CCI imposes collective penalty of Rs.1,500 crore on 5 tyre manufacturers and Automotive Tyre Manufacturers Association for indulging in cartelisation: Know the Details

CCI imposes collective penalty of Rs.1,500 crore on 5 tyre manufacturers and Automotive Tyre Manufacturers Association for indulging in cartelisation: Know the Details

The Competition Commission of India CCI imposed a collective penalty of Rs.1,500 crore on 5 tyre manufacturers and Automotive Tyre Manufacturers Association for indulging in cartelisation.

Background 

The present matter has been initiated on the basis of a reference received from the Ministry of Corporate Affairs (MCA) under Section 19(1)(b) of the Competition Act, 2002 (the Act) wherein it was alleged that domestic tyre manufacturers such as Apollo Tyres Limited (‘OP-1’), MRF Ltd. (‘OP-2’), CEAT Ltd. (‘OP-3’), JK Tyre and Industries Ltd. (‘OP-4’), Birla Tyres Ltd. (‘OP-5’) and Automotive Tyre Manufacturers’ Association (‘ATMA’/‘OP-6’) have violated the provisions of Section 3 of the Act.

Arguments

The OP-1 contended that the DG’s analysis of price movements is incorrect and misleading as there are serious calculation errors while comparing the rate of change in prices of tyres in the TBB segment. 

OP-2 argued that the DG has failed to show the existence of an ‘agreement’ amongst the OPs to prove a cartel under Section 3(3) (a) and 3(3) (b) of the Act which is a condition precedent to establish an allegation of cartel. 

Decision 

The three member bench of Augustine Peter, U. C. Nahta and Justice G. P. Mittal after analyzing the role of the office bearers of OP-1 to OP-6 found the certain office bearers to be liable under Section 48 of the Act.  

The CCI noted that the DG has investigated the role of the persons who at the time of such contravention were in charge of and responsible for the conduct of the business of the OPs so as to fix responsibilities of such persons and highlighted the individual roles of key persons of these OPs.

The Commission said that the OPs, by acting in concert, have increased the prices of cross ply/ bias tyres variants sold by each of them in the replacement market belonging to the truck/ bus segment and have also limited and controlled the production and supply in the said market thereby clearly contravening the provisions of Section 3(3)(a) and 3(3)(b) read with Section 3(1) of the Act. 

The Commission imposed a penalty on the office bearers in terms of Section 27 (b) of the Act calculated at the rate of 5% of average of the income for the last three preceding financial years and directed the Opposite Parties and the other individuals to deposit the penalty amount within 60 days of the receipt of this order.

Case title: Ministry of Corporate Affairs v/s Apollo Tyres Ltd.and Ors.

Citation: Reference Case No. 08 of 2013

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