CCI imposes ₹1,788 crore penalty on five tyre manufacturers for cartelisation

The Competition Commission of India (CCI/Commission) has imposed a collective penalty of ₹1,500 crore on five tyre manufacturers and Automotive Tyre Manufacturers Association (ATMA) for indulging in cartelisation..CCI found that the companies and the association had indulged in cartelisation by acting jointly to increase the prices of 'cross ply' variants sold by each of them in the replacement market and to limit and control production and supply in the said market, which contravened provisions of the Competition Act of 2002..In a press statement issued on Wednesday, the CCI stated that the following penalties have been imposed:₹425.53 crore on Apollo Tyres; ₹622.09 crore on MRF Ltd.;₹252.16 crore on CEAT Ltd.; ₹309.95 crore on JK Tyre; and ₹178.33 crore on Birla Tyres;The penalty collectively came to over ₹1500 crores. The Commission had also passed a cease and desist order. In addition, a penalty of ₹8.4 lakh was also imposed on ATMA, along with an order to disengage and disassociate itself from collecting wholesale and retail prices through the member tyre companies or otherwise..The CCI had initially passed the order holding the companies liable, in March 2018. However, the CCI probe had been challenged before the Madras High Court citing procedural irregularities and the CCI order was kept in sealed cover on the direction of the Madras High Court in 2018. The Division Bench of the Madras High Court later pronounced a judgment on January 6, 2022 noting that the investigation which was ordered by the CCI was complete and the report of the Investigating Officer was submitted to the CCI. The High Court held that the procedural irregularities in making the reference to the CCI for investigation by the Central Government could not result in setting aside the investigation. Since the inquiry by the CCI was at an advanced stage, the High Court declined to interfere and left it to the parties to seek their remedies against any final order passed by the CCI..Aggrieved, the tyre companies preferred appeals before the Supreme Court, which were dismissed on January 28, 2022.Pursuant to that, the CCI made the 2018 order public by way of press announcement. .The case against the tyre manufacturers had been initiated based on reference received from the Ministry of Corporate Affairs (MCA) which itself was based on a representation made by All India Tyre Dealers Federation (AITDF).CCI noted that the tyre manufactures had exchanged price-sensitive data between them through ATMA and had taken collective decisions on the prices of tyres.It was 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 the co- ordination easier amongst the tyre manufacturers.Accordingly, the Commission held the five tyre manufacturers and ATMA guilty under the Competition Act which prohibits anti-competitive agreements including cartels..[Read Supreme Court order].[Read CCI order of March 2018]