Concluding the final stage of case review (peninjauan kembali), the Supreme Court recently (5/5) handed down Decision No. 128 PK/PDT.SUS/2009 to uphold its previous Decision (No. 496K/PDT.SUS/2008), which, upon request for cassation by the appellants, found Singapore’s Temasek Holdings (“Temasek”) guilty of violating Law No. 5 of 1999 on the Prohibition of Monopolistic and Unfair Business Practices (“Anti-Monopoly Law”). The case review decision is final; Temasek and its subsidiaries are left with no legal recourse.
By way controlled subsidiaries ST Telmedia and SingTel, Temasek came to control a 41.9% share in PT. Indosat Tbk. (“Indosat”), and a 35% share in PT. Telekomunikasi Selular (“Telkomsel”) respectively. As Indonesia’s two largest telecommunications companies, Indosat and Telkomsel control between 75 and 80% of the market.
The Commission for the Supervision of Business Competition (‘KPPU’) raised the concern in 2006 that the cross ownership of Temasek’s subsidiaries effectively allowed it to (a) control a majority share of the Indonesian telecommunications market, and (b) engage in monopolistic conduct - specifically by price-setting tariffs for interconnection services. On 19 November 2007, the KPPU issued Decision No. 07/KPPU-L/2007, ordering Temasek subsidiaries to divest shares in either Indosat or Telkomsel, and pay fines for violation of Articles 17 (1), 25 (1) (b), and 27 (a) of the Anti-Monopoly Law.
Meanwhile, Temasek disputed the extent to which it ‘controlled’ the Indonesian telecommunications market, pointing out that it neither controlled day-to-day operations of its subsidiaries, nor a majority share in either Indosat or Telkomsel. The Indonesian state actually controls the other 65% of the shares in Telkomsel. Meanwhile, ST Telmedia’s 41.9% share in Indosat was bought from the Indonesian state in 2002, upon agreement by the government and consent from the capital markets regulator, ‘Bapepam-LK’. In fact, the Indonesian state continues to maintain a 14.3% ‘Series A’ or ‘Golden’ share in Indosat, which grants it special rights and veto privileges.
The dispute was taken to the Central Jakarta District Court. Although the District Court amended the KPPU Decision, removing the charge of violation towards Article 25 (1) (b) of the Anti-Monopoly Law, among other things, it did rule in favor of the KPPU overall with Decision No. 02/KPPU/2007/PN.JKT.PST, ordering Temasek to divest its share in one of the companies, and along with each affiliated subsidiary and Telkomsel, pay fines of IDR 15 billion. Temasek and Telkomsel appealed the District Court’s Decision, requesting cassation of the case to the Supreme Court.
Although the Supreme Court’s initial Decision amended the District Court’s Decision, eliminating the provision that no single party receive more than 10% of the divestiture, among other things, the core of the judgment remained the same: Temasek must divest from either Telkomsel or Indosat to unaffiliated buyers, and its subsidiaries must each pay IDR 15 billion fines for violations towards the Anti-Monopoly Law, in addition to Telkomsel.
The case review - Temasek’s final stage for appeal - made the Supreme Court Decision final and binding. The Supreme Court will soon go on to declare an execution statement, which obligates the respective parties to comply with the Decision.
Concluding the final stage of case review (peninjauan kembali), the Supreme Court recently (5/5) handed down Decision No. 128 PK/PDT.SUS/2009 to uphold its previous Decision (No. 496K/PDT.SUS/2008), which, upon request for cassation by the appellants, found Singapore’s Temasek Holdings (“Temasek”) guilty of violating Law No. 5 of 1999 on the Prohibition of Monopolistic and Unfair Business Practices (“Anti-Monopoly Law”). The case review decision is final; Temasek and its subsidiaries are left with no legal recourse.
By way controlled subsidiaries ST Telmedia and SingTel, Temasek came to control a 41.9% share in PT. Indosat Tbk. (“Indosat”), and a 35% share in PT. Telekomunikasi Selular (“Telkomsel”) respectively. As Indonesia’s two largest telecommunications companies, Indosat and Telkomsel control between 75 and 80% of the market.
The Commission for the Supervision of Business Competition (‘KPPU’) raised the concern in 2006 that the cross ownership of Temasek’s subsidiaries effectively allowed it to (a) control a majority share of the Indonesian telecommunications market, and (b) engage in monopolistic conduct - specifically by price-setting tariffs for interconnection services. On 19 November 2007, the KPPU issued Decision No. 07/KPPU-L/2007, ordering Temasek subsidiaries to divest shares in either Indosat or Telkomsel, and pay fines for violation of Articles 17 (1), 25 (1) (b), and 27 (a) of the Anti-Monopoly Law.
Meanwhile, Temasek disputed the extent to which it ‘controlled’ the Indonesian telecommunications market, pointing out that it neither controlled day-to-day operations of its subsidiaries, nor a majority share in either Indosat or Telkomsel. The Indonesian state actually controls the other 65% of the shares in Telkomsel. Meanwhile, ST Telmedia’s 41.9% share in Indosat was bought from the Indonesian state in 2002, upon agreement by the government and consent from the capital markets regulator, ‘Bapepam-LK’. In fact, the Indonesian state continues to maintain a 14.3% ‘Series A’ or ‘Golden’ share in Indosat, which grants it special rights and veto privileges.
The dispute was taken to the Central Jakarta District Court. Although the District Court amended the KPPU Decision, removing the charge of violation towards Article 25 (1) (b) of the Anti-Monopoly Law, among other things, it did rule in favor of the KPPU overall with Decision No. 02/KPPU/2007/PN.JKT.PST, ordering Temasek to divest its share in one of the companies, and along with each affiliated subsidiary and Telkomsel, pay fines of IDR 15 billion. Temasek and Telkomsel appealed the District Court’s Decision, requesting cassation of the case to the Supreme Court.
Although the Supreme Court’s initial Decision amended the District Court’s Decision, eliminating the provision that no single party receive more than 10% of the divestiture, among other things, the core of the judgment remained the same: Temasek must divest from either Telkomsel or Indosat to unaffiliated buyers, and its subsidiaries must each pay IDR 15 billion fines for violations towards the Anti-Monopoly Law, in addition to Telkomsel.
The case review - Temasek’s final stage for appeal - made the Supreme Court Decision final and binding. The Supreme Court will soon go on to declare an execution statement, which obligates the respective parties to comply with the Decision.
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