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2021, Indonesia, Other

Jakarta (08/07) – Indonesia Competition Commission (“ICC”) decides that PT. Garuda Indonesia (Persero) Tbk. ("GIAA") is proven to have violated Article 19 sub-article d of Law Number 5 Year 1999 regarding the Prohibition of Monopolistic Practices and Unfair Business Competition ("Law No. 5/1999") in a case of Alleged Discriminatory Practices of PT. Garuda Indonesia (Persero) Tbk. with regard to the Selection of Umrah Ticket Sales Partners to and fro Jeddah and Madinah. The conclusion was conveyed in the online Hearing of the Panel for the Reading Out of Decision on July 8, 2021. Based on such violation, GIAA has been fined in the amount of IDR1,000,000,000 (one billion rupiah).

The case begun with such public report raised the alleged violation of Article 19 sub-article d of Law No. 5/1999, specifically with regard to efforts to close access to the direct sales distribution channel of Umrah tickets to and fro Jeddah and Medina by GIAA through the Wholesaler Program. The said entry barrier has an impact on most of other Umrah Worship Tour Operators (“PPIUs”). The PPIUs appointed by GIAA consists of PT. Smart Umrah (Kanomas Arci Wisata), PT. Maktour (Makassar Toraja Tour), PT. NRA (Nur Rima Al-Waali Tour), PT. Wahana Mitra Usaha (Wahana), PT. Aero Globe Indonesia, and PT. Mosaic Charm.

The Commission Panel judges in the hearing proceedings that the action of GIAA in appointing the six PPIUs as wholesalers without going through an open and transparent appointment process was not based on clear and measurable requirements and considerations and there was inconsistency in the rationality of the appointment of the wholesalers. These have proved the existence of discriminatory practices of GIAA against at least 301 (three hundred and one) potential PPIUs in obtaining equal access in terms of the bookkeeping and/or purchase of GIAA's Middle East Area (“MEA”) route tickets for umrah purposes.

GIAA has once put forward a change of behavior in September 2020 at the Panel Hearing for Preliminary Examination. However, since GIAA did not fully implement the integrity pact on the change of behavior given, the hearing proceedings were resumed. The Commission Panel also considered the ability of GIAA to pay based on the 2018, 2019, and 2020 Financial Statements in the reading out of the decision today. Based on the said considerations, the Commission Panel judges that if a certain rate of fines is imposed, then GIAA has the potential to be unable to operate in a such financial condition.

In light of the aforementioned various facts, assessment, analysis, and conclusion, the Commission Panel declares that PT. Garuda Indonesia (Persero) Tbk. is proven to have violated Article 19 sub-article d of Law No. 5/1999 and imposed an administrative fine of IDR1,000,000,000 (one billion rupiah). The said fine must be paid by no later than 30 (thirty) days as from the decision has had a permanent legal force. In the event of delayed payment of the fine, GIAA may be subject to a delayed fine of 2% (two percent) per month of the value of the fine. This fine for delayed payment is in line with the provisions of Government Regulation Number 58 Year 2020 regarding the Management of Non-Tax State Re