MRTP ACT….

THE ROAD AHEAD

Birth and Objectives of MRTP Act

• The MRTP Act 1969 is an important but very

controversial piece of economic legislation. The act
came into force from 1st June 1970 and has been
amended in 1974,1980,1982,1984 and 1991. This
act applies to whole states except J&K.
• OBJECTIVES – Initially it had 3 objectives
• To control monopolies and monopolistic trade
practices
• To regulate the concentration of economic power to
the common detriment.
Continued…………..

• To prohibit restrictive trade practices unless any of

them can be justified to be in the public interest.
The Monopolies Amendment Act 1984 has introduced
a 4th objective.
• Regulation of unfair trade practices.
After the amendment of act in 1991, the objectives
now are:
• Regulating unfair trade practices.
• Controlling monopolistic trade practices.
• So after going through these objectives of MRTP
Act we can say that this act provides that operation
of the economic system does not result in the
concentration of economic power to the common
detriment, for the control of the monopolies, for the
prohibition of monopolistic and restrictive trade
practices and for matters connected there with.
Basic Provisions Of MRTP Act

• MRTP Act can be divided into two major parts.

• 1.MONOPLIES VIS-A-VIS CONCENTRATION OF
ECONOMIC POWER
• (i) The monopolies and industrial units which are
constructed to have a concentration of economic or
monopoly power are identified.
• (ii) Such units are to made to register themselves
• (iii) The directors of such organizations are brought
under some scrutiny with reference to the number of
directorships held by them.
SCOPE AND APPLICATION

• Applies to all companies which are registered and

operate in India under the company act 1956.
• Preventing unreasonable competition in the
production of goods ,distribution and supply of
goods.
• Prohibit unfair trade practices
This act is not applicable to

• Any undertaking owned or controlled by a

government (central or state)
• Any undertaking the management of which has been
taken over by the government.
• Any undertaking owned by a cooperative society
• Any public financial institution.
• Any trade union formed for their own reasonable
protection.
MRTP COMMISSION
CHAIRMAN

MEMBERS

DIRECTOR GENERAL

ADD. DIRECTOR GENERAL

DEPUTY ADD. GENERAL

PENALTIES

• A fine up to Rs 5000 and imprisonment up to 6

months to 2 year on first instance.
• A fine up to Rs. 5000 and imprisonment up to 2 to 3
years on second instance.
“Every Monopolistic
practice is, on the
face of it ,a
restrictive trade“
practice.”
MONOPOLISTIC TRADE
PRACTICES
It means in order to maximize profit and to
increase market power, certain business
firms unreasonably charge high prices to
prevent competition in the production &
distribution of goods by adopting unfair trade
practices.
It is a trade practice which represents the
abuse of the market power by charging
unreasonably high prices.
EXEMPTIONS
 A monopolistic trade practice is demed to be
prejudicial to the public interest ,except
when it is :
1. Authorised by the Central Govt ; or
2. Found necessary by the Central Govt. to
a)Meet the defense requirements;
b)Ensure the maintenance of the essential
services
REGULATION OF MTPS
 Regulation of production and fixing the term
of sale.

 Prohibiting any action that restricts

competition.

 Fixing standards for goods produced.

