Tyre companies to challenge cartelisation penalty

Swaraj Baggonkar | | Updated on: Feb 03, 2022

Competition Commission of India charged five tyre-makers and their lobby with colluding to fix prices

Apollo Tyres and Ceat will challenge the ₹1,788-crore fine imposed by the Competition Commission of India (CCI) collectively on five tyre companies and their lobby Automotive Tyre Manufacturers Association (ATMA) over charges of cartelisation.

Birla Tyres, MRF and JK Tyres are the other three companies that were charged with acting in concert to increase the price of cross ply or bias tyre variants.

The Commission imposed penalties of ₹425.53 crore on Apollo Tyres, ₹622.09 crore on MRF, ₹252.16 crore on Ceat, ₹309.95 crore on JK Tyre and ₹178.33 crore on Birla Tyres, besides passing a cease-and-desist order. Additionally, a penalty of ₹8.4 lakh was imposed on ATMA.

The companies are accused of limiting and controlling production and supply in the replacement market and, thereby, contravening the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Competition Act, 2002, CCI said in a statement.

A statement from Apollo Tyres said, “The company does not agree with the findings of the Commission and will take necessary steps under the law to appeal against the order after a more detailed examination of the full order. We would like to reiterate to all stakeholders that the company follows the highest level of governance practices and operates within the letter and spirit of the law.”

Ceat, in its statement, said, “CCI in the said order has imposed a penalty on Ceat. The order is being studied for appropriate legal course. We strongly reiterate that there has been no wrongdoing on the part of Ceat and want to reassure all the stakeholders that Ceat has never indulged in or was part of any cartel or undertook any anti-competitive practices.”

“ATMA is studying the detailed order and will take further course of action in consultation with our legal advisors”, the industry body said in a response.

The Commission is said to have noted that the tyre manufacturers had exchanged price-sensitive data among themselves through ATMA, and collectively decided on tyre prices.

The Commission also found that ATMA compiled company-wise and segment-wise data (both monthly and cumulative) on production, domestic sales and export of tyres on a realtime basis. Thus, the Commission noted that the sharing of such sensitive information made the coordination easier among the tyre manufacturers.

Published on February 03, 2022
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