The Hindu Business Line reported that the Competition Commission of India (CCI) has launched a probe by the director general to investigate alleged pricing collusion by the country’s top five tire makers.
The order was issued in June of this year in response to a complaint from the All India Tyre Dealers’ Federation (AITDF) in 2013.
According to the eight-page order, AITDF accused Apollo Tyres, MRF, Ceat, JK Tyres and Birla Tyres of engaging in “price parallelism” in the replacement market. According to the AITDF, these five tiremakers together contribute to 90% of India’s tire production.
The federation also accused the All India Tyre Manufacturers’ Association (ATMA) of patronizing such practices.
According to the federation of dealers, tiremakers have been consistent in increasing product prices to counter any sharp rise in the costs of natural rubber, but a decline in prices of raw material does not lead to a corresponding cut in tire prices.
The Hindu Business Line reported that the accusation was opposed by the ATMA. In its response, the producers’ body said it did not act as a platform for members to act in concert.
ATMA said that natural rubber is not the only raw material used in tiremaking, and that “the pricing of tires could not possibly be governed by the price of natural rubber.”
ATMA also pointed out that dealers lodged a similar complaint in 2008 that could not be substantiated.
After hearing both sides, a four-member CCI panel found merit in the complaint, according to The Hindu Business Line.
Quoting AITDF’s petition, it said the rise in natural rubber prices to ₹240 a kg sent tire prices soaring by 18-25% in 2011-12. However, a subsequent drop in rubber prices to ₹145 a kg did not result in a cut in tire prices.
On the contrary, tire prices of all companies remained firm and comparable between 2012 and 2014.