Indian dealers claim tire makers have cartel

ERJ staff report (TP)

New Delhi, India − Tire dealers have dragged MRF, JK, Birla Tyres and other manufacturers to the competition watchdog alleging cartelisation and that pricing of tires was "disproportionate and arbitrary", reported The Economic Times.

The federation has charged that despite a sharp drop in rubber prices by 15-17 percent from a year ago, domestic firms continue to charge high prices for tires. The first quarter results in 2013 saw most domestic tire manufacturers posting good results. In fact, the top five tire manufacturers captured 90 percent of the market.

"The Competition Commission of India [CCI] will hear the matter on 18 February, where either the parties appear or send written submissions," said the CCI in a notice to both parties.

The Ministry of Corporate Affairs (MCA) pushed the matter after the dealers' federation urged the government to initiate ‘suo moto’ (of their own accord) action against domestic tire companies for indulging in strangulating "free and fair play of market forces”.

Dealers have said 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 tire prices rolled back with immediate effect.

Convenor of the Dealers' Federation, SP Singh, believes there is a consumer mistrust that has developed because customers believe dealers must be pocketing the benefits from lower raw material prices.

He also said tire manufacturers are not collectively bringing prices down. "We will not lie low but fight for this issue," said Singh.

It is not just tire dealers who are a petitioner in the matter, but also the MCA. The notice for appearance in the hearing has been sent to both the tire dealers and the MCA. The tire dealers filed the complaint in September 2013.

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Full story from The Economic Times