16th Jan 2008
Andi Haswidi, The Jakarta Post, Jakarta
The Business Supervisory Competition Commission's legal arguments are flawed and have inconsistencies, despite extensive research on the Temasek case, legal experts said.
Competition law professor Ningrum Natasya Sirait highlighted flaws in various aspects of the competition commission's arguments, including due process of law, majority share, single economic entity and relevant market.
She was speaking during the case examination in Jakarta earlier this week.
"Among the violations of the due process of law in this case was the examination period that exceeds the 30 days limitation as demanded by the commission's internal regulation," Ningrum said.
The commission's decision to proceed with the case after the plaintiff withdrew charges was an abuse of authority as there were no rules for guiding such a matter, she said.
"In respect to the due process of law, the commission shall not be absolute in interpreting its authority."
After 14 months of legal process, in November 2007, the commission said Temasek was guilty of cross-ownership in the mobile telecommunication industry -- a situation it said led to an abuse of dominant power, as reflected by the excessive pricing in the industry.
Temasek owns a 54.15 percent stake in SingTel Group, which in turn holds a 35 percent stake in Telkomsel, while Singapore Technologies Telemedia (STT) -- wholly owned by Temasek -- owns 75 percent of Asia Mobile Holdings, which in turn owns 41.9 percent of Indosat.
The Singapore-owned company and subsidiaries would now be forced to choose to let go of all indirect and direct shares in either Telkomsel or PT Indosat, and to pay Rp 25 billion in fines.
Telkomsel has been told to lower tariffs by a minimum of 15 percent.
All firms must now wait for the results from the appeal process, which starts on Wednesday and expected to conclude this month.
Ningrum said the commission used the minimalist perspective in interpreting what constituted a majority share ownership. She said the commission had achieved this by arguing it could mean less than 50 percent of shares, instead of the average interpretation of above 50 percent.
She said the commission used the rule of reason principle in interpreting the dominant market position, as stated in the anti-monopoly law -- ruling more than 50 percent of market share.
"The commission was inconsistent when it did not refer to other laws and regulations that define what majority-share ownership means," she said.
Centre for Strategic and International Studies anti-trust expert Udin Silalahi also criticized the commission's interpretation on single economic entity.
The commission argued that single economic entity exists whenever a company owns managerial representation in another company, can influence policy making, and has access to confidential information.
But Udin said the text book principal of the single economic entity was the absence of freedom in making decisions -- something that did not occur in interactions between Telkomsel and Indosat with Temasek.
Former commission member Pande Radja Silalahi said the commission's research on the case had only focused on three main industry players -- Telkomsel, Indosat and XL.
Pande said its research had disregarded the other eight players -- companies he said had faced few issues entering the marketplace, which was a situation he said would normally occur for competitors entering an unhealthy and top heavy marketplace.
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