Indonesia’s Indosat Ooredoo & XL Axiata Suspected of Cartel Practices
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Indonesia’s Business Competition Supervisory Commission (KPPU) has ordered telecommunication operators Indosat Ooredoo and XL Axiata to provide more details concerning the establishment of their joint venture One Indonesia Synergy. The KPPU suspects that both companies are involved in cartel practices, more specifically the companies are suspected to have breached Law No. 5/1999 on the Ban on Monopolistic Practices and Unfair Business Competition in terms of price fixing, market allocation and output restriction.
Muhammad Syarkawi Rauf, Chairman of the KPPU, informed that there are indications that both telecommunication operators – both listed on the Indonesia Stock Exchange (IDX) – are (1) coordinating to determine prices, (2) coordinating to divide geographical areas for their products, and (3) coordinating to restrict the output of their products. These allegations are the result of the establishment of their joint venture One Indonesia Synergy.
Turina Farouk, Vice President Corporate Communication of XL Axiata, said the company cannot respond yet to the KPPU’s summon as XL Axiata is yet to receive the full details of the case. However, regarding One Indonesia Synergy Farouk said this joint venture is not a vehicle used to engage in cartel practices but is part of cost efficiency efforts for the development of their 4G LTE network. Farouk added that One Indonesia Synergy is not operational yet as it awaits several permits from authorities.
Cooperation is a strategy of Indosat Ooredoo and XL Axiata to make their operations more efficient in the future. Indonesia’s telecommunication sector is dominated by state-controlled Telekomunikasi Indonesia.
Indosat Ooredoo and XL Axiata each own a 50 percent stake in joint venture One Indonesia Synergy. Alexander Rusli, President Director and CEO of Indosat, said One Indonesia Synergy will offer consultation services for both companies’ cooperation in telecommunication networks, for example the so-called multi operator radio access network.
Questions & Answers
Q.What specific cartel practices are Indosat Ooredoo and XL Axiata suspected of?
What specific cartel practices are Indosat Ooredoo and XL Axiata suspected of?
The companies are suspected of breaching Law No. 5/1999 by coordinating to determine prices, divide geographical areas for products, and restrict product output. These allegations stem from the establishment of their joint venture, One Indonesia Synergy.
Q.What is the purpose of the joint venture One Indonesia Synergy, according to XL Axiata?
What is the purpose of the joint venture One Indonesia Synergy, according to XL Axiata?
XL Axiata states that One Indonesia Synergy is part of cost efficiency efforts for developing their 4G LTE network. It is intended to offer consultation services for cooperation in telecommunication networks, such as multi operator radio access networks.
Q.What is the current operational status of One Indonesia Synergy?
What is the current operational status of One Indonesia Synergy?
One Indonesia Synergy is not yet operational. It is awaiting several permits from authorities before it can commence its activities. Both Indosat Ooredoo and XL Axiata each own a 50 percent stake in the joint venture.
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