Citing a recent order of Competition Commission of India (CCI) imposing penalty on tyre manufacturers for violating the provisions of Competition Act, the All India Kisan Sabha (AIKS) said in a letter to Prime Minister Narendra Modi that the companies “looted and plundered” rubber farmers and to compensate the rubber cultivators. The AIKS demanded that the penalty amount of ₹1,788 crore must be passed on to the rubber producers.
The CCI had imposed penalty of ₹622.09 crore on MRF, ₹425.53 crore on Apollo Tyres, ₹252.16 crore on CEAT Ltd, ₹309.95 crore on JK Tyre and ₹178.33 crore on Birla Tyres and the Automotive Tyre Manufacturers Association (ATMA) for violating the provisions of Section 3 of the Competition Act. The section prohibits anti-competitive agreements including cartels. AIKS general secretary Hannan Mollah said the tyre manufacturers had exchanged price sensitive data amongst them through ATMA and had taken collective decisions on the tyre prices. “This is a gross violation with the intention of amassing profit by cheating both the rubber producers and consumers,” Mollah said.
He added that grant of ₹1,788 crore, equal to the sum of monetary penalty imposed by CCI, should be provided to producer cooperatives of rubber farmers to establish a world class tyre manufacturing unit under associated ownership. Mollah said several trade agreements in the past paved the way for large scale import of natural rubber.
Price crash
“The slashing of import duty resulted in the biggest ever crash of rubber prices in the domestic market from ₹245 per kg to ₹65-70 per kg in 2010. As per the estimate the huge crash of price of natural rubber resulted in loss of ₹ 11600 crore to the rubber farmers in Kerala alone in a single year 2010-11,” Mollah added.
He said though the natural rubber price had fallen, the price of automotive tyre did not decline. “This helped the tyre manufacturers to amass huge profits by plundering both the farmers and the consumers by forming cartels with the active help of ATMA. It was in this background, in August 2018, the watchdog imposed a total fine of ₹1,788 crore on five tyre manufacturing companies and ATMA,” he claimed. “This is a classic example of how the corporate companies under the Free Trade Agreements and neo-liberal policies being actively pursued by your government are looting and plundering the farmers and the consumers. We want to point out that supporting the farmers to develop farmer’s producer cooperatives to establish crop based agro-processing industries and marketing networks under their associated ownership is the only possible alternative to this corporate loot,” Mollah said in the letter.