'No evidence of cartelisation in tyre industry'

In the absence of “substantive evidence” to prove allegations of cartelisation, the Competition Commission of India (CCI) gave a clean chit to tyre manufacturers, including Apollo Tyres, MRF, JK Tyre, Ceat and Birla Tyres.

A senior CCI official said that the case had been closed with a majority ruling against cartelisation charges, since the available evidence does not give enough proof against these tyre companies.

“It is safe to conclude that on a superficial basis, the industry displays some characteristics of a cartel. (But) there has been no substantive evidence of the existence of a cartel. As a tradable, the industry has always been open to competitive threats from imports,” the competition watchdog said in its order.

 

However, one CCI member dissented with the majority order.

The complainant, All India Tyre Dealers’ Federation (AITDF), has already decided to approach the appellate authority- the Competition Appellate Tribunal (Compat) — against the CCI judgement. “Tyre dealers will to go for appeal before Compat against the majority judgment,” AITDF said.

The order comes after CCI’s director-general (investigation) in reported that major domestic tyre companies acted in concert and the industry association Automotive Tyre Manufacturers’ Association (ATMA) said they were ready to provide a platform to share information relating to price, export, import, etc.

Welcoming the decision, Atma Director General Rajiv Budhraja said: “We have not seen the fine print yet, but the ruling is positive for the industry.”

The anti-trust regulator has been probing allegations of cartelisation against tyre manufacturers since 2010, following a complaint by AITDF. In 2007, AITDF had filed a complaint to the corporate affairs ministry for probing cartels in tyre and transport. The ministry had referred the matter in 2008 to the then Monopolies and Restrictive Trade Practices Commission for investigation. Later, in 2010, the complaint was transferred to the CCI.

Cartelisation means two or more companies coming together to fix pricing of products and services, by limiting production and supply. Since such practices adversely impact competition in the market, this is prohibited under Section 3 of the Competition Act.

Recently, the competition watchdog slapped a heavy penalty on cement companies on cartelisation charges. The companies have now also approached the Compat against the CCI order.

Sources said that following the cement order, the CCI was under pressure from industry lobbies and that this could have led to a leniency while dealing with tyre manufacturers.

When contacted, a senior CCI official refused to comment on the issue. CCI, which was expected to pass an order on the tyre cartel around June, took longer to come to a conclusion.