Supreme Court Seeks Tyre Companies Reply in CCI Appeal Against NCLAT Order for Review of Cartelisation The Supreme Court in the matter of Competition Commission of India vs. Ceat Limited and ors has sought the replies from five tyre manufacturing companies in an appeal filed by the Competition Commission of India (CCI) against a National Company Law Appellate Tribunal (NCLAT) order that...
Supreme Court Seeks Tyre Companies Reply in CCI Appeal Against NCLAT Order for Review of Cartelisation
The Supreme Court in the matter of Competition Commission of India vs. Ceat Limited and ors has sought the replies from five tyre manufacturing companies in an appeal filed by the Competition Commission of India (CCI) against a National Company Law Appellate Tribunal (NCLAT) order that had directed the Commission to review its findings of cartelisation by the companies.
The division bench of Justices Sanjiv Khanna and MM Sundresh further issued notice to the Union Corporate Affairs Ministry and the Automotive Tyre Manufactures Association (ATMA) for the same.
The case dates back to 2018 when the CCI had imposed a collective penalty of Rs. 1,500 crore on the companies and the ATMA for indulging in cartelisation. It had also passed a cease-and-desist order.
In order to initiate the case against the tyre manufacturers, a reference was received from the Ministry of Corporate Affairs, which in turn was derived from a representation made by the All-India Tyre Dealers Federation of India.
As a result of the investigation, the CCI concluded that the companies and the association had acted jointly in order to increase the prices of the 'cross ply' variants sold by each of them on the replacement market, and to limit and control production and supply within said market.
The following penalties had been imposed:
-Rs. 425.53 crore on Apollo Tyres;
-Rs. 622.09 crore on MRF Ltd.;
-Rs. 252.16 crore on CEAT Ltd.;
-Rs. 309.95 crore on JK Tyre;
-Rs. 178.33 crore on Birla Tyres;
-Rs. 8.4 lakh on ATMA, along with an order to disengage and disassociate itself from collecting wholesale and retail prices through the member-tyre companies or otherwise.
The CCI's investigation in this regard was challenged before the Madras High Court citing procedural irregularities. Thereafter, the CCI’s findings were kept in a sealed cover on the High Court's orders. The High Court eventually ordered that it would not interfere in the manner.
The tyre companies appeals against this ruling was dismissed by the Supreme Court on January 28 last year, after which the 2018 CCI findings were made public. The Supreme Court had given liberty to the tyre companies to pursue their alternate remedies, after which they moved the NCLAT.
The Appellate Tribunal had, among other things, held there was no conclusive evidence of 'price parallelism' as found by the CCI.
The CCI has challenged this order, which also said that the Ministry could not have referred the matter in the way it did.
The appeal further reads, “The Hon’ble NCLAT has erred in directing the CCI to review the penalty to ‘save domestic industry’ and for ‘promotion of domestic industry.’ While holding so, the Hon’ble NCLAT has failed to appreciate that the (Competition) Act is based on the principle of “competition neutrality and ignored the objects and reasons for enactment and enforcement of competition law in India.”
Additional Solicitor General N Venkataraman and Advocate Arjun Krishnan appeared for the CCI before the Apex Court. The plea was filed through Krishnan, who is a Partner at Samvad Partners.