The Competition Commission of India (CCI) has filed an appeal at the Supreme Court against the ruling of the National Company Law Appellate Tribunal (NCLAT) in the tyre cartel matter.

The NCLAT had, in December last year, remanded the matter back to CCI to review its ₹1,788-crore cumulative penalty imposed on tyre companies for cartelisation.

The CCI is believed to have challenged certain observations made by the NCLAT, which highlighted ‘arithmetical errors’ in the competition watchdog’s order and required it to relook at the penalty amount in order to save the domestic tyre industry, sources said.

The case was initiated by CCI a decade ago in 2012 on a reference made by the Ministry of Corporate Affairs based on a representation made by the All India Tyre Dealers Federation alleging cartelisation by top tyre companies.

After detailed investigation, CCI ruled that JK Tyres, CEAT, Apollo, Birla and MRF indulged in cartelisation and slapped a cumulative penalty of ₹1,788 crore upon tyre companies and their trade association namely, Automotive Tyre Manufacturers Association (ATMA), for indulging in cartelisation by acting in concert to increase prices of tyres and also for limiting and controlling production and supply of tyres.

CCI found tyre manufactures to have exchanged price-sensitive data amongst them through the platform of their trade association (ATMA), and had taken collective decisions on the prices of tyres. CCI also 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 real-time basis. Thus, CCI noted that the sharing of such sensitive information made the co-ordination easier amongst the tyre manufacturers.

NCLAT proceedings

On appeals by tyre companies against the CCI ruling, the NCLAT directed CCI to review its ₹1,788-crore penalty on the grounds that the domestic industry needs to be “saved” during challenging times and that promotion of domestic industry, keeping in view the economic development of country, was an important facet of the Competition Act, 2002.

NCLAT, in its order, observed that “…matter can be remitted back to the CCI to re-examine the calculation of arithmetical errors and also consider reviewing the penalty to save domestic industry in view of the fact that domestic tyre industry is under lot of pressure from global tyre manufacturing companies where lot of unutilised capacity is available, the promotion of domestic industry is also to be kept in mind by CCI, as the object of the Competition Act, 2002 requires to keep in view the economic development of the country also. If violations are done by domestic industries, no doubt they should be penalised and be given a chance of reformatory instead of virtually putting the organisation on weak health. One of the Appellant – Birla Tyre is already under Corporate Insolvency Resolution Process”.