For forming a cartel, major tyre firms, including MRF company have been fined
The Competition Commission of India (CCI) has imposed penalties on 5 tyre manufacturers to the tune of Rs. 1788.06 crores for indulging in cartelisation, besides passing a cease and desist order.
In an order dated 2nd February 2022, the CCI said it has levied a penalty of Rs. 622.09 crores on MRF Ltd., Rs. 425.53 crores on Apollo Tyres, Rs. 309.95 crores on JK Tyre, Rs. 252.16 crores on CEAT Ltd., and Rs. 178.33 crores on Birla Tyres.
Back in 31st August 2018, the CCI had passed a final order against the 5 above-mentioned tyre companies for “indulging in cartelisation by acting in concert to increase the prices of cross ply/bias tyre variants sold by each of them in the replacement market and to limit and control production and supply in the said market.”
The companies, the CCI said, 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.”
It was found that ATMA collected and compiled information relating to company-wise and segment-wise data on production, domestic sales and export of tyres on a realtime basis, thereby aiding the tyre company cartel.
Since the sharing of such sensitive information made the coordination easier amongst the tyre manufacturers, the CCI held the 5 tyre manufacturers and ATMA guilty of contravention of the provisions of Section 3 of the Competition Act (‘Act’), 2022, which prohibits anti-competitive agreements including cartels.
But, the said order had been kept in sealed cover as the tyre makers exercised their legal actions before the higher courts. On 28th January 2022 the Supreme Court dismissed their writ appeal and now the monetary penalty has been imposed by the fair trade regulator.
In addition, a penalty of Rs. 8.4 lakhs was also imposed on ATMA. The tyre manufacturers association was also directed to “disengage and disassociate itself from collecting wholesale and retail prices through the member tyre companies or otherwise.”
Furthermore, certain individuals of the tyre companies and ATMA were held liable for the “anticompetitive conduct of their respective companies/association” in terms of the provisions of Section 48 of the Act.
This case was initiated on the basis of a reference received from the Ministry of Corporate Affairs (MCA) under Section 19(1)(b) of the Act. The said reference was based on a representation made by All India Tyre Dealers Federation (AITDF) to the MCA.
