RTPE 147 of 1992. Case: Union of India Vs MRF Ltd. and Ors.. COMPAT (Competition Appellate Tribunal)

Case NumberRTPE 147 of 1992
CounselFor Appellant: R.D. Makheeja, Advocate and Rakesh Vashist, Deputy Director General and For Respondents: Anant Haksar, Senior Advocate and Aditya Narain, Advocate
JudgesG.S. Singhvi, J. (Chairman) and Rajeev Kher, Member
IssueCompetition Act, 2002 - Sections 2(b), 26(1), 3(3)(a), 3(3)(b), 50(a), 53A, 66, 66(1), 7; Monopolies And Restrictive Trade Practices Act, 1969 - Sections 10(a)(ii), 10(a)(iii), 2(g), 35, 37, 37(1), 37(2), 50(2)
Judgement DateJuly 29, 2016
CourtCOMPAT (Competition Appellate Tribunal)

Order:

  1. Reference dated 07.12.1992 made by the Central Government under Section 10(a)(ii) of the Monopolies and Restrictive Trade Practices Act, 1969 (for short 'the 1969 Act') read with Regulation 46 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1991 (for short 'the Regulations') alleging that Respondent No. 1, MRF Ltd., Respondent No. 2 - Modi Rubber Limited, Respondent No. 3-Dunlop India Limited, Respondent No. 4 - Ceat Tyres of India Limited and Respondent No. 5 - Automotive Tyres Manufacturing Association have indulged in restrictive trade practices by manipulating fixation of price of tyres and tubes was registered as RTPE 147 of 1992 titled "Union of India v. MRF Ltd. and others". In the reference, it was averred that although there were 22 manufacturers of automotive tyres and tubes in the country, there were only 10 major manufacturers in private sector producing various types of automobile tyres and of them, Respondents Nos. 1 to 4 were the largest manufacturers and accounted for over 60% of the capacity and production. It was further averred that one more manufacturer i.e. Bombay Tyres International Ltd., is also under the same management as Modi in terms of Section 2(g) of the 1969 Act. It was further averred that although, 7 new companies were issued letters of intent, no new manufacturer entered in the market in the past decade with the production covering all varieties of automobile tyres and tubes as comparable to that of Respondents Nos. 1 to 4. Only one more manufacturer i.e. Kesoram Industries Ltd. recently commenced production. In support of the allegations made in the reference that Respondents Nos. 1 to 4 have indulged in restrictive trade practices, the Central Government relied upon the reports of the Bureau of Industrial Costs and Prices (BICP) on automotive tyre industry published in October, 1988 and July, 1992 apart from the report of the consultant, Dr. B.N. Mukherjee, which was titled as 'Study of Tyre Industry With Special Reference to Change in Tyre Costs And Prices'. The Central Government also relied upon order dated 19.04.1976 passed by the erstwhile Monopolies and Restrictive Trade Practices Commission (for short 'the Commission') in RTPE 01 of 1971 involving Respondent No. 1, Respondent No. 3 and Respondent No. 4 and some other manufacturers of tyres and tubes who were members of Respondent No. 5 and prayed that an enquiry may be held against Respondent Nos. 1 to 4 and other members of Respondent No. 5 and they be directed to cease and desist from continuing to indulge in collusive price behaviour.

  2. The Commission took cognisance of the allegations contained in the reference and issued Notice of Enquiry sometime in the beginning of 1993. After service of notice, the respondents were granted time to file replies. Between March, 1994 and May, 1996, the case was adjourned on various dates for consideration of the application filed on behalf of the Union of India for serving interrogatories on the respondents and objections filed by them.

  3. By an order dated 06.05.1996, the Commission directed that the interrogatories served on behalf of the Union of India shall be considered at an appropriate stage. At the same time, the Commission framed the following issues:

    1. Whether NOE is not maintainable in the light of the objections taken by the respondents in their reply as preliminary objections?

    2. Whether the respondents are or have been indulging in the restrictive trade practices as stated in the NOE?

    3. If the reply to Issue No. 2 is in the affirmative, whether the aforesaid restrictive trade practices are not prejudicial to public interest?

    Simultaneously, leave was granted to counsel for Respondent No. 1 to file an application for impleadment of other tyre manufacturers as parties.

  4. The application for impleadment filed on behalf of Respondent No. 1 was allowed by the Commission vide order dated 28.09.1996 and the Notice of Enquiry was issued to the added respondents. By another order dated 21.11.1996, the Director General (Investigation and Registration) [the DG (I&R)] was directed to furnish the list of companies not in existence. In turn, the DG (I&R) filed list of existing companies engaged in manufacturing of tyres and tubes. Thereafter, fresh Notice of Enquiry was issued to the existing manufacturers.

