Cartel and Political Corruption: Insight from Beef Imports Collusion in Indonesia

Abstract

Cartel is a group of several companies collude and give the appearance of competitive rivalry while in fact they have reached an understanding to jointly maximise profits. These companies involved in a conspiracy in anti trust activities. In industry and trade many cartel groups because their goals and action are categorized illegal in a country, especially in terms of price fixing. The purpose of this study is to reveal that cartel is not only a collusion among cartel companies, but also included outsider involvement in collusion. In sector case study of beef imports, the authors find that collusion in Indonesia through secret agreements , lobbying government through politician for private and collective benefits. This study is using qualitative-case study approach. Data is collecting by using literature study relating to the existence of cartel and articles that deals with the issue of cartel on beef imports throughout 2012 to 2018. The results of the study shows that inappropriate import policy is one of the causes of cartels and criminal act of corruption in cartel involving bureaucrat and politician privately or collectively.

Negative Effects of Non-Tariff Trade Barriers on the Welfare of Indonesians

“…In 2017, a judge of the Constitutional Court was found guilty of accepting bribes in relation to beef imports and sentenced to eight years in jail and an IDR 300 million fine. During the same year, another parliamentarian was found guilty of corruption in sugar import licenses (Neilson, 2018, p. 84;Tampubolon, Lele, Kumorotomo, & Suripto, 2020). In 2020, another former member of People's Representative Council was sentenced to seven years of imprisonment for accepting bribes in exchange for issuing an import quota permit for garlic (Adjie, 2020).…”

Optimal deterrence: Exploring business cartels in Indonesia and their impact on the economy

“…The question then is, How can we fight business cartels? The ineffectiveness of law enforcement related to cartel practices is something that is not encouraging, particularly in Indonesia (Tampubolon et al, 2019), considering that cartels are a very important and phenomenal issue in the application of business competition law in many countries (Antoni, 2019). The cartel remains the oldest form of business competition, as well as a collusive act by entrepreneurs who are considered the most dangerous in the business world.…”

“…Whether recognized or not, cartel practices still exist today in Indonesia, as if it is a necessary practice (Iman, 2014). Cartel cases that have occurred in Indonesia include the automotive industry, telecommunications related to the determination of telephone and SMS service tariffs involving several cellular operators, the pharmaceutical industry, bulk cooking oil and packaging, and even salt (see Tampubolon et al, 2019). An example of cartel practices in Indonesia can be seen in Table 2.…”

“…Cartel practices will force consumers to pay more expensive a product, both luxury goods and also their daily needs (Tampubolon et al, 2019). Consumers will have no choice in the market both in terms of price choices, competitive quality of goods and decent after-sales services.…”

“…Thus, its actions can hurt costumers through increased prices of commodities and lack of tranparency (Qaqaya, 2008). Furthermore, cartels are an independent producer group whose aim is to set prices, limit supply and competition (Tampubolon et al, 2019). Under antitrust laws, cartels are prohibited in almost all countries.…”