Companies

CCI pulls up Tata Steel, 3 others for cartelisation

Suresh P Iyengar Mumbai | Updated on June 07, 2020 Published on June 07, 2020

File photo   -  Reuters

No penalty levied by CCI

The Competition Commission (CCI) of India has held SKF, FAG Bearings India (now Schaeffler India), National Engineering Industries and Tata Steel Group company Tata Bearing, for involvement in cartelisation in the domestic industrial and automotive bearings market between 2009 to 2014.

Regarding the penalty, the Commission observed that "in light of the peculiar facts and circumstances of the present case, ends of justice would be met if the parties cease such cartel behaviour and desist from indulging in it in future, as directed".

The Commission cautioned the companies to ensure that their future conduct is in order, failing which any such future behaviour would be viewed seriously with attendant consequences.

The case was initiated by the Commission suo motu, pursuant to a so-called leniency application by Schaeffler on June 26, 2017 in which it sought lesser penalties and made disclosures about their activities.

Later, National Engineering Industries also filed a similar plea under the leniency programme, the CCI order said.

When the steel prices started increasing 2009 onwards, there was co-ordinated action among the five companies to pass on such increase to the automotive and industrial Original Equipment Manufacturer customers and in the distribution segment of the market.

Such co-ordination operated across industry segments within India to seek uniform price increase from various OEMs.

As a general practice, if there was an increase in the manufacturing cost of bearings, the OEMs accommodated certain increase in price. However, they generally did so only when all the suppliers demand for such an increase. Hence, under the cartel arrangement, these

five companies agreed on the percentage increase in steel price to the OEMs.

The rationale behind such co-ordination was to simultaneously send out price increase letters to the OEMs and distributors, specifying the percentage increase in steel prices and a request to increase the existing supply prices, as otherwise the likelihood of getting a price increase was believed to be less certain.

Tata Steel in a statement said the company had put forth objections for consideration of the Director General while a few manufacturers of bearings applied for leniency when the investigation was in progress.

In the report of investigation, the DG had partially exonerated Tata Bearings of the allegations. In respect of the balance allegations confirmed by the DG, the Bearings Division has put forth its objection before the CCI hearing concluded in October, 2019, it said.

Tata Steel and its divisions have strong governance practices on observing conduct on anti competition, said Tata Steel.

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Published on June 07, 2020
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