India tyre cartel allegation under investigation
India-based news website Livemint.com reports that antitrust regulator the Competition Commission of India (CCI) is looking into a possible cartel within India’s tyre industry. The CCI began its investigation following receiving a report from its director general earlier this year. This report concluded that the five leading Indian five makers, who together control 95 per cent of the domestic market, and the Automotive Tyre Manufacturers’ Association (ATMA) colluded to fix prices. Now the CCI is, says Livemint.com, looking into the allegation more closely with a view to holding a hearing in December.
The director general’s report, submitted to the CCI in May 2011, concluded that ATMA, along with Apollo Tyres Ltd, MRF Ltd, JK Tyre and Industries Ltd, Birla Tyres and Ceat Ltd acted together, violating the applicable Indian laws on cartelisation. Livemint.com says it has reviewed a copy of the director general’s report and quoted the following section: “The intent and conduct of ATMA as noted from the minutes and circulars clearly reflect that the major domestic tyre companies acted in a concerted manner and meeting of the minds has taken place with regard to various issues related and common to the tyre industry.”
“We are looking at the case and have asked leading tyre manufacturers some questions,” said a senior CCI official, quoted by Livemint.com on condition of anonymity. “Worldwide, it takes long to arrive at a conclusion as cartelisation is quite difficult to prove.” Cartel activities between 2005 and 2010 are under scrutiny. The CCI inherited the case from former competition regulator the Monopolies and Restrictive Trade Practices Commission (MRTPC) in 2010. The MRTPC, which lacked the power to impose penalties and order prosecution, was wound up last year.
The named parties have commented little, or not at all, on the allegations. Ceat vice-president Arnab Banerjee responded that “I would not like to comment at this point of time,” while JK Tyre, MRF and Birla Tyres did not reply to e-mails sent by the news site. Apollo Tyres said the company will let the ATMA comment on the matter. ATMA director general Rajiv Budhraja, however, also declined to comment on the report as it is still being debated. “All I can say is that the hearing is still going on and the case has been challenged by the tyre companies,” Budhraja told Livemint.com. In the tyre makers’ defence, Budhraja commented that no data supporting the theory of a cartel aimed at choking tyre imports – the report mentions cartel participants “collectively blacklisting” importers – exists. “Import data does not substantiate that,” he said. “Imports have only gone up.”
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