InfoSAWIT, JAKARTA – Indonesia's Business Competition Supervisory Commission (KPPU) has launched a preliminary investigation into allegations of anti-competitive practices involving the purchase of fresh fruit bunches (FFB) from independent oil palm smallholders in Pesisir Selatan Regency, West Sumatra.
The investigation focuses on allegations that several palm oil mills coordinated low FFB purchasing prices and imposed similar weight deduction practices, potentially harming independent smallholders.
The inquiry stems from Case Report No. 77-92/DH/KPPU-L/VI/2026, which concerns alleged violations of Law No. 5 of 1999 on the Prohibition of Monopolistic Practices and Unfair Business Competition.
According to an official summons issued by the KPPU Secretariat under Letter No. 1177/DH/P/VI/2026, dated June 25, 2026, complainant Novermal has been called to provide testimony during an online hearing scheduled for July 2, 2026.
In his complaint, Novermal alleged that five palm oil mills operating in Pesisir Selatan coordinated to set FFB purchasing prices at similarly low levels while applying comparable weight deductions during procurement.
He argued that such practices could indicate cartel behavior and monopsony, limiting marketing options for independent oil palm smallholders.
According to the complaint, FFB prices received by independent growers in Pesisir Selatan were reportedly around Rp1,400 per kilogram lower than government-recommended prices for plasma plantations. The prices were also said to be approximately Rp700 per kilogram below those offered to independent growers in neighboring Sijunjung Regency.
The complaint further highlighted weight deductions of 9–12 percent applied by mills in Pesisir Selatan, compared with deductions of only 4–5 percent reportedly imposed in Sijunjung.
According to the complainant, mills have justified the lower purchasing prices by citing poor FFB oil extraction rates. However, he argued that field-based yield assessments have never been conducted transparently, while extraction rate data at the mill level has not been made publicly available to growers.
Similarly, although weight deductions are reportedly based on fruit quality, the standards used to determine those deductions have not been transparently disclosed.
If the reported price gap of around Rp700 per kilogram compared with neighboring regions is consistently occurring, the complainant estimated that independent growers managing approximately 44,000 hectares of oil palm plantations in Pesisir Selatan could collectively be losing hundreds of billions of rupiah each year.
Through the complaint, the complainant urged KPPU to help establish a fairer marketplace by ensuring transparent FFB pricing mechanisms and grading procedures in accordance with Minister of Agriculture Regulation No. 13 of 2024 governing the purchase of oil palm FFB from partner smallholders.
The five companies named in the complaint are PT Incasi Raya Sudetan POM, PT Sumatera Jaya Agro Lestari, PT Transco Energi Utama, PT Kemilau Permata Sawit, and PT Muara Sawit Lestari.
As of publication, KPPU emphasized that the case remains at the preliminary investigation stage, during which investigators are gathering information and evidence. No determination has been made regarding whether any of the reported companies have violated Indonesia's competition laws. (T2)
