Jakarta union drops plan to sue Temasek

The Straits Times, April 14, 2007
By Salim Osman, INDONESIA CORRESPONDENT

No proof of price-fixing and cornering of cellphone market


JAKARTA - AN INDONESIAN labour union has cancelled its plan to file a class action suit against Temasek Holdings for alleged monopolistic practices in the local cellphone market.

The union says it does not have enough evidence to substantiate its allegations.

The Federation of State-Owned Enterprises Employees' Union (FSP) has also recalled its report against Temasek, filed on Oct 18 last year, at the government agency that regulates business practices, Komite Pengawas Persaingan Usaha (KPPU).

The report, which was a prelude to the planned class action suit, had alleged that Temasek violated Indonesia's anti-monopoly law by dominating the market and practised price-fixing.

FSP president Arief Poyuono said: 'After months of deliberation, our board of management decided on April 2 to call off plans to sue Temasek.

'We simply have a weak case because we cannot prove that the Singapore company had violated our anti-monopoly law.'

In its October report to KPPU, the union had accused Temasek of maintaining a hold on the cellphone market through its subsidiary, Singapore Technologies Telemedia (STT).

STT controls 41 per cent of Indosat, Indonesia's second-largest cellular operator.

Temasek also has a stake in Telkomsel, the country's biggest operator, through SingTel's 35 per cent ownership of the company.

Telkomsel is 65 per cent owned by government-controlled Telekomunikasi Indonesia.

The report alleged that Telkomsel and Indosat together control 80 to 90 per cent of Indonesia's cellphone market and also practise price-fixing.

Mr Arief said that after the report was submitted, the union was called up by the KPPU to substantiate its allegations.

'We carried out a review of our report, and even checked with Temasek for some information that would help us answer queries from the agency,' he told The Straits Times.

'We finally had to admit our mistake. It's not true that Temasek holds 80 per cent of the cellphone market here.'

He added that according to the union's calculations, Temasek holds only 30.75 per cent of the market while the remaining 69.25 per cent is controlled by the Indonesian government and other shareholders.

'We also found that Temasek is an investment holding company that does not interfere in the operations of its subsidiaries and companies in which it has a share, such as STT and SingTel. They operate independently of Temasek,' he said.

Mr Arief also admitted that the union could not prove there was price-fixing and even collusion between Telkomsel and Indosat.

'The cellphone market is now highly competitive with the presence of new entrants from Malaysia such as Maxis and Hutchison. Hence it's not possible for any company to fix the price or even hold a monopolistic control of the market,' he said.

The union's lawyer, Mr Habiburokhman, said that based on the facts gathered, 'we don't stand a chance to win' if the union went ahead with the suit.

'The whole issue of Indosat that is partly owned by Singapore has been politicised here by people who want to pressure the Singapore company into giving up its stakes,' he said.

'There are people waiting to buy the shares if STT were to sell them.'