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Shopee Agrees To Reform Practices In Indonesia After Competition Law Breach

By Nithya Bose in Business News, posted June 27, 2024

E-commerce platform Shopee has agreed to modify its business practices following admissions of violating Indonesia’s competition law.

This adjustment comes after discussions with the Indonesia Competition Commission (Komisi Pengawas Persaingan Usaha, KPPU), highlighting concerns over Shopee's operations and its affiliated courier service, Shopee Express.

The acknowledgment of these violations was disclosed during a recent hearing.

Shopee and Shopee Express conceded to having breached Law No. 5 of 1999, which governs courier services within the country.

The companies have committed to several behavioral changes prescribed by the KPPU to rectify their practices.

This agreement was reached after the company proposed several alterations to its user interface on June 20, which the commission subsequently approved.

Radynal Nataprawira, head of public affairs at Shopee Indonesia, emphasized the company's dedication to regulatory compliance and its efforts to enhance service quality based on the KPPU’s feedback.

Nataprawira said: “Shopee is fully committed to adhering to all relevant regulations and laws in the Republic of Indonesia.”

The issue came to light when the KPPU’s preliminary investigations suggested Shopee had preferentially used Shopee Express for package deliveries to consumers.

This potentially sidelined other courier services that demonstrated high service performance.

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The investigation also pointed to discriminatory practices where Shopee Express and another service, J&T Express, were automatically selected for sellers on the Shopee platform.

This was not a privilege extended to competing services.

Further complicating the scenario, the KPPU highlighted the conflict of interest posed by an individual holding directorial roles in both Shopee Indonesia and Shopee Express.

This could potentially manipulate competition and control company behaviors detrimentally.

As the investigation progresses, the KPPU scrutinizes Lazada, another major player in the region’s e-commerce market and a part of the Alibaba Group, on suspicions of similar competitive infringements.

The commission has warned that proven violations could lead to significant financial penalties based on net profits or total sales during the infringement period.

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