June 6, the observer network learned that TikTok Shop and Tokopedia recently responded to the potential monopoly behavior or unfair competition risks pointed out by the Indonesian Business Competition Supervisory Commission (KPPU), stating that they will respect the investigation process and cooperate with KPPU.
"We respect the ongoing investigation process and are ready to cooperate with KPPU to respond to the proposals of all parties," a TikTok spokesperson said in an interview with foreign media.
It is reported that this charge of monopoly risk stems from KPPU's comprehensive assessment of the two platforms' transactions. At the end of 2023, TikTok acquired 75.01% of Tokopedia's shares, and the transaction was completed in January 2024. As part of their strategic partnership, the business operations of Tokopedia and TikTok Shop Indonesia will be integrated under PT Tokopedia, with TikTok becoming the controlling shareholder of PT Tokopedia.
However, during the evaluation process after about one year following the integration of TikTok Shop and Tokopedia, KPPU found four facts that led to the determination that there may be unfair competition between the two:
KPPU pointed out that one of them is that this acquisition merges two participants in Indonesia's physical goods e-commerce market (electronics, fashion, daily necessities, home furniture, toys, etc.) into one entity, significantly increasing market concentration. "The overall assessment indicates that due to unilateral effects, prices may rise after the acquisition."
KPPU also emphasized that this transaction has strong network effects, which may ultimately harm the interests of multiple parties, including small and medium-sized enterprises and consumers, due to unfair competition.
"Although no significant barriers to market access for new enterprises have been found, the network effect is strong enough to potentially be used to implement bundled sales strategies, thereby harming consumer or other enterprise interests (especially small and medium-sized enterprises)," KPPU wrote.
Based on the above overall assessment results, KPPU believes that the TikTok Shop and Tokopedia transaction poses a monopoly risk. To avoid potential risks, KPPU requires the two companies to fulfill certain conditions.
The conditions include: ensuring that payment methods and logistics options remain open and are not linked to bundled sales strategies; prohibiting the abuse of market dominance, such as predatory pricing, self-preference, discrimination against products outside the group, and unreasonable restrictions on merchants' transactions on the Tokopedia platform; ensuring the freedom of TikTok account owners to promote products from other e-commerce platforms; preventing the abuse of market power through unreasonable price increases, and protecting the rights and interests of small and medium-sized enterprises on both platforms through equal development opportunities.
According to foreign media reports, the hearing will continue on June 10, with the agenda including responding to the assessment report and conditional proposals, as well as clarifying the implementation timetable.
This article is an exclusive article of the Observer Network and cannot be reprinted without permission.
Original source: https://www.toutiao.com/article/7512768346308362787/
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