Indulgence in cartelization was the reason behind the fine of Rs 1,788 Crore imposed on tyre makers.
Tyre makers fined by CCI include big names such as MRF, CEAT, Apollo, JK Tyres, Birla Tyres. This fine was imposed after the Competition Commission of India (CCI) found that all these tyre makers were indulged in cartelization of tyres.
Although, the fine imposed is in the form of monetary compensation but the amount is hefty for each tyre manufacturer.
The "Tyre" Story
According to the released report by CCI, the above said companies were found guilty of exchanging information along with indulgence of Automotive Tyre Manufacturers Association (ATMA) to jointly increase the prices of the cross-ply type of tyres in the replacement market by controlling their production.
This price-fixing is not the first time tyre makers have been held with. In the past also there have been events similar to such. The cumulative information exchange was done via their joint association ATMA.
This price-fixing game led to the divulgence of their actions and a quick enquiry was set up by CCI. This raid has led to a hefty fine imposition of 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 Tyres, and Rs 178.33 Crore on Birla Tyres.
During the probe, CCI also found that not only collective price holding decisions were made but ATMA collected and compiled information relating to company-wise and segment-wise data (monthly and cumulatively) of production, domestic sales and export of tyres on a real-time basis.
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The "Tyre" Impact
As expected a backlash was anticipated from such a negative news for the tyre industry. The investors immediately responded to this news leading to withdrawal of stakes from the stock market. As a result, the National Stock Exchange saw a negative fall of tyre stocks varying from 1-3%.
Another impact is that CCI has directed ATMA to disengage and disassociate itself from collecting wholesale and retail prices through the member tyre companies.
So what do you think about these tyre makers fined by CCI? Is it justifiable or there should've been other penalties? Do tell us by commenting below. Also, do not forget to subscribe to our YouTube channel 91Wheels for the latest auto-industry updates.
