- 03 Feb 2022
- ICICIdirect Research
CCI IMPOSES PENALTY ON MAJOR TYRE PLAYERS ALLEGING CARTELISATION IN PAST
News: The CCI had passed a final order against five Tyre companies namely Apollo Tyres, MRF Ltd, CEAT Ltd, JK Tyre & Birla Tyres and the tyre association i.e. Automotive Tyre Manufacturers Association for indulging in cartelisation by acting in concert to increase the prices of cross ply/bias tyres variants sold by each of them in the replacement market and to limit and control production and supply in the said market. The case pertains to financial years FY12-14 wherein it is alleged the tyre companies refrained to pass the benefits of lower raw material prices to end customers in the replacement market.
Views: CCI noted that the tyre manufactures had exchanged price-sensitive data amongst them through the platform of their association, Automotive Tyre Manufacturers Association (ATMA), and had taken collective decisions on the prices of tyres. Penalty has been imposed @5% on average turnover from year FY12-14, with penalty imposed at ~Rs.425 crore for Apollo Tyres (~3% of MCap) & Rs.310 crore for JK tyres (~9% of MCap). Official comments by the tyre players is awaited however the stocks are likely to open negative tracking this news item.
Impact: Negative