Madras HC allows CCI to pass final order in tyre cos’ pricing case


In a crucial judgment, Madras high court has paved the way for Competition Commission of India () to pass an order against major tyre manufacturers, whom it has been investigating for anti-market activities like price parallelism and cartelisation since 2014-15.

According to the high court order, the CCI can now issue its final order against the tyre manufacturers based on its probe finding. Earlier, in 2015, the court had allowed CCI to investigate but barred it from taking any final decision.

The case was initiated by corporate affairs ministry in 2013-14, where it had said that five domestic tyre manufacturer which account for 90% of the market share including–CEAT, JK Tyres,

, and their association- Automotive Tyre Manufacturer Association-had increased prices of tyres and tubes on the plea of increase in cost of raw materials, but not vice versa.

In the order pronounced on January 6, Justice T.Raja and T.V.Thamilselvi has dismissed the writ appeal, filed by MRF ( largest tyre manufacturer) against order passed by a single judge holding that CCI probe into anti-market activities, requires no interference.

Highlighting that since the investigation as ordered by the CCI has already been completed and the report of the investigating officer has also been submitted before the Commission and all the parties have also taken part in the proceedings before the Commission, Court opines that after getting the said final order, the parties, who are likely to be aggrieved, have to work out their remedy in the manner known to law, specifies that, “…at this final stage, the Court should, as far as possible, avoid any decision which would bring about the result of rendering the system unworkable in practice, HC noted.

The order further said that receiving of complaint/information in the form of reference and ordering investigation on the same after forming a prima facie opinion that there exists a prima facie case, are…administrative action at a preliminary stage…at this stage, any interference will only allow the parties to escape from the investigation itself, which would…defeat the object sought to be achieved by the Act.” it noted.

The ministry and the regulator (appellant in the case) submitted that – that in 2013-14, All India Tyre Dealers’ Federation had sent a representation to MCA, which was forwarded to CCI, alleging that when natural rubber price increased, the tyre prices were increased in a concerted manner by the domestic major tyre manufacturers, however, when price of natural rubber decreased, tyre prices were not reduced by domestic major tyre manufacturers and as such, they indulged in price parallelism and cartelization.

Based on the complaint, CCI directed directorate general to conduct an investigation in the matter, and subsequently, Madras HC Single Judge held that order under Section 26(1) based on the reference does not result in civil consequences, because it is only an administrative order ordering further investigation not affecting the interest of the parties in any manner.

Court elucidates that the CCI directive is not amenable to writ jurisdiction, as it does not affect the rights of the parties and it also does not effectively determine any right or obligation of the parties to the lis, and adds that “The direction issued under Section 26(1) being inquisitorial, preparatory and preliminary in nature, the same does not affect the rights of any party, because it is departmental in nature and does not cause any prejudice giving rise to civil consequences…the order going to be passed by the Commission under Section 26(2) being a final order…is only appealable.”

HC concludes that there is no merit in the appeal, and directs CCI and DG to proceed further in the manner known to law.



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