TYRE dealers have dragged MRF, JK and Birla Tyres among other tyre manufacturers to the competition watchdog alleging cartelisation and that pricing of tyres was “disproportionate and arbitrarily”.
The federation has charged that despite a sharp drop in rubber prices by 15-17% from a year ago, domestic firms continue to charge high prices for tyres. The first quarter results in 2013 saw most domestic tyre manufacturers posting good results. In fact, top five tyre manufacturers captured 90% of the market.
“The Competition Commission of India will hear the matter on February 18, where either the parties appear or send written submissions,” said CCI in a notice to both the parties.
The ministry of corporate affairs pushed the matter after the dealers’ federation urged the government to initiate suo moto action against domestic tyre companies for indulging in strangulating “free and fair play of market forces.” Dealers have expressed that since the prices of all raw materials from natural rubber to synthetic rubber have been coming down from the last 8-10 quarters, it should not been difficult for the government to have tyre prices rolled back with immediate effect.
Convenor of the Dealers’ Federation, SP Singh, believes that there is a consumer mistrust that has been developed because customers believe that dealers must be pocketing the benefit of cooling in raw material prices.
He further said that tyre manufacturers are collectively not bringing prices down. “We will not lie low but fight for this issue,” said Singh.
Interestingly, not just tyre dealers but also the ministry of corporate affairs is a petitioner in the matter. The notice for appearance in the hearing has been sent to both the tyre dealers and the MCA. The tyre dealers filed the complaint in September 2013.
Source: The Econimic Times
Published: 17 Jan 2014