Indonesia, Honda JV Tangle over Lube Tie-in

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Indonesia, Honda JV Tangle over Lube Tie-in
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A fair trade regulator in Indonesia heard arguments this week in the case of a Honda scooter supplier charged with illegally requiring dealerships to only offer lubricants provided by the scooter supplier.

The accused company, PT Astra Honda Motor, is a joint venture between Japanese automaker Honda Motor and PT Astra International, an Indonesian conglomerate and the largest auto group in Southeast Asia. Astra Honda Motor assembles and distributes Honda scooters, and it also franchises a chain of Astra Honda authorized service stations that offer service and maintenance on the scooters. Two-wheelers are the dominant mode of transportation in Indonesia and much of Southeast Asia, and Honda is a leading brand.

Astra Honda Motor also supplies spare parts for its scooters, including lubricants. According to a press release issued by the Indonesian government, prosecutors with the Business Competition Supervisory Commission (KPPU) told the Commission Council Tuesday that service station operators are required to purchase spare parts – including AHM brand lubricants – from Astra Honda Motor and are offered discounted prices on those parts if they do not offer any other brands.

“For lubricant products, investigators also find that [franchise] workshops can only sell lubricants belonging to AHM,” the press release stated. “Lubricants of other manufacturers’ brands, especially with similar specifications … are not permitted to be sold.”

Investigators said the scooters come with warranties requiring that periodic maintenance be performed at authorized service shops. The warranties specify that owners use lubricants meeting standards such as JASO MB or API SG, SH, SJ, SL, SM or SN, but Astra Honda Motors’ contracts with its franchise service stations prohibits them from offering other brands that meet those standards.

Indonesian fair trade regulations prohibit businesses supplying goods or services from requiring customers or partners to also purchase other goods or services or to prohibit the use of competing products.

KPPU started its investigation against Astra Honda Motor in 2016. The company will be able to present its response when the hearing before the Commission Council continues at the end of this month. Lube Report was unable to reach Astra Honda Motor to ask for comment.

Photo: sorranop01/stock.adobe.com

A mechanic works to change engine oil on a motorcycle.

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