32 Indonesian Companies Fined, Found Guilty of Forming Beef Cartel

The decision was read by KPPU Commissioner Chandra Setiawan on Friday (22/04). The companies, which includes the local unit of Australia-based agribusiness giant Elders, have been given 14 days to make an appeal. KPPU Commissioner Tresna Soemardi added that the institution found evidence - including statements from witnesses - that these 32 companies have been manipulating beef prices by curtailing the distribution of beef products on the domestic market as well as curbing imports of beef (hence causing inflationary pressures) by not making full use of their allowed import quota. This caused an "unnatural" price rise that benefits the earnings of the companies involved but comes at the expense of the Indonesian consumer.

Muhammad Syarkawi, Chairman of the KPPU, said these illegal actions of Indonesian beef importers are actually the result of weak government policy. The Indonesian government provides import quotas to a selection of companies that therefore are in a position to more-or-less determine the prices (because in terms of beef, Indonesia is still highly dependent on imports). In this situation it is very tempting for these companies to take advantage and curb the amount of imported beef in order to let prices soar. The beef price went as high as IDR 130,000 (approx. USD $9.85) per kilo in mid-2015, reason for the KPPU to start an investigation. Since 2010 - when the Indonesian government announced its "beef self-sufficiency program" - the government has been curtailing the beef import quota, hence undermining earnings of these beef importers in order to boost domestic beef production. This thus provided another incentive for these companies to engage in actions that would secure quick earnings.

Projection of Indonesia's Local Beef Production and Imports:

Year	Local Production	Import
2019	716.1	59.5
2018	656.9	62.6
2017	602.4	65.9
2016	552.2	69.4
2015	509.7	73.0

^{in thousand tons
Source: Investor Daily}

Indonesia's Chamber of Commerce and Industry (Kadin Indonesia) did not agree with the decision of the KPPU as it is considered to undermine legal certainty in the beef sector and results in the loss of jobs. One the companies that is fined, Agro Giri Perkasa, has already stopped operations, resulting in the sending home of about 100 employees.

Besides beef, there are also recurring stories of cartels in other sectors (such as rice and soybean) where alleged unethical actions of companies result in price swings at the expense of the consumer. The KPPU is currently investigating unusual fluctuations in the supply and price of rice.

32 Companies Fined by the KPPU:

Company
Agrisatwa Jaya Kencana	Catur Mitra Taruma	Karya Anugerah Rumpin	Rumpinary Agro Industry
Agro Giri Perkasa	Citra Agro Buana Semesta	Legok Makmur Lestari	Sadajiwa Niaga Indonesia
Andini Agro Loka	Elders Indonesia	Lemang Mesuji Lestary	Santosa Agrindo
Andini Karya Makmur	Fortuna Megah Perkasa	Lembu Jantan Perkasa	Septia Anugerah
Andini Persada Sejahtera	Great Giant Livestock	Mitra Agro Sampurna	Sukses Ganda Lestari
Austasia Stockfeed	Kadila Lestari Jaya	Mitra Agro Sangkuriang	Sumber Cipta Kencana
Bina Mentari Tunggal	Kariyana Gita Utama	Nusantara Tropical Fruit	Tanjung Unggul Mandiri
Brahman Perkasa Sentosa	Karunia Alam Sentosa Abadi	Pasir Tengah	Widodo Makmur Perkasa

^{Source: Investor Daily}

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Lex McGuir | 17 May 2016 13:59

What about the education cartel that charges 500,000,000 to 1,000,000,000 Rp to get into government medical schools to become a doctor (none of the money goes to the government all is corruption) or the money to get into school to become a policeman (the second most expensive school in Indonesia). Why can't KPK get them because all the government schools are involved?