The Supreme Court will, on Monday, hear the CCI appeal against the NCLAT ruling in the tyre cartel matter whereby the Appellate Tribunal remanded the matter back to the Competition watchdog for reconsideration of penalties. 

The NCLAT had overturned CCI’s ruling, in December last year, 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. 

This appeal matter will come in Supreme Court before a Bench comprising Justices Sanjiv Khanna and M M Sundresh on Monday, sources said. 

In its appeal, the CCI has contended before the Supreme Court that the purported errors pointed out by NCLAT were already noted and dealt with by the Competition watchdog in its order and therefore there was no occasion for remanding the matter back to CCI. 

CCI is also aggrieved of the observation of Appellate Tribunal that a 11-16 percent simultaneous increase in prices is not sufficient to establish cartel. CCI has contended that this sets a dangerous proposition for future cases in cartel matter, they added.

On appeals filed by tyre companies against the CCI ruling, NCLAT had, in December last year, 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.

Also read: Tyre companies to challenge cartelisation penalty

NCLAT had remanded the matter to CCI on the grounds that domestic industry needs to be “saved” during challenging times and that the promotion of domestic industry keeping in view the economic development of the country was an important facet of the Competition Act, 2002.

NCLAT order in the tyre cartel case evoked mixed reactions from Competition law experts and practitioners. Some experts contended that directing CCI to review penalties to save the domestic industry (which is under lot of pressure from global tyre manufacturing companies where a lot of unutilised capacity is available) sets a dangerous precedent, besides smacking of protectionism of domestic industry. The ruling disturbs a level playing field and may send a wrong signal to global players undermining India’s standing, they added.

Also read: CCI will explore “legal options” on recent NCLAT ruling in Android case, says ASG Venkataraman

Competition  law applies in equal measure  to both domestic and foreign  players, it was noted. 

However, some experts had a different take on this NCLAT order and claimed that It would not be wrong to state that the protection of the domestic market is in consonance with the objectives of Competition Act, namely economic development of the country and sustaining competition in the market, specially when the industry in issue is already in the red. 

The extreme penalties imposed are likely to kill the industry, which is not good for the economy, they argued.

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 a 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.

Also read: Indian tyre industry integrating with global supply chains: ATMA

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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