INDIA. Mumbai: The Competition Commission of India (CCI) has imposed a collective penalty of Rs.1,788 crore on five tire manufacturers and the Automotive Tyre Manufacturers Association (ATMA) for indulging in cartelisation.
According to the statement issued by the CCI on Thursday, the order to impose a penalty passed by the three-member bench of CCI on August 31, 2018, is being implemented following the dismissal of the appeals preferred by these companies by the Supreme Court.
Tyre companies over pressure
The companies include Apollo Tyres Ltd (Gurugram, Haryana) (penalty- Rs. 425.53 crores), MRF Ltd (Chennai, TamilNadu),(Rs.622.09 crore), CEAT Ltd.(Worli, Mumbai, Maharashtra), (Rs. 252.16 crores), J.K. Tyre and Industries Ltd.( New Delhi) (Rs. 309.95 crores) and Birla Tyres Ltd. (Kolkata, West Bengal) (Rs. 178.33 crores).
In addition, a penalty of Rs. 0.084 crore was imposed on ATMA. The association was also directed to disengage and disassociate itself from collecting wholesale and retail prices through the member tire companies.
Further, certain individuals of these companies and ATMA were held liable for the anti-competitive conduct in terms of section 48 of the Competition Act, 2002 Act.
The order was passed under section 27 of the Competition Act, 2002 by the bench comprising members- Augustine Peter, U. C. Nahta, and Justice G. P. Mittal while dealing with the case (No. 08 of 2013) filed by the Union Ministry of Corporate Affairs (MCA) under Section 19(1)(b) of the Act based on a representation made by All India Tyre Dealers Federation (AITDF).
The CCI booked these companies for indulging in cartelisation by acting in concert to increase the prices of cross-ply/bias tyres variants sold by each of them in the replacement market and to limit and control production and supply in the market, in contravention of the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act.
Earlier, as per the directions of the Madras High Court, in response to the litigation(W.A. No. 529/ 2018) filed by MRF Limited, the CCI order was kept held in abeyance .
After that, the division bench of the Madras High Court, by its order dated January 06, dismissed the writ appeal. Then aggrieved tyre manufacturing companies preferred Special Leave Petition before the Supreme Court, which S.C. dismissed with its order dated January 28.
The CCI noted that the tyre manufacturers had exchanged price-sensitive data amongst them through the platform of their association-ATMA and had taken collective decisions on the prices of tyres.
The Commission also found that ATMA collected and compiled company-wise and segment-wise monthly and cumulative data on production, domestic sales, and export of tyres on a real-time basis.
Thus, the Commission noted that sharing such sensitive information made coordination easier amongst the tyre manufacturers.
Accordingly, the Commission held above five tyre manufacturers and ATMA guilty of contravention of Section 3 of the Act, which prohibits anti-competitive agreements including cartels, during 2011-2012.
CCI held certain key persons responsible for the irregularities under section 48 of the Act. They included: Neeraj Kanwar, Vice-Chairman, and Managing Director and Satish Sharma, President, Asia Pacific, Middle East, and Africa- Apollo Tyres Ltd, K.M. Mammen, CMD, Koshy K Varghese, Executive Vice- President (Marketing)- MRF Ltd, Anant Goenka, Managing Director, Arnab Banerjee, Executive Director (Operations)- CEAT Ltd, Raghupati Singhania, CMD, Vikram Malhotra, Marketing Director, and Arun Kumar Bajoria, President- J.K. Tyre and Industries Ltd, Basant Kumar Birla, Chairman, Ashwani Maheshwari, President, and Arvind Kumar Singh, President/ Chief Executive Officer- Birla Tyres Ltd and Rajiv Budhraja, Director General, ATMA.
“There are 39 tyre companies in India of which the. Apollo, Birla, Bridgestone, Ceat, Continental, Goodyear, JK, MRF, Michelin, and TVS Srichakra together hold 95% share in the market,” the CCI noted.