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ICC Decides Lion Air Group Has Committed Practice of Discrimination in the Sales of the Capacity of Cargos

2021, Indonesia, Abuse of Dominance

Jakarta, 3 May 2021 - Indonesia Competition Commission (ICC) in the reading of its decision today decided that the three companies affiliated in Lion Air Group had been legally and convincingly proven to have commited  a practice of discrimination with regard to collaboration in the sales of cargo capacity in goods transportation services from several airports, such as Hang Nadim Airport to Soekarno-Hatta Airport, Halim Perdana Kusuma Airport, Juanda Airport, and Kualanamu Airport. The three companies are PT Lion Mentari (Reported Party I), PT Batik Air Indonesia (Reported Party II), and PT Lion Express (Reported Party IV). ICC in such decision imposed a fine of IDR1 billion on each Reported Party, thus, in total, ICC imposed a fine of IDR 3 billion on Lion Air Group. Whilst another Reported Party, namely PT Wings Abadi (Reported Party III) was declared as not committing violation because it did not have a flight schedule for the route which served as the object of this case.

The said initiative case under Register Number 07/KPPU-I/2020 had its origin from the pileup of cargos (goods, post, and cargo) taking place at Hang Nadim Airport in Batam from July-September 2018. Based on the pre-investigation, the evidence of the existence of cooperation agreement entered into by PT Lion Mentari, PT Batik Air Indonesia, and PT Wings Abadi as scheduled commercial air transportation business actors that provide goods transportation services from airports to airports was found. While PT Lion Express is a door to door package and document delivery service company to the entire region of Indonesia using Lion Air Group flights.

ICC found an exclusive right or exclusivity at PT Lion Express in the said cooperation for the use of cargo capacity of 40 (forty) tons per day for the 4 (four) agreed on flight routes. Such action was proven to have closed and/or hampered the access to freight forwarding for cargo agents registered as official agents other than PT Lion Express, thus, being compelled to use other alternative cargo services and/or representatives of other cargo agents. However, such discriminatory behavior did not work effectively because PT Lion Express did not succeed in taking the customers from other cargo agents and conversely switching to other airlines.

Based on the various facts found in the hearings, the Commission Council eventually decided that PT Lion Mentari, PT Batik Air Indonesia, and PT Lion Express were proven legally and convincingly to have violated Article 19 sub-article d of Law No. 5 Year 1999 regarding Prohibition of Monopolistic Practices and Unfair Business Competition. PT Wings Abadi was not proven to have committed a violation because it did not have a flight schedule for the route which served as the object of this case.

Therefore, the Commission Council sentenced PT Lion Mentari, PT Batik Air Indonesia, and PT Lion Express to each pay a fine of IDR1,000,000,000 (one billion rupiah). Furthermore, with due observance of the various considerations, among other things, the cooperative nature, the negative impact, the impact of the COVID-19 pandemic on the Reported Parties, and the fact that the agreement has been terminated, the Commission Council stipulated that the said fine does not need to be executed by the Reported Parties, unless within a period of 1 (one) year since the decision has had a permanent legal force, the three Reported Parties infringe Article 19 sub-article d of Law Number 5 Year 1999.