A CARTEL BY SALT SUPPLIERCase No. 10/KPPU-L/2005

ARTICLE 11: CARTEL

Business Actors shall be prohibited Business Actors shall be prohibited from entering into agreements with from entering into agreements with their competitors, with the intention of their competitors, with the intention of influencing prices byinfluencing prices by arranging production and or marketing of certain of certain goods and or services, which may goods and or services, which may result in monopolistic practices and or result in monopolistic practices and or unfair business competition.unfair business competition.

ARTICLE 9: DIVISION OF TERRITORY

Business Actors shall be prohibited Business Actors shall be prohibited from entering into agreements with from entering into agreements with their competitors, which have the their competitors, which have the purpose of dividing marketing purpose of dividing marketing territory of allocating the market for territory of allocating the market for goods and or services, potentially goods and or services, potentially resulting in monopolistic practices resulting in monopolistic practices and or unfair business competition.and or unfair business competition.

ARTICLE 22: CONSPIRACY

Business Actors shall be prohibited Business Actors shall be prohibited from entering into conspiracies with from entering into conspiracies with other parties in order to determine other parties in order to determine awardees of tenders which may awardees of tenders which may result in unfair business competition.result in unfair business competition.

IN BRIEF:This case began from a report that the raw material salt supply in North Sumatera had been controlled by 3 companies known as G3 (PT. Garam, PT. Budiono, and PT. Garindo) which have 100 % of market share in North Sumatera in 2005.

In Indonesia, almost 90% supply of raw material salt came from Madura Island.

Based on the government regulation, raw material salt must be purified from sands, rocks, and other dirt in site. PT. Garam is the only company that have purifying facilities where PT. Budiono and PT. Garindo utilized it also.

G3 entering into an agreement which are :- arrange the supply quantity of raw material salt to North

Sumatera;- distribute it with a price fixing to a certain business

actors

Product Market : Raw Material Salt,

derived from the sea shore evaporation process and increase its quality by purifying.

Geographical Market : North Sumatera

North Sumatera’s Demand for Raw Material Salt on 2005 is 131.500.000 kgs

Supplied by:PT. GaramPT. Garam 67.366.214 kgs67.366.214 kgs

PT. BudionoPT. Budiono 23.940.000 kgs23.940.000 kgs

PT. GarindoPT. Garindo 26.690.020 kgs26.690.020 kgs

G3’s Buffer G3’s Buffer stockstock

13.503.766 kgs13.503.766 kgs

SALT SUPPLIER

52%18%

20%

10%

PT. Garam PT. Budiono PT. Garindo G3's buffer stock

PRICING POLICY

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J anuary Ferbruary March April J une J uly August September October November December

PT. Garam PT. Budiono PT. Garindo

The agreement between G3:

1. Set the PT. Garam price’s ± 0.95% higher than other 2, because PT. Garam has a better quality of product and larger market share (52%)

The agreement between G3:

2. Supply to PT. Graha Reksa, PT. Sumatera Palm, UD. Jangkar Waja and UD. Sumber Samudera (known as G4) with lower price and based on G4’s demand.

G4 sell the raw material salt directly to:

• industries;

• Salt fish industries;

• Ice industries.

beside as traders, G4 also a salt iodized processing company.

G4’s competitors are able to buy raw material salt from G3, but they will be offered with G4’s selling price.

Even G4’s competitors are able to buy directly, they won’t be always supplied, because G3’s supply to north sumatera are based on G4’s demand.

COMPETITION IMPACT• Sham Competition

G3 (PT. Garam, PT. Budiono, PT. Garindo) has the same business activities and they should be compete each other in supplying raw material salt to north sumatera, but in fact, G3 controlled their supply to north sumatera and set their selling price together.

• G4’s Competitor

G4’s Competitor won’t be able to compete with G4 because of G3 won’t offer the same price as they giving to G4.

• Public Interest

Because of the arrangement in supply and price of raw material salt by G3, causing higher price of product that using salt, means the consumer should pay more.

RESULT

G3 (PT. Garam, PT. Budiono, and PT. Garindo) are proven violating article 11 Law No. 5/1999.

They have to pay a fine of Rp. 2.000.000.000 (± 200.000.000 Won)