Why NCLAT Sent Tyre Cartel Decision Back To CCI: Khaitan & Co. Analysis

Khaitan & Co. Update

On December 01, 2022, the National Company Law Appellate Tribunal disposed of appeals filed against the Competition Commission of India’s order which found a few tyre manufacturers guilty of cartelisation (Order) and remanded the matter back to the CCI for review.

The CCI observed that the tyre prices of different tyre manufacturers moved in tandem exhibiting price parallelism, varying within a small range of 10-11%. It noted that despite a decrease in raw material costs, tyre prices increased and market shares remained stable. The CCI additionally highlighted the improving financial performance and increasing profit margins of the tyre manufacturers during the alleged cartel period.

After analysing the aforementioned factors, the CCI, vide its Order dated August 31, 2018, concluded that the parties (the tyre manufacturers and ATMA)

1. acted in concert and increased the prices of, and

2. limited and controlled the production and supply of, truck-bus bias tyre variants sold in the replacement market (TBB replacement market).

This conduct was in contravention of Sections 3(3)(a) and 3(3)(b) of the Competition Act, 2002 (Act). The CCI also held certain office bearers of the parties liable under Section 48 of the Act. The CCI, however, limited its finding of cartelisation to a period of one year, i.e., 2011-12.

While the CCI’s Order was passed in August 2018, due to certain pending litigations before the Madras High Court and later before the Supreme Court of India challenging the validity of the reference and investigation, the order was sealed until such proceedings concluded. Hence, the order was communicated to the parties in February 2022.

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