Supreme Court Seeks Response from Tyre Manufacturing Companies in CCI's Appeal on Cartelisation

On Monday, the Supreme Court asked for a response from five tyre manufacturing companies regarding an appeal filed by the Competition Commission of India (CCI) against a National Company Law Appellate Tribunal (NCLAT) order that had asked the Commission to review its findings of cartelisation by the companies. The case at hand is Competition Commission of India v. Ceat Limited and ors. The Union Corporate Affairs Ministry and the Automotive Tyre Manufactures Association (ATMA) also received notices from the bench of Justices Sanjiv Khanna and MM Sundresh.

The CCI had imposed a collective penalty of ₹1,500 crore on the companies and the ATMA in 2018 for cartelisation and had passed a cease-and-desist order. The case against the tyre manufacturers had been initiated based on a reference received from the Ministry of Corporate Affairs, which was based on a representation made by the All India Tyre Dealers Federation. The CCI found that the companies and the association had acted jointly to increase the prices of 'cross ply' variants sold by each of them in the replacement market, and limited and controlled production and supply in the said market. The penalties imposed were ₹425.53 crore on Apollo Tyres, ₹622.09 crore on MRF Ltd., ₹252.16 crore on CEAT Ltd., ₹309.95 crore on JK Tyre, ₹178.33 crore on Birla Tyres, and ₹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 probe had been challenged before the Madras High Court, which kept the findings in a sealed cover on the High Court's orders. The High Court eventually ordered that it would not interfere in the matter. The tyre companies' appeals against this ruling were 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 held that 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 argues that the NCLAT erred in directing the CCI to review the penalty to 'save domestic industry' and for 'promotion of domestic industry'. The appeal contends that the NCLAT failed to appreciate that the Competition Act is based on the principle of 'competition neutrality' and ignored the objects and reasons for the enactment and enforcement of competition law in India.

Case: Competition Commission of India v CEAT Limited & Ors.- C.A. No. 001559 - 001571 / 2023

Counsel for Petitioner: ASG N Venkataraman, Adv. Arjun Krishnan

Counsel for Opposite Party: Adv. Faisal Sherwani

Order Date: 10.04.2023 

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