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JAKARTA - A JAKARTA court yesterday turned down an appeal by Singapore's Temasek Holdings against a ruling by Indonesia's business competition watchdog that it had violated the country's anti-trust law.
The three-member Central Jakarta District Court ordered Temasek and its affiliates to sell their stakes in one of their two Indonesian telecoms units.
The panel also upheld a ruling that one of the mobile phone operators, Telkomsel, had charged 'excessive' tariffs.
Temasek Holdings said it was 'deeply disappointed' by the verdict.
Managing director of strategic relations Goh Yong Siang said in a statement: 'The facts are Temasek has no shares in Indosat and Telkomsel, and plays no role in their business decisions and operations.
'Telkomsel, in particular, is majority owned by PT Telkom, which in turn is majority owned and controlled by the Indonesian government.'
Temasek lawyer Todung Mulya Lubis gave notice that the company would appeal to Indonesia's Supreme Court.
'We are very disappointed,' he told The Straits Times. 'The decision is a bad signal to foreign investors. There is no legal certainty for foreign investment.'
But the court yesterday refused to overturn the decision, ruling that the decision by the business competition watchdog KPPU was fair and in line with existing law.
Presiding judge Andriani Nurdin said: 'We found Temasek Holdings and its eight associated companies had violated Article 27 of the anti-trust law.'
Although it upheld the KPPU rulings, the court amended the penalties imposed on Temasek, its eight linked companies and Telkomsel.
It ordered Temasek to give up its stakes in one of the telcos within one year instead of the two years permitted in the original KPPU ruling.
The Singapore company also has the option of reducing its stakes by half in Indosat and Telkomsel. That was not an option provided in the KPPU ruling.
In divesting the shares, the court also said that Temasek can sell up to 10 per cent to any one party instead of 5 per cent as in the KPPU ruling. But the buyers cannot be affiliated to each other or to Temasek.
Judge Andriani also reduced the penalty of 25 billion rupiah to 15 billion rupiah (S$3.8 million to S$2.2 million) each for Temasek, its eight linked companies and Telkomsel.
But ST Telemedia lawyer Lucas expressed concern.
'Our client has invested so much in Indonesia,' he said. 'We are deeply disappointed because there is no legal certainty to the investment put in by foreign investors.'
The case has been watched closely by foreign investors concerned about the risks of doing business in Indonesia.
The panel of judges took turns to deliver the judgment over two hours.
The panel supported the KPPU argument that it had the authority to investigate the Singapore companies despite all of them not being registered in the country.
'This is a globalised world. A company can still be classified as operating a business in the country even if it is not set up in Indonesia. Based on the structure of the companies, we can conclude that they conduct business activities in the country,' said Ms Andriani.
'Temasek is the parent company having influence over business and policy decisions of the subsidiaries.'
But in Temasek's defence, Mr Goh said in his statement: 'Both Telkomsel and Indosat are regulated businesses, operating within the guidelines of the Indonesian Telecommunication Regulatory Authority.
'It is therefore not possible for Temasek to engage in any monopolistic or anti-competitive practices in the Indonesian mobile telecommunications market.'
salim@sph.com.sg
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