Jakarta (23/06) – Indonesia Competition Commission (ICC) has decided that PT Bulungan Citra Agro Persada is not proven to have violated Article 35 paragraph (1) of Law Number 20 of 2008 in the implementation of its partnership with Koperasi Serba Usaha (KSU) Mega Buana (Mega Buana All-purpose Cooperative). The decision was read out in a Commission Hearing held for the Reading Out of Decision on Case Number 21/KPPU-K/2019 regarding Alleged Violation of Article 35 paragraph (1) of Law Number 20 of 2008 regarding the Implementation of the Partnership between PT Bulungan Citra Agro Persada and KSU Mega Buana at the Head Office of ICC in Jakarta today.

The case had its origin from a complaint lodged by KSU Mega Buana to the Balikpapan ICC Regional Office on PT Bulungan Citra Agro Persada (Reported Party) with regard to the delay in the development and processing of plasma oil palm plantations in an area of 668 (six hundred and sixty-eight) hectares allotted to prospective plasma farmers joined in such KSU Mega Buana. The complaint was then followed up with partnership supervision by ICC. In the implementation of the partnership, the Reported Party, as a plantation company plays a part as the nucleus, while KSU Mega Buana plays a part as the plasma.

ICC provided the opportunity for improvements through 3 (three) Written Warnings to the Reported Party in the supervision process. The Reported Party had not made any rectification measures in the first two warnings. The Reported Party showed improvements in Written Warning III, but it did not make all the improvements as ordered by ICC. Such action had led ICC to continue the said matter to the Partnership Follow-up Examination by the Commission Panel.

It was found during the Examination of the Commission Panel that the Reported Party did not fulfill its obligation to develop an oil palm plantation allotted to plasma in accordance with the Cooperation Agreement for the Development and Management of Plasma Oil Palm Plantation between KSU Mega Buana and the Reported Party, namely in an area of 668 (six hundred sixty-eight) hectares. The hindered development of the plasma land by the Reported Party has something to do with the various problems in the field relating to land permits, land contours, and the method for the settlement of rights and obligations conducted by the Reported Party.

In the aftermath of the Partnership Follow-up Examination, the Reported Party and KSU Mega Buana agreed to terminate the cooperation through the signing of a Notary Deed of Termination Agreement on the Cooperation Agreement for the Development and Processing of the Plasma Oil Palm Plantations between KSU Mega Buana and the Reported Party which basically contains that:

1. All the obligations for the payment of loans used by KSU Mega Buana for financing the development of the plasma plantations shall become the full responsibility of the Reported Party; and
2. The Reported Party shall hand over the plasma plantations in an area of + 277 (approximately two hundred and seventy-seven) hectares already developed by the Reported Party and the areas/sites being the future plasma plantations belonging to KSU Mega Buana in an area of + 422 (approximately four hundred and twenty-two) hectares not yet developed by the Reported Party to KSU Mega Buana along with the land supporting documents to be managed independently.

Furthermore, KSU Mega Buana and the Reported Party have agreed to settle their respective rights and obligations in the context of fulfilling the terms and conditions for the termination of the agreement. In light of the said agreement, the Commission Panel is of the view that the termination of such cooperation agreement is in the context of resolving the problems arising for the duration of the implementation of the partnership cooperation of the case a quo, as well as proving that the rights and obligations in the partnership relationship between the Reported Party and KSU Mega Buana have been fulfilled. The Commission Panel is also of the opinion that the Termination of the Agreement accompanied by the handover of the plasma plantations proves that there has been no legal transfer of ownership of KSU Mega Buana, and the assets owned by KSU Mega Buana by the Reported Party acting as a Large Enterprise as its business partner in implementing the partnership relationship.

The Commission Panel has also judged that the handover of the plasma plantations constitutes an act that is in line with one of the principles of partnership, namely the principle of mutual benefit since KSU Mega Buana will be independent both viewed from the aspect of management and that of the operations in managing the oil palm plantation land. It is expected that independent oil palm plantations management is capable of enhancing the level and the scale of economy of KSU Mega Buana for it will have a multiplier effect in enhancing the welfare of the members of KSU Mega Buana.

Upon the fulfillment of the obligations of the partnership relationship and the absence of a legal transfer of ownership or control, the Commission Panel judges that the element of owning and/or controlling is not proven. Since the element of owning and/or controlling is not fulfilled, then the Commission Panel judges that there is no need for proving the subsequent element, namely the Element of the Implementation of Partnership Relations.

Therefore, based on the aforementioned facts, assessment, analysis, and conclusion, the Commission Panel has decided that PT Bulungan Citra Agro Persada is not proven to have violated Article 35 paragraph (1) of Law Number 20 of 2008 regarding Micro, Small, and Medium Enterprises.