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JK Tyre faces CCI probe in bid-rigging case; Apollo, MRF, CEAT also on radar

The Competition Commission of India (CCI) last year ordered a probe after the northern state of Haryana said JK Tyre employed unfair trade practices while bidding to supply tyres for public transport vehicles, a court filing showed

twitter-logoReuters | October 16, 2020 | Updated 15:25 IST
JK Tyre faces CCI probe in bid-rigging case; Apollo, MRF, CEAT also on radar
According to documents in the filing, Haryana state told the CCI that JK Tyre was the sole bidder in a tender and quoted high prices

India's antitrust regulator is investigating JK Tyre & Industries Ltd after a state government accused the company of bid rigging, and the probe has been expanded to other firms, according to sources and legal filings seen by Reuters. The Competition Commission of India (CCI) last year ordered a probe after the northern state of Haryana said JK Tyre employed unfair trade practices while bidding to supply tyres for public transport vehicles, a court filing showed.

The case details and CCI's initial assessment were contained in a Sept. 19 state court filing made by JK Tyre contesting some of the watchdog's demands. The filing, reviewed by Reuters, has not previously been reported and the CCI does not disclose current probes into cartel cases.

According to documents in the filing, Haryana state told the CCI that JK Tyre was the sole bidder in a tender and quoted high prices. The watchdog in November ordered a probe saying "non-participation by other tyre manufacturers" was suggestive of a "concerted act to rig the bid".

A JK Tyre spokesman declined to comment "as the matter is currently subjudice." In August this year, the CCI decided the role of other tyre firms should be examined and expanded its scrutiny to include Apollo Tyres, CEAT, MRF, and the Indian units of France's Michelin and Germany's Continental AG, two sources familiar with the case said.

It was not immediately clear whether the CCI has approached those tyre firms with inquiries. The sources declined to be identified as details of the probe were confidential. The CCI and the Haryana state government did not respond to requests for comments. MRF, Michelin and Continental also did not respond to requests for comments, while CEAT and Apollo declined to comment.

A finding of bid-rigging could lead to a potential fine of up to three times the profit in each year prices were fixed by the companies, or 10% of annual revenue, whichever is higher. JK Tyre, which has a market value of $190 million, says it accounts for 30-36% of the market for different types of tyre variants that is worth some $9 billion annually.

"EMAIL DUMPS"

Haryana state has alleged JK Tyre was the sole bidder in the tender in 2018 and its prices were around 34% higher than previous purchase rates, the documents show. "There appears to be some arrangement or understanding amongst the tyre manufacturers ... The matter warrants a thorough and detailed investigation to unearth the entire modus operandi resorted to," the CCI's Nov. 2019 order said.

As part of the probe, the CCI this year sought "email dumps" over five years belonging to some senior executives in the JK group, saying they were essential for the investigation. JK Tyre has challenged that demand at the High Court of Punjab and Haryana, saying it was cooperating with the investigation and the emails of those executives had limited or no relation to the case.

The watchdog's probe team was "acting in a completely unreasonable, arbitrary and whimsical manner", JK Tyre said in the Sept. 19 filing. The court will next hear the case on Oct. 28.

Also read: For the first time, RBI to carry out open market operations in state bonds

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Tags: JK Tyre | CCI
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