State-Owned Bank Accused of Violating Antitrust law

 
Happy Rayna Stephany, Jazmi Adlan Bohari
 
While it is not a surprise that unfair business practices and competition will be undertaken by market players in all sectors due to continued business pressures and a desire to gain more profits more easily achieved if there is less competition, such practices are nonetheless prohibited under Indonesia’s anti-competition laws and also undermine the healthy operation of market mechanisms.
 
Such practices have now come light under the exclusive deals concluded between the state-owned bank PT Bank Rakyat Indonesia Tbk (BRI) and two insurance companies, PT Asuransi Jiwa Bringin Jiwa Sejahtera (Bringin Life) dan PT Heksa Eka Life Insurance (Heksa Eka).
 
Investigators from the Commission for the Supervision of Business Competition (KPPU), revealed that debtors that wish to receive mortgage loans (kredit pemilikan rumah) from BRI, must use the insurance services of Heksa Eka and Bringin Life. Such practices are discriminatory and harmful because debtors have no option other than to choose one of the two designated insurance service providers.
 
If the findings of the investigations conclude that BRI and the two other insurance companies have violated Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition(Antitrust Law), the state-owned bank and its business partners may be subject to fines of up to IDR 100 billion imposed by KPPU.
 
KPPU investigators are asserting that BRI and its business partners have violated Article 15 (2) of the Antitrust Law by executing exclusive deals that led to unfair business competition.
 
Further, the investigators also claim that BRI and its business partners have violated Article 19 of the Antitrust Law, as BRI imposed conditions that could only be fulfilled by Heksa Eka and Bringin Life and not by other insurance service providers.
 
“Some of the conditions are premium exchange rates, free cover limits, and claim payment mechanisms,” explained Lantiko Hikma Suryatama, one of the KPPU investigators, during a preliminary hearing at the KPPU last Wednesday.
 
The investigators added that BRI and its business partners also violated Bank Indonesia Circular Letter No. 12/35/DPNP, which states that an entity offering bancassurance has to provide three insurance service providers to consumers.
 
“But we will review whether competition in the market is sufficient or not,” Mr. Suryatama emphasized.
 
Doddy Doealtief, Director of Heksa Eka, refuted the investigator’s accusation of a violation of Bank Indonesia Circular Letter. Mr. Doelatif said that if his company has violated this rule, it should be Bank Indonesia that gives a written warning and undertakes any other necessary measures, not the KPPU.
 
Meanwhile, Sugeng Sudibjo, Director of Bringin Life, refrained from giving any detailed comments on the matter. He said that his company will study the issue with Heksa Eka and BRI. However, Mr. Sudibjo did not deny the existence of cooperation between BRI, Heksa Eka, and Bringin Life.
 
BRI itself did not send its representatives to the hearing. Consequently, the KPPU will summon it to the next hearing on 14 April.
 
(hot/kc)