Apollo Tyres, assisted by Genesis, absolved of cartelisation charges by the CCI
6 September 2015
The Competition Commission of India (“the CCI”) recently dropped the cartelisation allegation that was made against five tyre manufacturers by the All India Tyre Dealers Federation under the MRTP regime.
Genesis was retained by Apollo Tyres (one of the parties to the case) to conduct an economic assessment of the likelihood of cartelisation in the Indian tyre industry. The CCI concurred with Genesis’ finding that the market dynamics in this industry are such that it is difficult to sustain a cartel. In particular, Genesis’ analysis of structural and behavioural factors in the industry was upheld by the CCI. The CCI accepted that the presence of factors such as seasonality of demand, threat from imports and countervailing buyer power makes it difficult for the tyre manufacturers to sustain collusion.Further, the CCI endorsed Genesis’ critique of the DG’s analysis relating to price parallelism and pricecost movements. It noted that the variation in prices and profitability levels across firms is not indicative of a cartel like situation. Similarly, since market shares were not found to be stable over time, the likelihood of a cartel in the industry was found to be low. In line with Genesis’ conclusion, the CCI also refuted the DG’s claim of underutilisation of capacity by noting that there have been increased investments and capacity additions by the concerned parties, contrary to the expected outcome under a collusive agreement.