Indian probe finds SKF, Schaeffler, Tata Steel units colluded on bearings prices

The Competition Commission ofIndia(CCI) began an investigation in 2017 after receiving allegations of five companies colluding onbearingspricesfrom 2009-2014 to pass higher raw material costs onto customers in the auto sector.

Bearingsreduce friction in moving parts, helping smooth the operation of vehicles.India'sbearingsmarket is dominated bySKFandSchaefflerand is worth $1.3 billion, showed data from ICRA Research.

CCI's investigations arm, in a report dated May 6 which has not been made public, said it analyzed company emails, call records and executive testimonies and concluded thatSKFIndiaLtd,SchaefflerIndiaLtd, National Engineering Industries andTataSteel'sbearingsdivision contravened antitrust law by discussing and agreeing on prices.

SKF, the world's largest maker of ball-bearings, in a statement said it aided the investigation, and that "we dispute any claim of wrongdoing on the part ofSKF".

The investigations arm said it found no evidence against the fifth firm, ABCBearings, part of USfirm Timken Co, the report showed. ABCBearingsdeclined to comment.

The report also showed the investigations arm considered the collusion lasted through the financial year to March 2011 but found no evidence to indicate when it actually ended.

The four firms, "through personal meetings of key persons, on two occasions shared the strategic information regarding their future efforts to seek price increase from" auto sector companies, the investigations arm said in its 106-page report.

The CCI did not respond to a Reuters request for comment. A person with direct knowledge of the matter said senior CCI officials are reviewing the report and that the antitrust body is able to dispute the findings of its investigation arm.

The CCI can fine firms up to three times the profit made in each year of wrongdoing or 10 per centof revenue, whichever is higher.

In 2014, European Union antitrust regulators finedSKF,Schaefflerand three Japanese auto parts makers $1.3 billion for taking part in abearingscartel from 2004 through 2011.

The investigation report showed the four companies controlled nearly 75per centof the domesticbearingsmarket in the period 2009-11 - a time whenpricesofsteel, the key raw material inbearings, were fluctuating sharply.

The steepsteelprice volatility, the CCI's investigation arm said, provided the companies an "incentive to collude".

There was a consensus among the firms "to seek a price increase of 12per centand settle at 6 per cent" with a tractor and automotive manufacturers. With motorbike makers, there was a consensus to seek a 10% price increase and settle at 4 per cent, the report showed.

The investigation arm also saidSchaefflerand National Engineering Industries told the CCI that employees had participated in discussions with competitors "mainly to seek coordinated price increase ofbearings". It did not elaborate on when the companies disclosed discussions to the CCI.

During theprobe, ABCBearings,SKF, andTataSteel'sbearingsdivision told the CCI they had no evidence of such discussions, the report showed.

"The conduct of the parties has resulted in an appreciable adverse effect on competition," the CCI investigation arm said in the report. "The sharing of price information is particularly sensitive to the competition law perspective."