CCI imposes a penalty worth Rs 1,788 crore on five Tyre manufacturers & their ATMA for indulging in cartelisation

Fair trade regulator Competition Commission of India (CCI) has imposed a penalty of over Rs 1,788 crore on five tyre companies and their Association (ATMA) for indulging in alleged cartelization. The five tyre companies include Apollo Tyres Ltd, MRF Ltd, CEAT Ltd, JK Tyre & Industries Ltd and Birla Tyres Ltd.

The Commission imposed penalties of Rs 425.53 crore on Apollo Tyres, Rs 622.09 crore on MRF Ltd., Rs 252.16 crore on CEAT Ltd., Rs 309.95 crore on JK Tyre and Rs 178.33 crore on Birla Tyres, besides passing a cease and desist order. In addition, a penalty of Rs 0.084 crore was also imposed on ATMA. ATMA was also directed to disengage and disassociate itself from collecting wholesale and retail prices through the member tyre companies or otherwise.

The Commission noted that the tyre manufacturers had exchanged price-sensitive data amongst them through the platform of their association, namely, Automotive Tyre Manufacturers Association (ATMA), and had taken collective decisions on the prices of tyres. The Commission also found that ATMA collected and compiled information relating to company-wise and segment-wise data (both monthly and cumulative) on production, domestic sales and export of tyres on a real-time basis. Thus, the Commission noted that the sharing of such sensitive information made coordination easier amongst the tyre manufacturers.

The fair trade regulator in a release said, "CCI had passed a final order dated 31.08.2018 against five Tyre companies namely Apollo Tyres Ltd., MRF Ltd., CEAT Ltd., JK Tyre and Industries Ltd., Birla Tyres Ltd. and their association i.e. Automotive Tyre Manufacturers Association (ATMA) 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 said market, thereby contravening the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Competition Act, 2002 ('the Act')."

This case was initiated based on a reference received from the Ministry of Corporate Affairs (MCA) under Section 19(1)(b) of the Act. The said reference was based on a representation made by the All India Tyre Dealers Federation (AITDF) to the MCA.

The five tyre manufacturers and ATMA were held guilty of contravention of the provisions of Section 3 of the Competition Act, which prohibits anti-competitive agreements including cartels, during 2011-2012, it said.

Further, certain individuals of the aforesaid tyre companies and ATMA were held liable for the anticompetitive conduct of their respective companies/association in terms of the provisions of Section 48 of the Act.