  5. The added respondents were granted several adjournments for filing replies. On some dates, the case was adjourned for consideration of the application filed on behalf of Respondents Nos. 6, 8, 10, 12 and 13 for supply of better particulars. That application was finally dismissed vide order dated 16.03.2000. Thereafter, the Commission issued summons to Shri A.K. Makkar, Deputy Director, BICP, who was cited as a witness by the Union of India. Shri A.K. Makkar appeared on 09.11.2001, but he was not cross-examined because copy of his affidavit and documents were not supplied to the respondents. Shri Makkar was finally cross-examined on 28.02.2002 subject to the decision by the Commission on the admissibility of the BICP Report of 1992.

  6. On 17.09.2002, learned counsel for Respondents Nos. 1, 4, 6 and 8 filed a copy of the report prepared by the Ministry of Industry, Department of Industrial Development, which contained an assurance by the Central Government given in the context of starred questions asked in the Parliament. Thereupon, counsel for the Union of India sought adjournment to seek instructions. After about eight months, the complainant placed on record letter dated 24.09.2004 received from the Ministry of Commerce and Industry, Department of Industrial Policy and Promotion (DIPP) and time was granted to the counsel for the respondents to file reply.

  7. From 09.10.2003 to 09.08.2005, the case was adjourned on more than one occasion for consideration of the application filed on behalf of Respondent No. 1 under Regulation 65(1)(j) of the Regulations, which was finally rejected by the Commission by a detailed order dated 23.08.2005 and the respondents were directed to file list of witnesses and affidavit of evidence. The Commission also directed that admission/denial of the documents of the respondent be carried out by 10.11.2005 and fixed 29.11.2005 for cross-examination of the witnesses of the respondents.

  8. It is borne out from the record that the proceedings pending before the Commission were stayed by the Delhi High Court in Writ Petition Nos. 22478 - 89 of 2005 filed by some of the respondents. Consequently, the Commission adjourned the matter on 29.11.2005, 19.04.2006, 27.04.2006, 23.11.2006, 07.03.2007, 13.08.2007, 12.11.2007, 08.07.2008 and 26.09.2008. By an order dated 10.12.2008, the case was adjourned sine-die.

  9. Although, the writ petitions were dismissed by the Delhi High Court vide order dated 16.04.2009, this fact was not brought to the notice of the Commission by either party for next four years. In the meanwhile, the 1969 Act was repealed by Section 66(1) of the Competition Act, 2002 (for short 'the 2002 Act'), which brought into force vide S.O. 2 of 2004 (E) dated 28.08.2009 published in Gazette of India of the same date. Section 66(1) of the 2002 Act was amended with effect from 01.09.2009 by Section 50(a) of the 2002 Act by Act 39 of 2007 and the erstwhile Commission was dissolved. Simultaneously, all pending cases pertaining to monopolistic and restrictive trade practices were treated as transferred to the Competition Commission of India (for short, 'the CCI') established under Section 7 of the 2002 Act. Section 66 was again amended by Act 39 of 2009 and a provision was inserted in the form of second proviso to sub-section (4) thereof for deemed transfer of the cases of restrictive trade practices to the Appellate Tribunal established under Section 53A of the 2002 Act.

  10. When the Registry of the Tribunal was apprised about dismissal of the writ petitions by Delhi High Court, the matter was listed before the Tribunal on 30.07.2013. On the next date, i.e., 04.09.2013, the respondents were directed to file their affidavits of evidence and documents. The counsel for the Union of India carried out admission/denial of the documents and cross-examination of R.W. 1, R.W. 3, R.W. 4, R.W. 5, R.W. 6, R.W. 8, R.W. 12 and R.W. 13. R.W. 2 was examined on 10.08.2015 but the proceedings recorded before the Registrar do not show that he was cross-examined by the counsel for the Union of India/DG (I&R).

  11. The final arguments were partly heard on 27.04.2016 and the case was adjourned to enable the learned counsel for the parties to place before the Tribunal compilation of the orders passed by the erstwhile Commission and the CCI in the related matters. On the next date i.e. 11.05.2016, further arguments could not be heard because the Tribunal remained busy in part-heard matters being Appeals Nos. 60 to 62 of 2014.

  12. In compliance of the directions given by the Tribunal, learned counsel for Respondents Nos. 1, 4, 6 and 12 filed a compilation of orders dated 19.04.1976, 24.03.1983, 03.12.1993 and 08.02.1995 passed by the erstwhile Commission in RTPE 01/1997, RTPE 13/1978, RTPE 78/1984 and P.N. Nos. 7 to 9 of 1986 respectively. A copy of order dated 30.10.2012 passed by the CCI in RTPE 20 of 2008 titled 'All India Tyre Dealers' Federation v. Tyre Manufacturers' was also filed.

  13. We have heard the learned counsel for the parties and perused the record. In our opinion, the issues arising in the present reference are no longer res integra and must be treated as finally settled by the orders passed by the erstwhile Commission and the Competition Commission.

  14. RTPE 01/1971 was registered on the basis of an application filed by the Registrar of Restrictive Trade Agreements under Section 10(a)(iii) read with Section 37 of the 1969 Act against eight companies engaged in the manufacture and sale of tyres in India. These included Respondent No. 1-MRF Ltd., Respondent No. 3 - Dunlop India Limited and Respondent No. 4 - Ceat...

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