A couple of days ago, the Ministry of Corporate Affairs filed a complaint against five tyre manufacturers for being involved in cartelisation. This include major India-based tyre manufacturers like Apollo tyres, MRF, CEAT, JK Tyres and Birla Tyres.
Cartelisation means setting the price of their products after agreeing with each other. Many experts believe that it is one of the ways to make profit when the competition is fierce.
An investigation done by CCI (Competition Commission of India) found that “Despite slack tyre demand in 2012-13 and 2013-14, the companies were able to significantly enhance operating margins, a strong indication of coordinated action”.
CCI said, “These five companies, under the aegis of the Association of Tyres Manufacturers Association (ATMA), have from 2011-12 to 2013-14 indirectly determined the price of tyres in the market.”
However, Onkar Kanwar, Chairman of Apollo Tyres has denied the allegations that there is cartelisation in the tyre industry. He said that market forces determine the pricing of their products. He said, “As far as Apollo Tyres is concerned, we go on our own pricing”.
Explaining it further, he said the tyre market is highly competitive as there are many players including domestic manufacturers, foreign makers and even Chinese imports. “So there is no question of cartelisation.”
Further, the CCI has asked the alleged companies and ATMA to submit objections on this preliminary report by March 16, 2016. The final decision will be announced by CCI after conducting an oral hearing on March 23, 2016.