NCLAT sets aside Rs.1,788 crore penalty imposed by CCI on tyre companies

NCLAT sets aside Rs.1,788 crore penalty imposed by CCI on tyre companies

Remands the matter back to the tribunal for fresh consideration

The National Company Law Appellate Tribunal (NCLAT) has set aside the Rs.1,788-crore penalty imposed by the Competition Commission of India (CCI) on five tyre companies for indulging in cartelization.

The division bench comprising Justice Rakesh Kumar (judicial member) and Ashok Kumar Mishra (technical member) pronounced its order on a batch of appeals by Apollo Tyres, MRF, CEAT, JK Tyre and Birla Tyres, and their association Automotive Tyre Manufacturers Association (ATMA) against the CCI order.

The appellate tribunal set aside the penalties and remanded the matter back to the Commission for fresh consideration. Earlier, NCLAT had reserved its order in the nearly decade-old matter.

Early this year, CCI imposed a cumulative penalty of Rs.1,788 crore on the five tyre companies and the association. They had appealed against the order.

The matter arose out of a representation made in 2013 by the All-India Tyre Dealers Federation (AITDF) to the Ministry of Corporate Affairs, which forwarded it to the CCI.

AITDF alleged that the tyre companies, accounting for 90 per cent of industrial production, were engaging in 'price parallelism' in the profitable replacement market.

In 2018, the competition watchdog passed a final order against the companies and their association. The Commission noted that tyre manufacturers had exchanged price-sensitive data amongst themselves through their association and took collective decisions on prices.

It held the manufacturers and ATMA guilty of contravention of the provisions of the Competition Act, which prohibited anti-competitive agreements, including cartels.

The order of the Commission was appealed before the Madras High Court by MRF, and in January, the appeal was dismissed.

Thereafter, the Supreme Court also dismissed the SLPs filed before it. Following this, the CCI imposed a cumulative penalty of Rs.1,788 crores on the five tyre companies and the association.