This time, the CCI is up against some of the major leaders in the tyre industry. The Director General submitted a report in May, concluding that some of the top companies (Apollo Tyres, MRF ltd,, JK Tyres,Birla Tyres and Ceat Ltd along with Automotive Tyre Manufacturers Association, a lobby grop) have colluded and formed a cartel with respect to price fixation and other related matters. This case was initially filed before the Monopolies and Restrictive trade Practices Commission (MRTP Commission) and the period under investigation is 2005-2010. This matter has been reported by Mint.
The case squarely falls under § 3(3) of the Competition Act which states that any agreement entered into between persons/association of persons, including cartels, that are engaged in similar trade of goods and services, for the purposes of price fixation, controlling the production/supply of services or collusive bidding, shall be ‘presumed’ to have an appreciable adverse effect on competition.
Mint has reported an excerpt from the DG’s Report which stated that the conduct of the lobby group, as inferred from minutes and circulars, clearly reflect a ‘meeting of minds’ among the tyre companies and the lobby group.
In this context, it shall be interesting to study the majority opinion of the CCI in the case of Neeraj Malhotra v. Deutsche Post Bank Home Finance Ltd. In this case, the issue was whether there was an agreement amongst various banks for the levy of prepayment penalty on home loans, is anti competitive under § 3of the Competition Act, 2002. It was alleged that a circular , which was issued by the Indian Banking Association asking the banks to adopt a uniform approach with respect to the issue of prepayment penalty, signified an agreement amongst the banks to impose such penalty. However, the majority opinion, while deliberating on the existence of any ‘agreement’ amongst the banks to impose such penalty, held that there was no ‘congruence of action’ among the banks with respect to the levy of such penalty ‘at a particular point of time’. All the banks had not started levying such penalty at the same time, and this negated any claim of ‘congruence of action at a point of time’. Thus, it could not be said that there was an ‘agreement or a concerted decision amongst the banks’ to impose such penalty. However, the minority opinion dissented from such an interpretation of the term ‘agreement’ and held that in order to infer whether the banks acted in concert for the imposition of such penalty, one needs to look at the circumstantial evidence that can be gathered from the acts and objectives of the parties. The minority opinion rejected the necessity to show ‘congruence of action at a point of time’, in order to establish an agreement amongst parties under § 3.
Though the DG’s finding of an agreement seems to be in consonance with the test laid down by the minority opinion, one needs to see the test that would be finally adopted by the CCI to determine whether there was any ‘meeting of minds’ among the tyre companies.
[This post has been authored by Jenisha Parikh, Student, B.A./B.Sc. LL.B., WBNUJS]
The case squarely falls under § 3(3) of the Competition Act which states that any agreement entered into between persons/association of persons, including cartels, that are engaged in similar trade of goods and services, for the purposes of price fixation, controlling the production/supply of services or collusive bidding, shall be ‘presumed’ to have an appreciable adverse effect on competition.
Mint has reported an excerpt from the DG’s Report which stated that the conduct of the lobby group, as inferred from minutes and circulars, clearly reflect a ‘meeting of minds’ among the tyre companies and the lobby group.
In this context, it shall be interesting to study the majority opinion of the CCI in the case of Neeraj Malhotra v. Deutsche Post Bank Home Finance Ltd. In this case, the issue was whether there was an agreement amongst various banks for the levy of prepayment penalty on home loans, is anti competitive under § 3of the Competition Act, 2002. It was alleged that a circular , which was issued by the Indian Banking Association asking the banks to adopt a uniform approach with respect to the issue of prepayment penalty, signified an agreement amongst the banks to impose such penalty. However, the majority opinion, while deliberating on the existence of any ‘agreement’ amongst the banks to impose such penalty, held that there was no ‘congruence of action’ among the banks with respect to the levy of such penalty ‘at a particular point of time’. All the banks had not started levying such penalty at the same time, and this negated any claim of ‘congruence of action at a point of time’. Thus, it could not be said that there was an ‘agreement or a concerted decision amongst the banks’ to impose such penalty. However, the minority opinion dissented from such an interpretation of the term ‘agreement’ and held that in order to infer whether the banks acted in concert for the imposition of such penalty, one needs to look at the circumstantial evidence that can be gathered from the acts and objectives of the parties. The minority opinion rejected the necessity to show ‘congruence of action at a point of time’, in order to establish an agreement amongst parties under § 3.
Though the DG’s finding of an agreement seems to be in consonance with the test laid down by the minority opinion, one needs to see the test that would be finally adopted by the CCI to determine whether there was any ‘meeting of minds’ among the tyre companies.
[This post has been authored by Jenisha Parikh, Student, B.A./B.Sc. LL.B., WBNUJS]
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