This presentation by Indonesia was made during the break-out Session 3, “Techniques and evidence for assessing predatory pricing, margin squeeze and exploitative abuses” in the discussion “Economic analysis and evidence in abuse cases” held at the 20th meeting of the OECD Global Forum on Competition on 7 December 2021. More papers and presentations on the topic can be found out at oe.cd/eac.

1. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
Global Forum on Competition
Economic analysis and evidence in abuse cases
Predatory Pricing and Margin Squeeze and Exploitative Abuses
7 December 2021
Commissioner Dinni Melanie, ICC

2. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
Overview of the Cement Case
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1. The decision on the cement case (Decision Number 03/KPPU-L/2020) was issued on a virtual hearing on
15 January 2021, where ICC found that Conch South Kalimantan Cement (Conch), subsidiary of Anhui
Conch Cement Co. Ltd., violated Article 20 on Predatory Pricing of the Indonesian Competition Law.
2. As their response to the Decision, Conch submit their appeal to the Commercial Court. However, on 4
March 2021, the Commercial Court of Central Jakarta upheld the decision of ICC
3. After the Commercial Court’s Decision, the Conch submitted their cassation to the Supreme Court, which
was rejected through the Supreme Court Decision Number 951 K/Pdt.Sus- KPPU/2021 on 12 August
2021. Thus, the ICC’s Decision on the cement case is now final and binding.

3. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
Assessment of Evidences
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During the investigation of this case, we analyzed some aspects to prove the predatory pricing:
a. Relevant Market and the Business Players
b. Market Shares
c. Price Analysis
d. Financial Power
e. Entry Barrier and Re-entry Barriers
f. Excess Capacity
g. Impact to the Relevant Market

4. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
Assessment of Evidences
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a. Relevant Market and the Business Players
The product market for this case is Portland Composite Cement or PCC in 40 Kg and 50 Kg Pack, and the
geographical market is South Kalimantan. Before 2015, there were 5 (five) companies who compete in the
market:
1.
1. PT Indocement Tunggal Prakarsa, Tbk
2. PT Semen Indonesia, Tbk
3. PT Semen Tonasa
4. PT Solusi Bangun Persada, Tbk
5. PT Semen Bosowa Maros
Other than those companies, there were also 3 (three) companies who have small shares in the market.

5. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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b. The Market Shares

6. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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c. Price Analysis
The data shown that Conch's average selling price is lower than its competitor for 40 kg packaged PCC
cement in 2015 to 2019, with a price difference ranging from USD 0.69 (zero point sixty-nine US Dollar) to
USD 0.97 (zero point ninety-seven). Whereas based on data of Conch's average selling price compared to its
competitors for PCC cement, we assessed that Conch had set very low prices in 2015 to 2019 for PCC
cement in the South Kalimantan region, which resulted in a significant increase of Conch‘s market share.
Year Cost of Goods
Sold (Rp/bag)
Average Annual
Selling Price of
40kg Packaging
(Rp/bag)
Margin
(%)
2015 - 2,29
2016 16,12
2017 13,04
2018 24,28
2019 35,35
Sales Profit Per Bag of Cement Type PCC (40 Kg)
Year Cost of Goods
Sold (Rp/bag)
Average Annual
Selling Price of
40kg Packaging
(Rp/bag)
Margin
(%)
2015 - 30,25
2016 4,72
2017 1,56
2018 9,47
2019 21,64
Sales Profit Per Bag of Cement Type PCC (50 Kg)

7. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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d. Financial Power
Conch is indirectly controlled by the Anhui Business Group which is a giant company in the field of cement
industry in the world. This is known, among others, based on the share ownership of the said group of
companies to the Conch at the beginning of the investment:

8. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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In Conch’s financial statements, we could also see the guarantee for Conch's loan at Bank of China by Anhui
Conch Cement Company Limited. This shows that the Conch received financial support in carrying out its
business activities.
The annual total of loans and borrowings are as below:
Financial Statement 2014 : USD 39,240,307.50 (thirty-nine point two million USD)
Financial Statement 2015 : USD 70,632,553.50 (seventy point six million USD)
Financial Statement 2016 : USD 20,000,000 (twenty million USD)
Financial Statement 2017 : USD 94,176,738 (ninety-four point one million USD)
Financial Statement 2018 : USD 333,009.04 (three hundred and thirty-three thousand USD)
Financial Statement 2019 : USD 270,133.19 (two hundred and seventy thousand USD)

9. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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• Conch’s Audited Financial Report 2015 also shown that there is management fee in the administrative cost
component, and the management fee is deposited to the ultimate parent, namely Anhui Conch Cement
Company Limited.
• In this case, we did not consider the provisions for dominant position, because dominant position can also
be identified from other factors, namely financial capability.
• The Commission was also of the opinion that predatory pricing should not always be carried out by
companies who have a dominant position. As happened in the case of Ligget vs Brown & Williamson
Tobacco Corp in the United States.
e. Entry barriers and re-entry barriers
The main obstacles in this industry are structural barriers where business actors require high investment to
enter the market and are associated with large transportation and storage costs. This can be seen in the facts
of this case where companies who tend to survive in the market are companies who have factories or carry out
production activities in South Kalimantan area, namely PT Indocement Tunggal Prakarsa, Tbk (Semen brand
"Tiga Roda) and Conch.

10. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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f. Excess Capacity
The utility of Conch's production capacity
tends to increase from year to year
Conch’s Factory Utilization (in Tons)
Furthermore, it is relevant to the contribution of Conch
in making sales or fulfilling market demand in South
Kalimantan,

11. INDONESIA COMPETITION COMMISSION
REPUBLIC OF INDONESIA
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g. Impact to the Relevant Market
Based on the facts, we considered the impact of the behavior of Conch can be seen from:
1. Significant increase of market share
Conch is a new entrant who started its production in November 2014 and started its marketing in early
2015. But the data shown that Conch's market share increased significantly, from 0% (zero percent) in
2014 to 43.65% (forty-three point sixty-five percent) in 2015.
2. Eliminating Competitors from the Market
In the data on market share, it was shown that 5 (five) competitors eliminated from the market, namely:
Those companies experienced a sharp decline in sales and attempted to lower the selling price but were
unable to compete with the selling price of the Conch's cement in the relevant market.
• PT Cemindo Gemilang; • PT Jui Shin Indonesia; • PT Solusi Bangun Indonesia;
• PT Semen Bosowa Maros; • PT Semen Jawa;

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