Cartel in tyre industry uncovered

2010-09-06 11:27

A Competition Commission investigation has uncovered a cartel in the tyre manufacturing industry, it said on today.

In a statement, the commission said it had referred a complaint of collusive tendering, price fixing, information exchange and market allocation to the Competition Tribunal.

The allegations were against the SA Tyre Manufacturers’ Conference (SATMC) and tyre manufactures and suppliers, Apollo Tyres SA (Apollo), Goodyear SA (Goodyear), Continental Tyre SA (Continental) and Bridgestone South Africa (Bridgestone).

“The commission’s investigation was prompted by a complaint alleging that the tyre manufacturers simultaneously adjusted their prices around the same time and within the same parameters,” it said.

As a result of the complaint, on April 4 2008 the commission conducted a search and seizure operation at the premises of Bridgestone, Apollo and the SATMC.

“Pursuant to the commission’s investigation and interrogations, one of the cartel members, Bridgestone, applied for and was granted conditional immunity from prosecution in terms of the commission’s corporate leniency policy.”

In its application for leniency, Bridgestone admitted that it held telephonic discussions and met with its competitors during the period 1999 to 2007 to agree in principle that they should co-operate to ensure stability in the market.

“The meetings, which were attended by the tyre manufacturers’ sales and marketing representatives, co-ordinated the timing and the average percentage price increase of tyres, agreed on the discount structure to be given to tyre dealers and messages to be given to the market explaining the increases,” the commission said.

The cartel concerned the manufacture and supply of passenger tyres, light truck/commercial tyres, trucks and bus tyres, off-road tyres, agricultural tyres and earthmover tyres.

The main customers were tyre dealers, who purchased tyres for resale to consumers; vehicle manufacturers, who purchased tyres for new vehicle models; and the government, which procured tyres for state owned vehicles and fleets through a tender process managed by the State Tender Board.

“The commission’s investigation found that the SATMC was used as a platform for what has been termed ’coffee table discussions’ to determine price increases and general co-ordination in the market amongst the tyre manufacturers.”

The commission said the investigation also found that tyre product importers Yokohama Southern Africa and Michelin Tyre Company South Africa were not involved in the cartel conduct.

The commission has asked the tribunal to impose an administrative penalty amounting to 10% of the total turnover of each of parties.

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