Indonesian regulator says Singapore’s Temasek not complying with competition law

October 23, 2007
Singapore Democrats

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Forbes
23 Oct 07
http://www.forbes.com/markets/feeds/afx/2007/10/22/afx4244251.html

The Indonesian competition authorities have ruled that Singapore government-linked investment company Temasek Holdings is not in compliance with the law relating to its ownership of two Indonesian cellphone carriers, the chairman of the body said Monday.

Temasek has until the end of the month to respond to the findings of the Commission for the Supervision of Business Competition, or KPPU, said commission chairman Mohamad Iqbal.

The commission handed its findings to Temasek two weeks ago so it will have enough time to study them, he said.

Temasek owns 56 percent of Singapore Telecommunications Ltd, known as SingTel, which in turn owns 35 percent of Indonesia’s largest cellphone carrier, PT Telkomsel.

Temasek also owns all of Singapore Technologies Telemedia (STT), which owns 41.9 pct of Indonesia’s second-largest telecommunications company, PT Indosat.

Indonesian competition rules ban a single entity from owning a controlling stake in several companies in the same business if it gives the entity a greater than 50 percent share of the market for a given product.

Companies are also restricted from using a dominant position to prevent consumers from buying a product at competitive prices.

The commission is looking not only at the ownership structure but also at Temasek’s conduct to determine whether or not it is following the law in setting prices for the services provided by Telkomsel and Indosat, Iqbal said.

A panel of investigators is planning to decide on sanctions against Temasek in mid-November, he said.

‘If, after that, they [Temasek] do not accept the decision, they can take the case to a district court,’ said Iqbal.

If a district court were to rule against it, Temasek could appeal to the Supreme Court, he said.

Temasek lawyer Todung Mulya Lubis said the company has refuted the allegations and that this position has not changed.

Lubis said he is still studying the KPPU’s findings. He declined to elaborate.

Lubis previously said that Temasek neither directs the investment and operational decisions of SingTel and STT nor does it get involved in the operations of SingTel and STT companies such as Telkomsel and Indosat.