Home » CCI imposes Rs. 1,788 crore penalty on five tyre manufacturers for cartelisation

CCI imposes Rs. 1,788 crore penalty on five tyre manufacturers for cartelisation

by Raju Vernekar
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By Raju Vernekar
Mumbai, Feb 4:

The Competition Commission of India (CCI) has imposed a collective penalty of Rs.1,788 crore on five tyre manufacturers and the Automotive Tyre Manufacturers Association (ATMA) for indulging in cartelisation.
As per the statement issued by the CCI on Thursday, the order to impose penalty passed by the three member bench of CCI on August 31,2018 is being implemented following dismissal of the appeals preferred by these companies by the Supreme Court.
The companies include: Apollo Tyres Ltd (Gurugram, Haryana) (penalty- Rs. 425.53 crore), MRF Ltd (Chennai,TamilNadu),(Rs.622.09 crore), CEAT Ltd.(Worli, Mumbai, Maharashtra), (Rs. 252.16 crore), JK Tyre and Industries Ltd.( New Delhi) (Rs. 309.95 crore) and Birla Tyres Ltd. (Kolkata, West Bengal) (Rs. 178.33 crore).
In addition, a penalty of Rs. 0.084 crore was imposed on ATMA. The association was also directed to disengage and disassociate itself from collecting wholesale and retail prices through the member tyre companies. Further, certain individuals of these companies and ATMA were held liable for the anticompetitive conduct in terms of the provisions of section 48 of the Competition Act, 2002 Act.
The order was passed under section 27 of the Competition Act, 2002 by the bench  comprising members- Augustine Peter,  U. C. Nahta and Justice G. P. Mittal while dealing with the case (No. 08 of 2013) filed by the Union Ministry of Corporate Affairs (MCA) under Section 19(1)(b) of the Act based on a representation made by All India Tyre Dealers Federation (AITDF).
The CCI booked these companies 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 market, in contravention of the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act.
Earlier the CCI order was kept held in abeyance as per the directions of the Madras High Court, in response to the litigation( W.A. No. 529/ 2018), filed by MRF Limited. Thereafter, the division bench of the Madras High Court by its order dated January 06, dismissed the writ appeal. Then aggrieved tyre companies preferred Special Leave Petition before the Supreme Court, which was dismissed by the SC with its order dated January 28.
The CCI noted that the tyre manufactures had exchanged price-sensitive data amongst them through the platform of their association-ATMA and had taken collective decisions on the prices of tyres. The Commission also found that ATMA collected and compiled company-wise and segment-wise monthly and cumulative data 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 coordination easier amongst the tyre manufacturers. Accordingly, the Commission held above five tyre manufacturers and ATMA guilty of contravention of the provisions of Section 3 of the Act, which prohibits anti-competitive agreements including cartels, during 2011-2012.
The Director General, CCI held certain key persons responsible for the irregularities under section 48 of the Act. They included: Neeraj Kanwar, Vice-Chairman and Managing Director and Satish Sharma, President, Asia Pacific, Middle East and Africa- Apollo Tyres Ltd, K.M. Mammen, CMD, Koshy K Varghese, Executive Vice- President (Marketing)- MRF Ltd, Anant Goenka, Managing Director, Arnab Banerjee, Executive Director (Operations)- CEAT Ltd, Raghupati Singhania, CMD, Vikram Malhotra, Marketing Director and Arun Kumar Bajoria, President- JK Tyre and Industries Ltd, Basant Kumar Birla, Chairman, Ashwani Maheshwari, President and Arvind Kumar Singh, President/ Chief Executive Officer- Birla Tyres Ltd and Rajiv Budhraja, Director General, ATMA.
There are 39 tyre companies in India of which the. Apollo, Birla, Bridgestone, Ceat,  Continental, Goodyear, JK, MRF, Michelin and TVS Srichakra together hold 95% share in the market, the CCI noted.

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