NCLAT delivers landmark ruling in tyre cartelisation case

NCLAT on tyre cartelisation case

The National Company Law Appellate Tribunal (NCLAT) delivered a landmark judgment in a cartelisation case where it ordered the CCI to review fines imposed on five domestic tyre manufacturing companies and the Automotive Tyre Manufacturers’ Association (ATMA).

The NCLAT, which hears appeals against the National Company Law Tribunal (NCLT) and the Competition Commission of India (CCI), directed the CCI to pass a fresh order citing the need to re-examine arithmetical and inadvertent errors, and review the penalty to save the domestic tyre industry.

Law firm Luthra and Luthra Law Offices (L&L) successfully defended the ATMA and its office bearers in this case.

Partner GR Bhatia, who is also head of the competition practice, led the L&L team, with assistance from managing associate Arjun Nihal Singh, and associates Rajshree Chaudhary, Sanyam Juneja and Manav Gupta.

In a case that began more than 10 years ago in 2012, the CCI alleged that five of India’s leading tyre manufacturers – JK Tyres, CEAT, Apollo, Birla and MRF – engaged in information exchange under the aegis of the ATMA and the firms unduly benefited from this action.

The All India Tyre Dealers Federation sought a CCI investigation after the industry body alleged pricing and trade malpractices against the five Indian companies.

The CCI ruled that JK Tyres, CEAT, Apollo, Birla and MRF violated section 3 of the Competition Commission of India Act 2002, and slapped a fine of INR17.89 billion (USD216.96 million) on the firms.

This was challenged before the NCLAT, which later remanded the case back in 2022 to the CCI for review. In its ruling, the NCLAT observed that the object of the Competition Act 2002 requires to keep in view the economic development of the country also while penalising unlawful actions.