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28 May 2024
News Indonesia

Jakarta (28/5) - The Indonesia Competition Commission (KPPU) has initiated the preliminary examination on Case Number 04/KPPU-I/2024 concerning the alleged violation of Article 19 letter d and Article 25 paragraph (1) letter a of Law Number 5 Year 1999 Related to Delivery Services (Courier) on the Shopee Platform on 28 May, 2024, at the Head Office. The hearing was led by Aru Armando as Chairman of the Commission Panel, accompanied by Panel Members Gopprera Panggabean and Budi Joyo Santoso, with the agenda of Exposure of Alleged Violation Report ("LDP") by the Investigator and Examination of Completeness and Appropriateness of Evidence (in the form of letters and/or supporting documents) in the LDP.

The case is an ex-officio case involving two reported parties, namely PT. Shopee International Indonesia (Reported Party I) and PT Nusantara Ekspres Kilat (Reported Party II). All attorneys of Reported Party I and Reported Party II were present at the first hearing. In the LDP, the investigator stated that the relevant market in this case is the Electronic Trading System (ETS), or marketplace platform provider, in all regions of Indonesia. In this market, there are several business actors, including Shopee, Tokopedia, Lazada, Bukalapak, and Blibli.

For further information, from the first quarter of 2020 to the second quarter of 2022, Shopee and Tokopedia's monthly web visit traffic increased significantly, while the others experienced a decline. Based on these indicators, both Tokopedia and Shopee control more than 60% (sixty percent) of the marketplace in Indonesia since the first quarter of 2020 and more than 75% by the second quarter of 2022.

The investigator considers that Shopee has a dominant position in the marketplace, which is shown from the results of a consumer survey, where 69.33% of almost a thousand respondents indicated Shopee as the top of mind or first choice for marketplace. So even though, based on the monthly web visit traffic, Shopee's market share does not reach more than 50%, Shopee still has a dominant position in the marketplace. Shopee also has greater financial capability because of its highest net revenue in 2022 compared to its closest competitor.

The Investigator also presented various findings that led to the alleged violation of Article 19 letter d and Article 25 paragraph (1) letter a of Law Number 5 Year 1999. The alleged findings include:

  • The algorithm system has been discriminatorily set up by Reported Party I to prioritize Reported Party II in every package delivery to consumers (buyers).
  • Discriminatory behavior has been carried out by Reported Party I in determining the delivery service companies, namely J&T and Shopee, which are automatically activated in bulk on the Seller dashboard. In the statement by Reported Party I, these two companies were selected to be activated due to their good service performance. However, there are still other delivery service companies that have good service performance but were not selected for mass auto-activation. Based on this, the reported party allegedly discriminated against the selection of delivery service companies that are automatically activated in bulk on the seller dashboard.
  • Implementation of standardization in the selection system of the delivery service company involves eliminating the option of selecting couriers and delivery costs.
  • Appointment of Handika Wiguna Jahja, Director of PT Shopee International Indonesia, as Director of PT Nusantara Ekspres Kilat (SPX) on 27 June, 2018. This affiliation relationship through concurrent positions may affect the behavior of affiliated business actors and competition because they can ensure and control the policies or behavior of both companies.

The investigator suspects that the various findings of violations have caused direct harm to consumers as well as exclusionary practices by favoring Shopee Express, an affiliated company, in the competition for delivery services in the Shopee marketplace.

After listening to the presentation of the LDP from the investigator as well as examining the completeness and suitability of the evidence, the Commission Panel will continue the hearing with the agenda of Submission of the Reported Party's Response to the LDP on 11 June, 2024, at the KPPU Office in Jakarta. The period of this preliminary examination is 30 (thirty) working days, starting on 28 May, 2024, and ending on 10 July, 2024.