Price fixing probe vexes Temasek

24 May 2007

Indonesia’s competition authority yesterday accused Temasek, the investment arm of the Singapore government, of breaching competition laws by using subsidiaries’ shareholdings in the two largest mobile phone operators to fix prices. Temasek has not been formally charged but the move could threaten to undermine relations between the two countries which are already strained as a result of disputes over an extradition treaty, a defence cooperation pact and Indonesia’s ban on sand exports to its neighbour. According to the head of the competition commission, Muhammad Iqbal, an initial investigation uncovered irregularities regarding agreements over pricing in the mobile market. ‘This evidence is sufficient to launch a supplementary investigation over the suspicion of Temasek’s cross ownership in two telecommunication companies, namely Indosat (Satelindo) and Telkomsel,’ he said. Iqbal went on to say that concerns have been raised as to why the two operators’ tariffs remain high while those of their competitors have come down. ‘We’re concerned why the tariffs should be so high and customers have to suffer. This case is simple: it’s purely about competition.’