Shopee admitted to violating competition law, Indonesia says

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Shopee Admits to Anti-Competitive Practices in Indonesia, Agrees to Change Course

Shopee, the e-commerce arm of Southeast Asian tech giant Sea Limited, has admitted to violating competition rules in Indonesia, agreeing to adjust its practices after an investigation by the country’s competition watchdog, Komisi Pengawas Persaingan Usaha (KPPU). The investigation, which began in May 2024, found that Shopee had prioritized its own courier service, Shopee Express, over other delivery services on its platform. This allegedly gave Shopee Express an unfair advantage, potentially hurting other delivery companies and ultimately negatively impacting consumers.

Key Takeaways

  • Shopee and Shopee Express admitted to breaching Indonesia’s competition laws. This admission comes after KPPU found evidence of Shopee prioritizing its own courier service over others on its platform.
  • KPPU has determined specific behavioral change points for Shopee to address the identified issues. The e-commerce giant has agreed to implement these changes, which aim to ensure a more equitable and competitive environment for all delivery services on its platform.
  • Shopee’s rival Lazada is also under investigation by KPPU. The watchdog is investigating allegations of similar anti-competitive practices by Lazada, the Southeast Asian e-commerce arm of Chinese tech giant Alibaba, highlighting the intensified scrutiny of the region’s e-commerce landscape.

Shopee’s Admission and Proposed Changes

In a statement, KPPU revealed that Shopee and Shopee Express admitted to violating Law no. 5 of 1999, which regulates delivery services. The watchdog found that Shopee had engaged in "discriminatory behavior" by automatically activating Shopee Express and J&T Express on its seller dashboards, while other delivery services did not receive the same automatic selection. KPPU investigators also noted the "dual position" of an employee who held director roles in both Shopee Indonesia and Shopee Express, suggesting potential conflicts of interest.

Shopee has proposed adjustments to its practices, which were approved by KPPU on June 20, 2024. The company’s head of public affairs in Indonesia, Radynal Nataprawira, confirmed that Shopee is committed to compliance and will implement changes to its user interface to enhance its services and ensure fair treatment for all delivery partners.

However, the details of these changes have not been publicly disclosed, leaving some ambiguity about the specific actions Shopee will take to address the identified issues.

KPPU’s Investigation and Potential Consequences for Shopee and Lazada

KPPU’s investigation of Shopee highlights the increasing scrutiny of large e-commerce players in Indonesia. The watchdog’s probe into Lazada reveals that the investigation is not limited to Shopee, suggesting a broader effort to ensure a fair playing field within the country’s expanding digital marketplace.

If Lazada is found to have violated competition laws, it could face significant consequences. The company could be subjected to a fine of up to 50% of its net profit or 10% of its total sales earned in the relevant market during the period of the violation.

The Broader Implications for the Indonesian E-Commerce Industry

The actions of KPPU demonstrate a growing awareness and concern for the potential impact of large e-commerce platforms on competition in Indonesia. The government’s intervention in this sector is critical for ensuring fair competition, protecting consumer interests and fostering a healthy and sustainable digital economy.

This case also highlights the increasing scrutiny of large technology companies globally. Regulators in various countries are increasingly investigating potential anti-competitive practices by tech giants, aimed at ensuring a level playing field and protecting consumers.

Shopee’s decision to adjust its practices in Indonesia, along with the ongoing investigation into Lazada, indicates a significant shift in the power dynamics of the e-commerce landscape. The Indonesian government’s firm stance on competition issues sends a powerful message to other large e-commerce companies operating within its borders and beyond.

Going forward, it remains to be seen whether Shopee’s proposed changes will effectively address the concerns raised by KPPU. The watchdog’s ongoing actions, along with the outcome of its investigation into Lazada, will be crucial in shaping the future of e-commerce in Indonesia and how these companies navigate the complexities of competition and regulatory oversight.

Article Reference

Brian Adams
Brian Adams
Brian Adams is a technology writer with a passion for exploring new innovations and trends. His articles cover a wide range of tech topics, making complex concepts accessible to a broad audience. Brian's engaging writing style and thorough research make his pieces a must-read for tech enthusiasts.