Tyremakers Meet to Address Cartel Allegations

In an attempt to address allegations of cartel behaviour amongst Indian tyremakers the Automotive Tyre Manufacturers Association (ATMA) and the Competition Commission of India (CCI) have met to discuss the issue, and negotiations have begun on the possibility of implementing a compliance programme to eliminate such practices, whether they be planned or unintended.

While a probe conducted by India’s Monopolies and Restrictive Trade Practices Commission has been stalled since the early 1990s due to a high court stay obtained by a leading tyre manufacturer, India’s tyremakers deny the claims of cartelisation, and reportedly seem eager to participate in discussions that will wipe away any blemishes remaining from past anti-competitiveness allegations or investigations.

Evolving a model compliance programme for tyre companies is part of the CCI’s efforts to promote competitive practices, and the CCI has asked the Institute of Company Secretaries of India (ICSI) to prepare a charter document for the industry. “The idea is to educate the industry bodies and companies that discussing profit margins, discounts and [the] de-marketing of markets go against principles of competition,” CCI member Vinod Dhall said. Such a document would, according to ICSE CEO NK Jain, “cover good practices of production, supply and pricing.” And while, Mr. Jain adds, “some suggestions may be recommendatory, some may be the essence of competition law, which if violated, would be punishable.”

Speaking on behalf of India’s tyre manufacturers, the ATMA told the Commission that price variation exists amongst comparable products manufactured by different companies and that there is little territorial concentration- both of which, the organisation claims, indicate the absence of any tyre industry cartel at work. “We are one of the first sectors to meet the Competition Commission and to educate them about pricing,” stated ATMA secretary-general D Ravindran to Indian media. “We made a presentation to the Commission.” Mr. Ravindran also claimed that the ATMA has recommended the Indian government stop futures trading in rubber as speculation drives rubber prices up. The government is yet to decide on this matter.