Indian Tyre Majors Face Cartel Investigation

India’s government has asked the national fair trade regulator MRTP Commission – a quasi-judicial tribunal established to investigate monopolistic, restrictive and unfair trade practices – to look into suspected cartel-like behaviour amongst India’s major tyre manufacturers. On April 16 the commission’s investigative division issued notices to five leading tyre makers who, combined, control more than 80 per cent of the Indian market: The five include MRF, who alone controls 24 per cent, Apollo (22 per cent), JK Tyres (17 per cent), Ceat (14 per cent) and Goodyear (6 per cent).

The commission will seek details of recent price rises, capacity utilisation, raw material costs, profit margins and other information to establish whether any evidence of collusion and parallel pricing can be found. Should this prove to be the case, the findings will strengthen the position of federal finance minister Palaniappan Chidambaram, who previously indicated that tough measures will be taken against sectors in which monopolistic and oligopolistic behaviour is present.

The director-general of investigation & registration, who assists the commission in investigations, has three months in which to complete the inquiry. On top of any governmental action that occurs as a result of the regulator’s findings, the commission holds the power to order a cessation of collusive activities. Should the companies in question not comply, contempt of court proceedings may well follow.