MRTP

Ranjit SJ

 MRTP Act 1969 came into force from 01st June 1970 and has been amended in 1974,1980,1982,1984, and 1991. It extends to the whole of India except the State of Jammu and Kashmir.

This Act was enacted: To ensure that the operation of the economic system does not result in the concentration of economic power in the hands of few To provide for the control of monopolies To prohibit monopolistic and restrictive trade practices

APPLICATION OF THE ACT

This Act shall not apply to: Any undertaking owned or controlled by the Government Company Any undertaking owned or controlled by a corporation Any undertaking owned by a co-operative society formed and registered under any Central, Provincial or State Act Any financial institution

Objectives
Initially there were 3 objectives : To control monopolies and monopolistic trade practices Prevention of concentration of economic power in the few hands only To regulate trade practices After the amendment of the act in 1984 a 4th objective was introduced :Regulation of Unfair Trade Practices

 MRTP Act can be divided into 2 major parts 1. Monopolies V/s Concentration of economic power : a) the expansion, establishment of new undertakings, diversifications , Mergers and Amalgamations, of such units are subject to approval by Central Govt b) In exceptional cases the govt can force an Industrial Undertaking to divide into number of smaller divisions

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.

Restrictive Trade Practices Act

The term Restrictive Trade Practice is used for any strategy used by the producers to restrict competition within a given market a) The Setting of minimum prices b) The refusal to supply retailers that stock the products of other competitors; c) Setting different prices for different buyers (discriminatory pricing)

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

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.

Unfair Trade Practices

Any trade practice which adopts one or more of the following practices : Making misleading advertisements Selling hazardous products Hoarding in order to push up the price level

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

2. 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

4. 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

5. 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

 The industrial policy statement of 1991 bring drastic changes in the MRTP Act. These provisions were criticized very much because of their negative impact on growth and competition .. So the following is an important point regarding the new policy: Prior approval of Central Government for establishment of new Undertakings , expansion of existing new undertakings, mergers, amalgamation, take over, and appointment of new Directors will no longer be required

Relief Available
This practice should not be repeated The agreement relating thereto shall be void Any information relating to such unfair trade practice shall be disclosed

This Act is not applicable to :

i) Any undertaking owned or controlled by Central or State Government ii) Any undertaking the management of which has been taken over by the government iii) Any undertaking owned by the cooperative society Iv) Any financial institution

MRTP Commission
The powers of the commission include the powers vested in the civil court and include further powers : To direct an undertaking to discontinue a trade practice and not to repeat the same To grant temporary injunction restraining an undertaking from discontinuing an alleged trade practice

 To award compensation for loss suffered or injury sustained on account of RTP, UTP,or MTP To direct the parties to issue corrective advertisements To recommend Central Government , division, Undertakings if their working is pre-judicial to public interest .

Investigation & Enquiries

The MRTP Commission can be approached with a complaint/ reference on Restrictive or Monopolistic or Unfair Trade Practices by : An individual consumer; A registered association of consumers; A trade association

Remedies Under the Act

Temporary Injunction Compensation