(Bloomberg) — Indonesian antitrust authorities are investigating Southeast Asian e-commerce leader Sea Ltd. for potentially unfairly favoring its own delivery service over other alternatives.
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Online shoppers in Indonesia can choose which company to deliver their purchases, and Sea’s e-commerce arm, Shopee, set up an algorithm that prioritized its own service over other options, including local competitors, said the antitrust body known as KPPU at a hearing on Tuesday. Shopee’s legal team, which was present at the event, is expected to respond at a follow-up hearing on June 11th.
Indonesia, with about 280 million people, is a key growth market for Singapore-based Sea, as well as its competitors such as ByteDance Ltd.’s TikTok as well as Alibaba Group Holding’s Lazada. Ltd.. If the rules are proven to have been broken, Shopee will face potential fines and may need to change the way it presents delivery options to consumers.
Shopee is “committed to complying with all applicable regulations and legislation in the Republic of Indonesia,” said a Shopee Indonesia spokesperson.
As part of supporting evidence, the KPPU said a Shopee director had also served as a senior officer in its delivery services arm since 2018.
“Based on this, PT Shopee Intenational Indonesia discriminated in the selection of shipping service companies that are automatically activated in bulk on the seller panel,” the antitrust body said in a statement.
The agency is also investigating Lazada.
What Bloomberg Intelligence says
The antitrust penalties that Indonesian authorities could impose on Alibaba’s Lazada if it were found to have broken laws would be lower than the possible fines on Sea’s Shopee, which has four times as many monthly active users in the Southeast Asian country. Less than a third of Lazada’s monthly active users were in Indonesia, compared to Shopee’s nearly 50% as of April 30, based on Sensor Tower data.
-Catherine Lim and Trini Tan, analysts
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–With help from Olivia Poh.
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