Competition panel probes alleged cartelisation in tyre industry

The Competition Commission of India (CCI) has ordered a probe by the director general-investigations into alleged cartelisation by the country’s top five tyre makers.

The order was issued in June this year in response to a complaint from the All India Tyre Dealers’ Federation (AITDF) in 2013. The probe is now on.

According to the eight-page order, AITDF accused Apollo Tyres, MRF, Ceat, JK Tyres and Birla Tyres – together contributing to 90 per cent of the production – of engaging in “price parallelism” in the profitable replacement market.

The dealers’ body also accused the All India Tyre Manufacturers’ Association (ATMA) of patronising such practices.

According to dealers, tyre makers have been consistent in increasing product prices to counter any sharp rise in the costs of natural rubber, but a decline in prices of raw material does not lead to a corresponding cut in tyre prices.

The accusation was opposed by the ATMA. In its response, the producers’ body said it did not act as a platform for members to act in concert.

ATMA pointed out that natural rubber is not the only raw material used in tyre making. “Therefore, the pricing of tyres could not possibly be governed by the price of natural rubber.”

It had pointed out that dealers had lodged a similar complaint in 2008 that could not be substantiated.

After hearing both sides, a four-member CCI panel found merit in the complaint.

Quoting AITDF’s petition, it said the rise in natural rubber prices to ₹240 a kg sent tyre prices soaring by 18-25 per cent in 2011-12. However, a subsequent drop in rubber prices to ₹145 a kg did not result in a cut in tyre prices.

On the contrary, tyre prices of all companies remained firm and comparable between 2012 and 2014.

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