Read: Cartel Theory & Indian Tyre manufacturers
CCI fined five Tyre companies namely Apollo, MRF, CEAT, JK, Birla and their association i.e. Automotive Tyre Manufacturers Association (ATMA) for indulging in price-fixing in concert to increase the prices of cross ply/bias tyres variants sold by each of them in the replacement market and to limit and control production and supply in this market.
PENALTIES:
The Law – The maximum penalty cannot exceed 10 % of the average of the turnover of the contravening enterprise for the three preceding financial years. However, in the case of a cartel, the CCI can impose a penalty of up to three times the profit of the contravening enterprise or 10 % of the turnover of the contravening enterprise, for each year of the continuance of the cartel, whichever is greater. Further, the directors and other employees of the contravening entity found responsible can also be penalized.
Since the pandemic, CCI’s investigations continued against cartels. Last year alone, CCI fined 5 entities (including their officers) guilty of cartelization. Till date, penalties for cartel infringements have crossed approximately 90 billion rupees.
In three leniency applications, including one filed by Hyundai disclosing the existence of price fixing, the CCI, while granting reduction in penalties to the leniency applicants, imposed monetary penalties amounting to 8.63 billion rupees on two companies and their trade association.
The CCI has given relief to parties complaining against trade associations imposing mandatory unfair terms and conditions to control their market practices and pricing strategies – in the pharmaceutical / films industry, amateur baseball players, to name a few.
Cooperation
with other jurisdictions
The CCI has executed memoranda of understanding on cooperation with several competition agencies – in US, EU and Australia, besides Administrative Council for Economic Defense of Brazil and the Japan Fair Trade Commission, International Competition Network and other channels.
CCI’s extraterritorial jurisdiction – An action taking place outside India that is likely to harm the market in India – The CCI has exercised its powers in a few cases.
| TALKING POINTS |
What lies ahead for Tyre Industry
The findings and punitive orders passed in 2020 – 22 against Tyre manufacturers, Tata Motors and Maruti Suzuki can open doors to fair dealing if the dealers of tyre and other OEM brands take this as an opportunity to negotiate for an equal relationship or fair terms with the OEMs. It is a wake up call for OEMs for corrective measures in dealings, particularly relating to imposing or maintaining prices that may be seen as violative of competition law. |
OEMs should ponder on these points
- How to develop seamless business strategies and practices in align with recent CCI’s rulings
- Focusing on competition issues
- Mitigating risk of getting investigated in future
- Future course of action