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

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

A Division Bench of NCLAT comprising Justice Rakesh Kumar, Member (judicial) and Ashok Kumar Mishra, Member (Technical) on Thursday pronounced its order on a batch of appeals preferred by tyre companies — Apollo Tyres, MRF, CEAT, JK Tyre and Birla Tyres— and their association i.e. Automotive Tyre Manufacturers Association (ATMA) against CCI order.

The  Appellate Tribunal set aside the penalties and remanded the matter back to CCI for fresh consideration. Earlier, after marathon hearings in the matter, NCLAT had in September reserved its order  in the nearly decade-old matter.

 The CCI had in February this year imposed a cumulative penalty of ₹ 1,788 crore on these five tyre companies and ATMA. These tyre companies had appealed against the order. 

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

 AITDF had alleged that five major tyre companies — accounting for 90 per cent of tyre industry production — were engaging in “price parallelism” in the profitable replacement market.

 The competition watchdog had, in August 2018, passed a final order against the five tyre companies and their association. 

The CCI had noted that the tyre manufacturers had exchanged price sensitive data amongst themselves through the platform of their association and had taken collective decisions on tyre prices. 

CCI had held the five manufacturers and ATMA guilty of contravention of the provisions of Section 3 of Competition Act, which prohibit anti-competitive agreements, including cartels, during 2011-12.

The CCI’s order was appealed before Madras High Court by MRF and the HC had, in January this year, dismissed the appeal. 

The SC, in January this year, dismissed the SLPs filed before the apex court. Following this, the CCI had, In February, imposed cumulative penalty of ₹1,788 crore on the five tyre companies and ATMA. 

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