CCI penalises tyre manufacturers and ATMA for indulging in cartelisation

The Competition Commission of India (CCI) passed a order on August 31, 2018 against five Tyre companies namely Apollo Tyres, MRF, CEAT, JK Tyre and Industries, Birla Tyres and association body the Automotive Tyre Manufacturers Association (ATMA) for indulging in cartelisation by acting in concert to increase the prices of cross ply/bias tyres variants sold 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 order was earlier kept in sealed cover as per the directions of the Madras High Court, issued in W.A. No. 529 of 2018, preferred by MRF. Thereafter, the Division Bench of the Madras High Court vide an order dated January 1, 2022, dismissed the aforesaid writ appeal. Aggrieved with the same, the tyre companies preferred SLPs before the Supreme Court, which was dismissed vide its order dated January 28, 2022.

This case was initiated on the basis of 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 All India Tyre Dealers Federation (AITDF) to the MCA.

The Commission noted that the tyre manufactures 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 the co-ordination easier amongst the tyre manufacturers. Accordingly, the CCI held the five tyre manufacturers and ATMA guilty of contravention of the provisions of Section 3 of the Act, which prohibits anti-competitive agreements including cartels, during 2011-2012.

The CCI has imposed penalties of Rs 425.53 crore on Apollo Tyres; Rs 622.09 crore on MRF; Rs 252.16 crore on CEAT; 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.

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