Indonesia fines Chinese state-owned CRRC Sifang unit for rail bid rigging

Indonesia’s antitrust regulator today fined Chinese state-owned firm CRRC Sifang’s local unit and logistics company Anugerah Logistik Prestasindo a total of 4 billion rupiah (about $245,000) for conspiring to rig a tender for transporting train units in the country’s first high-speed railway project. Indonesia’s antitrust regulator today fined Chinese state-owned firm CRRC Sifang’s local unit and logistics company Anugerah Logistik Prestasindo a total of 4 billion rupiah (about $245,000) for conspiring to rig a tender for transporting train units in the country’s first high-speed railway project. The Indonesian Competition Commission, or KPPU, found that CRRC Sifang, which acted as the tender committee, facilitated a sham bidding process to ensure Anugerah Logistik would win the contract, despite it failing to meet qualification requirements. The two companies “conspired by creating a pseudo-competition to regulate and determine the tender winner,” KPPU commissioner Aru Armando said during a three-hour final hearing today. The regulator found that CRRC Sifang and Anugerah Logistik manipulated vendor selection procedures, submitted non-compliant documents and engaged in “closed, non-transparent and discriminatory procurement” that eliminated potential competitors and distorted pricing. Each company was fined 2 billion rupiah. They must submit a bank guarantee for 20 percent of the fine within 14 days and pay in full within 30 days if they accept the decision. The case stemmed from a public complaint and centered on the transport of Electric Multiple Units, or EMUs, for the high-speed railway connecting the capital Jakarta to the university town of Bandung some 150 kilometers away. The procurement process was handled internally by CRRC Sifang, which is part of the Chinese-Indonesian contractor consortium behind the project. KPPU investigators said Anugerah Logistik was ineligible due to insufficient paid-up capital and lack of relevant experience. Nonetheless, CRRC Sifang allowed it to evaluate its own bid and benefit from the outcome. During earlier proceedings, both CRRC Sifang Indonesia and Anugerah Logistik denied the allegations (see here). Their formal response in January allowed the case to proceed to an advanced examination phase, where investigators and the parties presented witnesses and expert testimony. KCIC — the project consortium led by Indonesian state-owned construction company Wijaya Karya and several Chinese state-owned firms, including China Railway International and China Railway Group — has distanced itself from the transport tender. KCIC Corporate Secretary Eva Chairunisa previously said that the procurement was handled solely by CRRC Sifang. At the hearing, CRRC Sifang was represented by ABNR Counsellors at Law and Anugerah Logistik by AWNP Law Firm. Tito Widyarto, a lawyer for Anugerah, told MLex the company has not yet decided whether to appeal to the Central Jakarta Commercial Court. Please email editors@mlex.com to contact the editorial staff regarding this story, or to submit the names of lawyers and advisers.