Tyre stocks skid as CCI slaps penalty on 5 companies for 'indulging in cartelisation'

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The Competition Commission of India (CCI) on February 2 announced the imposition of monetary penalty on five major tyre manufacturers for "indulging in cartelisation".

A penalty of Rs 425.53 crore was levied 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, the CCI said in a statement.

"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 fair trade regulator noted.

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.

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"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," the CCI added.

Apart from the penalties levied on the tyre manufacturers, a penalty of Rs 0.084 crore has been 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 statement further said.

Notably, the CCI order which held the tyre manufacturers and ATMA guilty was passed in August 2018. The order was kept in sealed cover as the tyre makers had decided to exercise their legal options before the higher courts. Their appeal was dismissed by the Supreme Court on January 28.