Apollo Tyres arm pays $5.7-m fine to SA competition panel

Written by Ronojoy Banerjee | Ronojoy Banerjee | New Delhi | Updated: Jan 13 2012, 08:55am hrs
In what would be a first for any Indian multinational company, Apollo Tyres South Africa recently paid a fine of $5.7 million or 45 million rand to the Competition Commission of South Africa after being found to be in violation of the competition law in the country.

A probe by the South African anti-trust regulator has found that a tyre cartel operated between 1999 to 2007 among South African Tyre Manufacturers Conference and four local manufacturers the South African units of Apollo, Goodyear, Continental and Bridgestone.

Following this, and Apollo Tyres South Africas admission that it did engage in the cartel, the regulator slapped a fine of 45 million rand on the firm amounting to 4.75% of the companys total turnover in 2008. The settlement was reached in November 2011.

Apollo Tyres South Africa is the unit of Apollo Tyres, one of the Indias largest tyre manufacturer. Apollo Tyres had acquired Dunlop in South Africa in 2006 for a reported amount of R290 crore. The acquired firm was then named Apollo Tyres South Africa.

An Apollo Tyres spokesperson, while confirming the development, said that the matter has been amicably settled. Though he said that the period referred to by the competition regulator for the companys South Africa unit had a different management at that time and the current management had no involvement or knowledge of the same.

The Competition Commission of South Africa, while reaching the settlement with Apollo, noted the cooperation of the companys new management. Apollo has further agreed to refrain from engaging in this conduct and to develop and implement a compliance programme to ensure its employees are aware of the provisions of the Competition Act, the commission said.

The investigation, which was taken up after a complaint filed by a fleet owner, said that tyre manufacturers agreed on price increases and implementation thereof, a press statement issued by the South African competition commission said.

The office premises of Apollo apart from the others were searched and seized. It (investigations by the commission) further found that the SATMC was used as a platform to conduct these discussions, the commission noted. The cartel not only was related to the manufacture and supply of passenger car tyres and commercial vehicle tyres but also included off-the-road and agricultural tyres. The victims of the cartel were mainly the tyre dealers, vehicle manufacturers, the government and fleet owners.

Now, a similar matter pertaining to cartel among tyre companies in the Indian market is before the Competition Commission of India (CCI), a senior official in CCI said. The CCI is currently presiding over a case that involves the countrys top five tyre manufacturers. Though the director general wing of the commission has submitted its report alleging that a cartel indeed operated a final decision from CCI is still awaited.

On Thursday Apollo Tyres share priced closed at R67.55 up 1.58% on BSE.