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The Supreme Court on Monday issued notices to the tyre companies and their association, Automotive Tyre Manufacturers‘ Association (ATMA) in the matter of CCI’s appeal against the NCLAT tyre cartel ruling that required the competition watchdog to reconsider the penalties imposed on leading tyre companies.
The apex court’s division bench comprising Justices Sanjiv Khanna and M M Sundresh gave time till September 2023 for the tyre companies and ATMA to respond to the notices. The Supreme Court is now expected to hear the appeal in September 2023.
Domestic industry needs
Senior advocate Mukul Rohatgi, who appeared for one of the tyre makers, informed the court on Monday that some of the tyre companies are also wanting to prefer an appeal against National Company Law Appellate Tribunal’s (NCLAT) order.
The NCLAT had, in December last year, overturned CCI’s ruling and remanded the matter back to the competition watchdog to review its ₹1,788-crore cumulative penalty imposed on tyre companies and their industry association ATMA for cartelisation. NCLAT had 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.
NCLAT had remanded the matter to CCI on the grounds that domestic industry needs to be “saved” during challenging times and that promotion of domestic industry keeping in view economic development of country was an important facet of the Competition Act, 2002.
The NCLAT order was issued in the wake of appeals filed by leading tyre makers such as Ceat, Apollo Tyres, JK Tyre, MRF, Birla Tyres and ATMA.
For cartelisation, CCI had imposed penalties of ₹425.53 crore on Apollo Tyres; ₹178.33 crore on Birla Tyres; ₹ 309.95 crore on JK Tyre; ₹ 252.16 crore on CEAT Ltd and ₹ 622.09 crore on MRF.
Tyre cartel case
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, 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.
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