The Business Competition Supervisory Commission (KPPU) ruled on Tuesday (19/12) that Tirta Investama, the producer of Indonesia's oldest bottled water brand Aqua, was guilty of preventing shops from selling a competitor's products and fined Tirta Rp 13.8 billion ($969,000).

The KPPU reached its verdict despite the fact it is distributor Balina Agung Perkasa that buys Aqua bottled water from Tirta Investama and resells them to shops.

KPPU also fined Balina Agung Rp 6.3 billion.

"This [ruling] sets a dangerous precedent in Indonesia because according to KPPU's interpretation, a principal [company] now has to be responsible for their distributor's actions," said Rikrik Rizkiyana, a prominent antitrust lawyer who represents Tirta Investama.

"Foreign investors might be forced to reconsider whether or not they can handle this kind of risk," Rikrik said.

The case began late last year when Tirta Fresindo Jaya, producer of Le Minerale bottled water and a unit of Indonesian listed food company Mayora Indah, published public notices in local newspapers accusing certain parties — reportedly acting of behalf of Tirta Investama — of stopping some shops from selling Le Minerale.

A KPPU investigation found the incident had indeed happened in two shops in Bogor, West Java. During hearings in the case, however, it was shown that later investigation proved the incidents were isolated to the shops.

In one of the incidents, a low-level officer from Tirta Investama — acting on his own — was proven to have acted against the company's ethical standards.

A study from research company Nielsen Indonesia meanwhile revealed that Le Minerale managed to double its market share between 2015 and 2016, contradicting Tirta Fresindo Jaya's claim that its growth has been stymied by underhand tactics.

Agus Pambagio, a public policy analyst at University of Indonesia, said the KPPU had dismissed the defendant's arguments out of hand "as if it had been decided from the very beginning that Tirta Investama will be found guilty in this case."

"The ruling today will show to the public if the KPPU is still an independent body. Hopefully, no one is using the KPPU to beat competitors unfairly," Agus said.

Tirta Investama's lawyer Rikrik said the company will wait to receive the verdict documents from the KPPU before deciding on their next move. The company has 14 working days since receiving the documents to file an appeal to a district court.

Early this month, Astra Honda Motor and Yamaha Indonesia Motor Manufacturing, local units of the Japanese motorcycle manufacturers, lost their appeals at the North Jakarta District Court to overturn a KPPU ruling that found the companies guilty of cartelism.

Honda had to to pay a fine of Rp 22.5 billion and Yamaha Rp 25 billion.

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