Indonesia's anti-trust agency looking into GoTo merger for 'monopolistic practices'

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Komisi Pengawas Persaingan Usaha (KPPU), Indonesia’s anti-trust agency, is “scrutinising” the merger between Gojek and Tokopedia for potential monopolistic behaviour. Recently, Gojek and Tokopedia announced a merger to form GoTo Group, marking the largest ever business combination in Indonesia and the largest between two Asia-based Internet media and services companies to date.

Quoting KPPU, Reuters reported that neither Gojek nor Tokopedia notified it about the merger. However, they are allowed to alert authorities 30 days after the transaction, Reuters said. KPPU will then review the transaction for “potential monopolistic practices or unfair business competition”, focusing on the various relevant markets that are part of GoTo’s ecosystem. The anti-trust agency added that a transaction made in the digital market generally requires “a complex network effect analysis”, Reuters reported.

Additionally, KPPU also encouraged business owners and consumers to report any breach of regulations concerning business competition following the creation of GoTo. The new entity will be required to make adjustments to its operations to ensure there is fair competition should a merger be found to result in unhealthy business competition, Reuters said. However, KPPU added that it does not rule out mergers.

GoTo's spokesperson told MARKETING-INTERACTIVE: "We adhere to all applicable laws and regulations in Indonesia and we are closely coordinating with relevant government agencies to ensure full compliance."

GoTo had a total group gross transaction value of more than US$22 billion last year and over 1.8 billion transactions. Its ecosystem encompasses 2% of Indonesia’s GDP and has over 100 million monthly active users. The combined entity will be led by Gojek's co-CEO Andre Soelistyo, while Tokopedia’s Patrick Cao will serve as GoTo Group president. Soelistyo will continue to lead payments and financial services, under the new brand of GoTo Financial, which encompasses GoPay as well as the group’s merchant and financial services offerings. Meanwhile, Kevin Aluwi will continue as CEO of Gojek and William Tanuwijaya will remain CEO of Tokopedia.

When the merger was announced two weeks ago, GoTo said it will continue to focus on the fast-growing and emerging markets where Gojek already operates. The new entity also means same-day eCommerce delivery moves a step closer to becoming the norm in Indonesia.

Prior to the GoTo merger, there was also chatter about Gojek potentially merging with Grab, which the former denied last February. Yayasan Lembaga Konsumen Indonesia, Indonesia's competition and consumer commission, also reportedly expressed “rejection” of the proposed Gojek-Grab merger. It said that the merger risks violation of consumer rights as there will no longer be more choices for consumers.