Indonesia to probe palm producers' environmental pledge -competition watchdog

(Adds comment from IPOP legal team)

By Bernadette Christina Munthe

JAKARTA, April 14 (Reuters) - Indonesia will investigate palm oil companies that are signatories to the Indonesian Palm Oil Pledge (IPOP) for potential anti-competitive practices, the country's anti-monopoly agency (KPPU) said.

"The IPOP agreement has the potential to become the means of a cartel that will give rise to monopoly practices and or unhealthy business competition," KPPU spokesman Dendy Sutrisno said in a statement issued late on Wednesday. "Because of this, the KPPU states that the IPOP agreement cannot be implemented."

IPOP is an agreement aimed at curbing deforestation. Its six members are are Wilmar International Ltd, Cargill Inc , Musim Mas, Astra Agro Lestari, Asian Agri and Golden Agri-Resources.

Indonesia wants big palm oil companies to row back on the historic pledges made at a climate change summit in 2014, arguing that they are hurting smallholders who cannot afford to adopt sustainable forestry practices.

Indonesia is the world's biggest producer of the edible oil.

Ibrahim Senen, who heads the IPOP legal team, said the investigation was not expected to disrupt implementation of the growers' pledge. "No regulations have been breached," he said.

Asian Agri and Golden Agri Resources declined to comment on the matter. A spokesman for Astra Agro could not be reached for comment. Wilmar did not respond to an emailed request for comment. (Additional reporting by Aradhana Aravindan in SINGAPORE; Writing by Fergus Jensen; Editing by Ed Davies and Jane Merriman)