State of Haryana, Through its Director, State Transport Haryana vs. J. K. Tyre & Industries Limited and Others

Public Version

COMPETITION COMMISSION OF INDIA

Reference Case No. 01 of 2019

In Re:

And

CORAM

Ms. Ravneet Kaur

Chairperson

Ms. Sweta Kakkad

Member

Mr. Deepak Anurag

Member

Present:

Mr. Harman Singh Sandhu, Ms. Atreyee Sarkar, Ms. Manasvini Jain, and Ms Sanjana L.B., Advocates

Mr. R.S. Sachdeva, President Group Legal and Mr. P.K. Rustogi, Company Advisor, JK Tyre | | For CEAT Limited (OP-2) | : | Mr. Raj Shekhar Rao, Senior Advocate

Mr. Vivek Agarwal, Ms. Anandita Rana, and Mr. Divyansh Prasad, Advocates

Mr. Kurian Joseph, Chief Legal Officer, CEAT | | For Rekha Agencies (OP-9) | : | Mr. Malak Bhatt and Ms. Samridhi, Advocates | | For SS Marketing (OP-10) | : | Mr. Samar Bansal, Mr. Abhinav Bhalla and Mr. Vivek Singh, Advocates |

Order under Section 27 of the Competition Act, 2002

1. The present reference was filed by State of Haryana through its Director, State Transport, Haryana (‘Informant’) under Section 19(1)(b) of the Competition Act, 2002 (the ‘Act’) against J. K. Tyre & Industries Limited alleging inter alia contravention of the provisions of Section 3 of the Act.

2. The Informant is inter alia engaged in procurement of stores through public notices, receipt of tenders online, evaluation thereof and submission of agenda proposals to the High Powered Purchase Committee (‘HPPC’) constituted by the State Government.

3. OP-1 to OP-8 are the tyre manufacturers in India. Rekha Agencies (‘OP-9’) operated as an authorized representative of OP-1. SS Marketing (‘OP-10’), acted as authorized representative of OP-2 for tenders of State Transport Undertakings (‘STUs’). Hereinafter, OP-1 to OP-10 are collectively referred to as ‘Opposite Parties’/‘OPs’.

Facts in brief:

4. The Informant issued an online tender on 21.09.2018 for the procurement of new steel radial tyres of various sizes and specifications. The tender specified that the tyre sets were to be delivered to 25 different locations across the State of Haryana. The list of items included in the online tender were as follows: i. New steel radial tyre set size of 10.00R20-16PR with tubes and flaps; ii. New nylon tyre set of size 8.25x16-16PR with tubes and flaps; iii. New steel radial tubeless tyre of size 295/80R22.5-16PR; iv. New tubeless tyre of size 165/80R-14; v. New tubeless tyre of size 185/70R-14; and vi. New tubeless tyre of size 215/75R-15(RT).

5. The Informant stated that as per the prescribed procedure, it invites online tenders for procurement of various products, including tyres, for inter-alia providing public transport facilities to commuters. Subsequently, evaluation of bids is done and proposal is submitted to a HPPC to decide on final procurement after conducting negotiations with technically qualified lowest quoting bidder. It has been further stated that all purchases above the value of Rupees one crore are decided by HPPC. Based on the decision of HPPC, supply orders are placed on the successful bidders by the Informant, as per the terms and conditions provided in the detailed notice inviting tenders.

6. It was stated that only OP-1 had submitted a bid in response to the tender issued by it on 21.09.2018. Following the technical evaluation, the financial bid was opened on 10.10.2018. Subsequently, a meeting of the HPPC regarding the tender was convened on 13.11.2018. During the meeting, it was observed that the rates quoted by OP-1 were significantly higher than the rates approved in previous purchases. As per the Informant, HPPC also observed that online tenders had been invited on three different occasions; however, every time only OP-1 submitted the bid, despite there being several other tyre manufacturers in India.

7. Accordingly, the reference filed before the Commission, inter alia, pointed towards the following main allegations: (i) OP-1 quoted prices significantly higher than the previous year’s approved rates, with increases of 34-39% across various tyre sizes. These higher prices were unreasonable, especially given that the cost of raw material had only increased by approximately 12.55% on average; (ii) Despite being asked by the HPPC to match the price they offered to another transport body (Karnataka State Road Transport Corporation) or reduce their quoted rates, OP-1 declined to make any concessions.

8. Based on the above, the Informant, inter alia, prayed to the Commission to consider the instant reference against OP-1 for formation of cartel and adoption of anti-competitive practices.

9. The Commission, vide its prima facie order dated 01.11.2019, directed the Director General (‘DG’) to cause an investigation into the matter under the provisions of Section 26(1) of the Act and also noted that the DG shall be at a liberty to investigate the role of other tyre manufacturers who have not been specifically arrayed as OP in the present reference.

10. The DG, vide its note dated 17.08.2020, forwarded a proposal for the addition of CEAT Limited (‘OP-2’); Birla Tyre Limited (‘OP-3’); Michelin India Private Limited (‘OP-4’); Continental India Private Limited (‘OP-5’); Apollo Tyres Limited (‘OP-6’); MRF Limited (‘OP-7’) and Bridgestone India Private Limited (‘OP-8’) in the instant matter. Accordingly, the Commission vide order dated 26.08.2020, directed the DG to investigate the role of the above-mentioned parties as OPs.

11. To examine the allegations, the DG issued notices to the OPs and third parties to collect relevant information/ data, conducted search and seizure operations in March, 2022 and also recorded statements of office bearers of the OPs during the investigation.

12. The DG submitted the investigation report on 31.07.2023. The Commission considered the same on 03.11.2023 and directed the DG to investigate the matter further as per the provisions of Section 26(3A) of the Act and submit a supplementary investigation report. Thereafter, the DG submitted the first supplementary investigation report on 09.12.2024. On 10.02.2025, the Commission considered the first supplementary investigation report and directed the DG to further investigate the matter in terms of Section 26(3A) of the Act. After investigation, the DG submitted the second supplementary investigation report on 21.02.2025. In this report, the DG stated that the issues raised in the case were revisited and examined in greater detail, culminating in an investigation report, which subsumes and builds upon the findings of the earlier reports. The second supplementary investigation report is hereinafter referred to as the ‘Investigation Report’.

13. The Commission considered the Investigation Report in its ordinary meeting held on 12.03.2025 and inter-alia noted that as per DG there are evidences against OP-1 and OP-2 for bid rigging. The Commission further noted that the DG found evidences of direct communication between representatives of OP-1 and OP-2 i.e., Rekha Agencies (representative of OP-1) and SS Marketing (representative of OP-2), and recorded that they are equally responsible for anti-competitive conduct, alongside the manufacturers they represent. Accordingly, the Commission decided to array Rekha Agencies and SS Marketing as OP-9 and OP-10, respectively, in the present matter. Further, the Commission also directed a change of the cause title.