Carrefour Indonesia Ordered to Sell Its Alfa Stake

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By Widya Utami and Ladka Bauerova

Nov. 3 (Bloomberg) -- Carrefour SA, Europe’s biggest retailer, was ordered to sell its stake in an Indonesian supermarket chain as regulators said the French company was using its “dominant position” to unfairly squeeze suppliers.

Carrefour Indonesia must sell its stake in PT Alfa Retailindo within a year, Dedie S. Martadisastra, a commission chairman at the agency, told reporters in Jakarta today. The company has 14 days to file an appeal at the district court, Martadisastra said.

The French retailer said it will likely appeal, calling the regulator’s assertion “completely baseless.” Carrefour bought Alfa Retailindo last year for 675 billion rupiah ($70 million), part of its strategy to expand in emerging markets as the company’s home French market stagnates.



The deal boosted Carrefour’s share of the superstore market to 58 percent from 46 percent, according to Benny Pasaribu, the regulator’s chairman. “That market power and dominant position has been misused by Carrefour to force its suppliers into providing discounts,” Pasaribu said today.

If the retailer is forced to sell its 75 percent stake in Alfa, it will most likely abandon the Indonesian market, according to Standard & Poor’s analyst James Monro.

“Indonesia is very small for Carrefour in the larger scheme of things,” the analyst said. “The company has more pressing problems, such as how to revive sales in France.”

Russian Retreat

“We stick to our position that the agency’s charges are completely baseless,” said Irawan Kadarman, Carrefour Indonesia’s corporate affairs director. Helene Saint-Raymond, a Paris-based Carrefour spokeswoman, declined to comment further.

Carrefour Indonesia had 45 hypermarkets and 30 supermarkets as of April. A withdrawal from Indonesia would follow Carrefour’s exit from the Russian market, announced last month as the retailer said it would focus on countries where it’s among the market leaders.

Chief Executive Officer Lars Olofsson, who took over in January, vowed to improve the French retailer’s sales and efficiency in its home market and in western Europe. Olofsson was brought in with the support of Colony Capital LLC and billionaire Bernard Arnault, who bought a stake in March 2007 and now jointly own about 14 percent of the company.

Exiting Indonesia “might actually please some of the shareholders” since the company “should get a fair price,” Monro said. He estimated the retailer may be able to fetch a price close to the $70 million it paid for the stake.

To contact the reporters on this story: Widya Utami in Jakarta at wutami@bloomberg.net; Ladka Bauerova in Paris at lbauerova@bloomberg.net.

Last Updated: November 3, 2009 11:12 EST