Monopolies and Restrictive Trade

Practices Act

PRESENTED BY:AKASH SHARMA

MBA(Gen.)

MRTP ActThe Monopolies and Restrictive Trade Practices Act, 1969, brought into force from 1st June 1970, was a very common controversial piece of legislation.

The Monopolistic and Restrictive Trade Practices Act, 1969, was enacted1. To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few,

2. To provide for the control of monopolies, and

3. To prohibit monopolistic and restrictive trade practices.The MRTP Act extends to the whole of India except Jammu and Kashmir.

The MRTP Act sought to prevent the concentration of economic power

to the common detriment by preventing those developments which

might result in the concentration of economic power such as substantial expansion of existing undertaking; mergers and amalgamations; takeovers; and interconnection of undertakings.

The MRTP Act was significantly amended in 1982, 1984, 1985 and 1991.

The amendment of 1985 was to raise the asset threshold of undertaking (s) from Rs. 20 Crores to Rs. 100 Crores for applying

the provisions of the MRTP Act relating to prevention of

concentration of economic power.

1991 ChangesThe Industrial Policy Statement of July 24, 1991, announced very drastic changes in the MRTP Act, viz:

Repeal of the provisions of Act pertaining to concentrating of economic power i.e. investment limits, except the

provisions empowering the government to defuse concentration of

economic power to the common detriment.

The provisions of the MRTP Act pertaining to the concentration of

economic power were much criticized because of their negative

impact on growth and competition.

Monopolistic Trade Practice

A monopolistic trade practice is a trade practice which has, or is likely to have, the effect of reasonably preventing or lessening competition in the production, supply or distribution of any goods or services; limiting technical development and capital investment to the common detriment; or allowing the quality of goods or services to deteriorate.

A monopolistic trade practice shall be deemed to be prejudicial to the public interest, if having regard to the economic conditions prevailing in the country, and to all other matters which are relevant in the particular circumstances, the effect of the trade practice is or would be:

To increase unreasonably the cost relating to the production, supply or distribution of goods or the performance of any service.

To increase unreasonably: The price at which goods are sold The profits derived from the production, supply or distribution of

any goods (including their sale or purchase) or from the performance of any service.

To reduce or limit unreasonably competition in the production, supply or distribution of any goods (including their sale or purchase) or the provision of any service

To limit or prevent unreasonably the supply of goods to consumers or the provision of any service

To result in a deterioration in the quality of any goods or in the performance of any service.

Restrictive Trade Practice A restrictive trade practice is a trade practice which has the effect, actual or probable of restricting, lessening or destroying competition. Such trade practices may tend to obstruct the flow of production or to bring about manipulation of prices or conditions of delivery etc. to the common detriment.

The distinction between the two is based, perhaps, on the Monopolies Inquiry Commission, which confined the word “restrictive trade practices” to mean restrictive trade practices other than those pursued by monopolist.

Unfair Trade Practice

An unfair trade practice means a trade practice, which, for the purpose of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or deceptive practice.

Unfair practices may be categorised as under: FALSE REPRESENTATION

BARGAIN PRICE

OFFERING OF GIFTS AND PRIZES

NON-COMPLIANCE OF PRESCRIBED STANDARDS

HOARDING OR DESTRUCTION OF GOODS

FALSE REPRESENTATION Falsely suggests that the goods are of a particular standard

quality, quantity, grade, composition, style or model. Falsely suggests any re-built, second-hand renovated,

reconditioned or old goods as new goods. Makes a false or misleading representation concerning the

need for, or the usefulness of, any goods or services. Materially misleads about the prices at which such goods or

services are available in the market.

BARGAIN PRICE

The price stated in the advertisement in such manner as suggests that it is lesser than the ordinary price.

The price which any person coming across the advertisement would believe to be better than the price at which such goods are ordinarily sold.

OFFERING OF GIFTS AND PRIZES

Creating impression that something is being offered free along with

the goods, when in fact the price is wholly or partly covered by the price of the article sold.

Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business.

NON-COMPLIANCE OF PRESCRIBED STANDARDSAny sale or supply of goods, for use by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by some competent authority, in relation to their performance, composition, contents, design, construction, finishing or packing, as are necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to an unfair trade practice.

HOARDING OR DESTRUCTION OF GOODSAny practice that permits the hoarding or destruction of goods, or refusal to sell the goods or provide any services, with an intention to raise the cost of those or other similar goods or services, shall be an unfair trade practice.

MRTP COMMISSION

In accordance with the provisions of the Act, the Government of India has set up a Commission known as the Monopolies and Restrictive Trade Commission. The Act provides that the Commission shall consists of a chairman, and not less than two and not more than eight other members, to be appointed by the Central Government.

POWERS OF MRTP COMMISSION1. Power of Civil Court under the Code of Civil Procedure, with respect to:

Summoning and enforcing the attendance of any witness and examining him on oath;

Discovery and production of any document or other material object

producible as evidence;

Reception of evidence on affidavits;

Requisition of any public record from any court or office.

Issuing any commission for examination of witness; and

Appearance of parties and consequence of non-appearance.

2. Proceedings before the commission are deemed as judicial proceedings with in the meaning of sections 193 and 228 of the Indian Penal Code.

3. To require any person to produce before it and to examine and keep any books of accounts or other documents relating to the trade practice, in its custody.

4. To require any person to furnish such information as respects the trade practice as may be required or such other information as may be in his possession in relation to the trade carried on by any other person.

5. To authorise any of its officers to enter and search any undertaking or seize any books or papers, relating to an undertaking, in relation to which the inquiry is being made, if the commission suspects tat such books or papers are being or may be destroyed, mutilated, altered, falsified or secreted.

REMEDIES UNDER MRTP ACTTEMPORARY INJUNCTION

Where, during any inquiry, the commission is satisfied that any undertaking or any person is carrying on, or is about to carry on, any monopolistic, restrictive or unfair trade practice, which is a pre-judicial to the public interest or the interest of any trader or class of traders generally, or of any consumer or class of consumers, or consumers generally, the commission may grant a temporary injunction restraining such undertaking or person form carrying on such practice until the conclusion of inquiry or until further orders.

COMPENSATION

Where any monopolistic, restrictive or unfair trade practice has caused damage to any Government, or trader or consumer, an application may be made to the Commission asking for compensation, and the Commission may award appropriate compensation. Where any such loss or damage is caused to a number of persons having the same interest, compensation can be claimed with the permission of the commission, by any of them on behalf of all of them.