CCI penalizes tyre makers for cartelisation

The Competition Commission of India (CCI) has imposed a penalty on five tyre manufacturers and their association for indulging in cartelisation.

CCI has penalised five tyre companies namely Apollo Tyres, MRF, CEAT, JK Tyre and Industries, Birla Tyres and their association i.e. Automotive Tyre Manufacturers Association (ATMA) for indulging in cartelisation by acting in concert to increase the prices of cross ply/bias tyres variants sold by each of them in the replacement market and to limit and control production and supply in the said market.

The Commission noted that the tyre manufactures had exchanged price-sensitive data amongst them through the platform of their association, namely, Automotive Tyre Manufacturers Association (ATMA), and had taken collective decisions on the prices of tyres. The Commission also found that ATMA collected and compiled information relating to company-wise and segment-wise data (both monthly and cumulative) on production, domestic sales and export of tyres on a real time basis. Thus, the Commission noted that the sharing of such sensitive information made the co-ordination easier amongst the tyre manufacturers.

Accordingly, the Commission held the five tyre manufacturers and ATMA guilty of contravention of the provisions of the Competition Act, 2002, which prohibits anti-competitive agreements including cartels, during 2011-2012.

The Commission imposed penalties of Rs 425.53 crore on Apollo Tyres, Rs 622.09 crore on MRF, Rs 252.16 crore on CEAT, Rs 309.95 crore on JK Tyre and Rs 178.33 crore on Birla Tyres, besides passing a cease and desist order. In addition, a penalty of Rs. 0.084 crore was also imposed on ATMA. ATMA was also directed to disengage and disassociate itself from collecting wholesale and retail prices through the member tyre companies or otherwise.

The CCI order which held the tyre manufacturers and ATMA guilty was passed in August 2018. The order was kept in sealed cover as the tyre makers had decided to exercise their legal options before the higher courts. Their appeal was dismissed by the Supreme Court on January 28.

Following the announcement by CCI, Birla Tyres (down 2.88%) and JK Tyre and Industries (down 2.31%) declined while MRF (down 0.26%), Apollo Tyres (down 0.07%) and CEAT (up 0.12%) traded flat.

Powered by Capital Market - Live News