Food prices are a politically sensitive issue because of their impact on the poor, with the Indonesian government blaming high prices on food hoarding and speculators, although some analysts credit the country's self-sufficiency policy.

IBU, a unit of food company PT Tiga Pilar Sejahtera Food , is suspected to have displayed incorrect information on rice products and misstated the quality of two brands, National Police spokesman Martinus Sitompul said.

Violations of business competition rules, and laws on food and consumer protection, are among the charges facing IBU president director Trisnawan Widodo, Sitompul told reporters.

"Today his detention begins," he told a news conference.

If convicted of the charges, the chief executive could face up to 20 years in prison, officials have said. Despite a similarity in names, he is not related to Indonesia's president.

Police are also investigating IBU for possible money laundering linked to its rice sales, Sitompul added.

"This investigation is still in an early stage and there is a series of further investigations," he said.

Reuters could not reach Trisnawan Widodo or a representative for comment. An official of parent company Tiga Pilar did not respond to telephone calls and a text message from Reuters to seek comment.

Late last month, police raided an IBU warehouse near Jakarta, the capital, confiscating more than 1,000 tonnes of rice and alleging the company bought lower quality grain and sold it as premium rice. The company has denied the allegations.

Shares of Tiga Pilar fell 4.3 percent on Wednesday, underperforming a gain of 0.3 percent in the benchmark index.