ORDER

Order under section 27 of the Competition Act, 2002

Factual Background

1. The present information was originally filed by the All India Tyre Dealers' Federation (AITDF) against the tyre manufacturers before the Ministry of Corporate Affairs and the same was forwarded by the Ministry to the MRTP Commission (MRTPC). Consequent upon the repeal of the MRTP Act, the matter stood transferred to the Competition Commission of India (Commission) under section 66 (6) of the Competition Act, 2002 ('the Act').

2. In the said information dated 28.12.2007, AITDF alleged that the tyre manufacturers were indulging in anti-competitive activities. In the information, statements of Ministers of Finance and Corporate Affairs were quoted to indicate that the Ministers were also aware about the behaviour of the tyre manufacturers.

3. It was alleged that the domestic tyre industry was the best example of indulgence in the anti-competitive activities and resorting to trade mal-practices. The tyre trade has been reeling under this exploitative behaviour of these handful of domestic tyre majors. The domestic tyre industry, operating at 95%-100% capacity, on the back of almost 25% annual growth in commercial vehicle population in last four-five years, has been working in unison and usurping the excise duty reduction contrary to the interest of tyre users.

4. The AITDF alleged that since independence, the behaviour of domestic tyre majors has been anti-competitive, anti-consumer and they have been indulging in various pricing and trade malpractices, which had direct bearing on the revenue of the state exchequer. The tyre majors are having history of restrictive trade practices and even 35 years back the MRTP Commission had passed its first 'cease and desist' order against the cartelization by domestic tyre industry in October 1974. Hence, domestic tyre industry has the 'distinction' of being indulgent in restrictive trade practices in the market and as a consequence creating chasm among the dealers creating a 'creamy layer' within the tyre trade and generally exploiting the tyre user by price rigging and strangulation of production and supplies. AITDF also alleged that the truck and bus operators are not the only victim of their machination, but also the vehicle manufacturers like Tata Motors have been exploited in recent past by the domestic tyre majors.

5. The AITDF submitted that they have been continuously feeding the concerned Central Ministries about the anti-trade, anti-consumer and restrictive trade practices of domestic tyre majors. The AITDF also approached the Competition Commission of India regarding the anti-competitive behaviour of domestic tyre majors vide letter dated 09.06.2007.

6. Following the receipt of the information, the erstwhile MRTP Commission ordered an investigation into the matter. From the record, it appears that as the DG (I&R) could not complete the investigation when the MRTP Act, 1969was repealed, the matter was transferred to the Commission.

Prima Facie Opinion

7. The Commission considered the matter in its meeting and on perusal of the material on record and after giving thoughtful consideration to all the facts and circumstances of the case, passed an order dated 22.06.2010 under section 26(1) of the Act directing the Director General ('DG') to conduct an investigation into the matter and submit a report. The order of the Commission specifically mentioned the five major domestic tyre manufacturing companies viz. Apollo Tyres Limited, MRF Ltd., Ceat Tyre Ltd., Birla Tyre Ltd. and J.K. Tyre Ltd.

Investigation and Findings of DG Report

8. In pursuance of the direction of the Commission, the DG conducted the investigation into the matter and submitted his investigation report to the Commission.

9. During the course of the investigation, the DG issued notices to the following tyre manufacturers to seek informati