(Bloomberg) -- Indonesia’s antitrust authorities are investigating Southeast Asia’s e-commerce leader Sea Ltd. for potentially unfairly favoring its own delivery service over other alternatives.

Online shoppers in Indonesia can choose the 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 contenders, the antitrust watchdog known as KPPU said in a hearing Tuesday. Shopee’s legal team, which was present at the event, is scheduled to respond at a follow-up hearing on June 11.

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 Ltd.’s Lazada. If proven to have violated rules, 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,” a Shopee Indonesia spokesperson said.

As part of its supporting evidence, the KPPU said a Shopee director has also acted as a top officer at its delivery service arm since 2018.

“Based on this, PT Shopee Intenational Indonesia has discriminated in the selection of shipping service companies that are automatically activated in bulk on the seller dashboard,” the antitrust watchdog said in a statement.

The agency is also investigating Lazada.

What Bloomberg Intelligence Says

Antitrust penalties that Indonesian authorities might impose on Alibaba’s Lazada if found to have violated laws would be lower than possible fines on Sea’s Shopee, which has four times more monthly active users in the Southeast Asian nation. Less than a third of Lazada’s monthly active users were in Indonesia vs. nearly 50% for Shopee as of April 30, based on Sensor Tower data.

-Catherine Lim and Trini Tan, analysts

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--With assistance from Olivia Poh.

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