RESTRICTIVE TRADE PRACTICE
A restrictive trade practice is a trade practice
which:
 Prevents, distorts or restricts competition in
any manner
 Obstructs the flow of capital or resources
into the stream of production
 Tends to bring about manipulation of prices
or conditions
 RESTRICTIVE TRADE
PRACTICES
 CONCERT or COLLUSION/ CARTELS
 PRICE DISCRIMINATION
 PREDATORY PRICING
 TIE- UP SALES
 FULL-LINE FORCING
 EXCLUSIVE DEALING
 AREA RESTRICTION
 RESALE PRICE MAINTENANCE
EG. OF RESTRICTIVE TRADE
PRACTICES
 1. Coca Cola stopping its vendors from
keeping the soft drinks of its rival brands.
 2. M/s TELCO ordering vehicle maintenance
firm near Lonavala Ghats to refuse service of
vehicles other than TATA. TELCO won the
case on the ground that the technicians had
only been trained for maintenance of TATA
vehicles.
EXEMPTIONS
 The following restrictive trade practices are
outside the purview of the MRTP Act:
a)Those that place in the State of Jammu &
Kashmir
b)Restrictive trade practices relating
exclusively to the production , supply ,
distribution or control of goods for export.
c)Safeguard the rights of patentees under the
Indian Patents Act in regard to certain
infringements .
RELIEF AVAILABLE
 The practice shall be discontinued or shall
not be repeated
 The agreement relating thereto, shall be
void
UNFAIR TRADE PRACTICE
A trade practice which, for the purpose of
promoting any sale, use or supply of any goods or
services, adopts unfair method. These are
categorized as:
 False Representation
 False Price or Bargain Price
 Free gifts offer and Prize Schemes
 Non-compliance of Prescribed Standards
 Hoarding, Destruction etc.
1. FALSE REPRESENTATION
 Falsely suggests that the goods are of
particular standard quality, grade and
composition
 Falsely suggest any re-built good as new one
 Makes a misleading representation
concerning for the need for, or the
usefulness of, any goods or services
 Gives any warrantee or guarantee to the
performance and efficacy of the goods that
is not based on proper tests
 A promise to replace until it has achieved a
specified result
 FALSE OFFER OR BARGAIN PRICE
 When an advertisement is published in newspaper,
offering goods at a bargain price when in fact
there is no such intention that the same may be
offered at the same price for reasonable period.
3. FREE GIFTS OFFER AND PRIZE SCHEMES
 Offering any gifts along with some other goods
when the intention is different
 Creating an impression that something is offered
free when in fact the price is included in the price
of article sold
 Offering some prizes to the buyers by the conduct
of any contest with real intention to promise sales
 NON-COMPLIANCE OF
PRESCRIBED STANDARDS
Any sale or supply of goods, knowing or having
reason to believe that the goods do not
comply with the standards prescribed by
some competent authority
HOARDING, DESTRUCTION ETC
Any practice of that permits the hoarding
or destruction of goods, with an intention
to raise the cost of those or other similar
goods.
RELIEF AVAILABLE
 The practice shall be discontinued or shall
not be repeated
 The agreement relating thereto, shall be
void
 Any information relating to such unfair trade
practice shall be disclosed
ARE UNFAIR TRADE PRACTICES
ONLY RELEVANT TO CONSUMERS ?
 Most certainly not. Businesses are also big losers when
it comes to unfair trade practices. Firstly responsible
businesses will lose sales to disreputable businesses
that engage in UTPs because the dis –reputable firms:
 unfairly increase their sales to the detriment of
responsible businesses; and
 reduce their costs of purchase or manufacture.
 Secondly UTPs can damage consumer confidence to
the extent that
 overall growth in the market is affected. This can
happen when
 consumers get overly wary about trying new
products/services or new businesses.
REMEDIES UNDER THE ACT
 Temporary Injunction
 Compensation
MONOPLISTIC, RESTRICTIVE AND
UNFAIR TRADE PRACTICES

The Industrial policy statement of 1991 bring drastic

changes in MRTP Act. These provisions were
criticised very much because of their negative impact
on growth and competition. So following are the
important points regarding new policy:
(i) Prior approval of the central government for
establishment of new undertakings, expansion of
existing undertakings, merger, amalgamation and
take over and appointment of certain directors will no
longer be required.
Continued……….

.
• (ii) In exceptional cases, the government may even
force an industrial undertaking to divide into a
number of smaller divisions.
THE ROAD AHEAD……..

MRTP ACT -1969 COMPETITION

LAW-2002
MRTP ACT VS competition act

. MRTP ACT, 1969 COMPETITION ACT, 2002

• Based on pre-reforms • Based on post-reforms
command and control liberalised regime
regime
• Based on size/structure • Based on conduct as a
as factor factor
• Competition offences • Competition offences
implicit and not defined explicit and defined
• Complex in arrangement • Simple in arrangement
and language and language, and
comprehensible
Contd………
. MRTP ACT, 1969 COMPETITION ACT, 2002

• Frowns upon dominance • Acts upon abuse of

Registration of business dominance
agreements, such as • No requirement of
marketing etc compulsory registration of
. No combinations agreements
regulations (post-1991 • Combination
amendment) regulations
• No penalties for offences beyond a high threshold
limit
• . Reactive and rigid
• Penalties for offences
• Unfair trade practices
• Proactive and flexible
covered
• Unfair trade practices
COMPETITION ACT-2002

• The rubric of the new law, Competition Act, 2002

(Act, for brief) has essentially four compartments:
• Anti-Competitive Agreements;
• Abuse of Dominance;
• Combinations Regulation; and
• Competition Advocacy.
 
FIVE FEATURES ENTAILED IN
COMPETITION LAW ARE:

• Combinations Regulation;
• Extra territorial jurisdiction;
• Harmonisation of Competition Act and IPR Laws;
• Overlaps between Competition Act and Sectoral
Regulatory Laws; and
• Competition Advocacy
CASES

 UJALA Whitener vs Reckitt & Coleman

 Onjus Beverage
 Case law relating to float glass
 Soda Ash Cartel
CONCLUSION

• It is increasingly recognized more than ever before

that competition in markets promotes efficiency,
encourages innovation, improves quality,boosts
choice, reduces costs, leads to lower prices of
goods and services. MRTP ACT 1969 worked
efficiently to achieve above stated dimensions but it
was revamped to Competition Act 2002 to match
up to the fast changing economic scenario & also
achieving economic growth & social justice hand in
hand.