Monopolistic and Restrictive Trade

Practices Act, 1969

Mr. Rohit Kumar Vishwakarma (UIM 011) 1

 Monopolistic and Restrictive Trade
Practices Act, 1969
• All what is required is the trade which is free from
all unfair trade practices, restrictive trade
practices and monopolistic trade practices.
• Such trade is in the interests of both the trading
community and the customers or common
public.
• Quite often, cut throat competition and craze for
making quick money prompts businessmen to
indulge in various types of unfair trade practices.
• These practices are injurious to the interests of
small and weak traders and the common man.
Mr. Rohit Kumar Vishwakarma (UIM 011) 2
 Monopolistic and Restrictive Trade
Practices Act, 1969
• The Monopolies And Restrictive Trade Practices Act,
1969, commonly called MRTP Act which was into force
from 1st June, 1970,was always been a subject matter
of controversies piece of legislation ever since its
inception.
• The principle objective of it, which extends to the
whole of India except to the state of Jammu and
Kashmir, were
a. To ensure that the operation of the economic system
does not result in the concentration of economic power
in hands of few,
b. To provide for the control of monopolies, and
c. To prohibit monopolistic and restrictive trade practices.
Mr. Rohit Kumar Vishwakarma (UIM 011) 3
 The MRTP Act extends to the whole of India
except Jammu and Kashmir.
Unless the Central Government otherwise
directs, this act shall not apply.
• Any undertaking owned or controlled by the Government Company,
• Any undertaking owned or controlled by the Government,
• Any undertaking owned or controlled by a corporation (not being a
company established by or under any Central, Provincial or State Act,
• Any trade union or other association of workmen or employees formed for
their own reasonable protection as such workmen or employees,
• Any undertaking engaged in an industry, the management of which has
been taken over by any person or body of persons under powers by the
Central Government,
• Any undertaking owned by a co-operative society formed and registered
• under any Central, Provincial or state Act,
• Any financial institution.

Mr. Rohit Kumar Vishwakarma (UIM 011) 4

 Monopolistic Trade Practices
A monopolistic trade practice means a trade practice, which has, or is
likely to have, the effect of:
1. Maintaining prices at an unreasonable level by limiting, reducing or
otherwise controlling the production, supply or distribution of goods of
any description or the supply of any services or in any other manner;
2. Unreasonably preventing or reducing competition in the production,
supply or distribution of any goods or in the supply of any services;
3. Limiting technical development or capital investment to the common
detriment or allowing the quality of any goods produced, supplied or
distributed, or any service rendered in India to deteriorate;
4. Increasing unreasonably- The cost of production of any good, or Charges
for the provision, or maintenance of any service,
5. Increasing unreasonably-
 The price at which goods are, or may be, sold or resold or the charges at which
services are, or may be, provided, or
 The profits which are, or may be, derived by the production, supply or distribution
(including the sale or purchase) of any goods or by provision of any services,
6. Preventing or reducing competition in the production, supply or
distribution of any goods or in the provision or maintenance of any services
by the adoption of unfair method or unfair or deceptive practices.
Mr. Rohit Kumar Vishwakarma (UIM 011) 5
 Monopolistic Trade Practices
Order
Section 31 provides that where it appears to the central government
that the owners of one or more monopolistic undertakings are
indulging in any monopolistic trade practice, the government may refer
the matter to the MRTP commission from an inquiry and the
commission shall report to the central government its findings. It may
include an order:
1. Regulating the production, storage supply, etc, of any goods by the
undertaking and fixing the terms of sale or supply;
2. Prohibiting the undertaking from restoring to any act or practice from
pursuing any commercial policy which lessens or prevents competition
in the production;
3. Fixing standards for the goods used or produced by the undertaking;
4. Declaring unlawful, the making or carrying out of any such agreement
as described in the order;
5. Requiring any party to terminate the agreement within such time,
either wholly or specified;
Mr. Rohit Kumar Vishwakarma (UIM 011) 6
 Monopolistic Trade Practices
Exceptions
• A monopolistic trade practice is deemed to be
prejudicial to the public interest, except when
it is;
a) Authorized by the Central Government; or
b) Found necessary by the Central Government to
c) Meet the defense requirements;
d) Ensure the maintenance of essential services; or
e) Give effect to the terms of an agreement to which the
central government is a party

Mr. Rohit Kumar Vishwakarma (UIM 011) 7

 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.

Mr. Rohit Kumar Vishwakarma (UIM 011) 8

Possible restrictive trade practices:
1. Concept or Collusion! Cartels: That is, collusive action on
the part of manufacturers or suppliers in fixing prices or
terms of sale to lesson competitive or to divide markets to
eliminate competition.
2. Price 'Discrimination: This refers to the practice of selling
.goods or services where there are no or nominal cost
differences at different effective prices to separate groups
of customers.
3. Predatory Pricing: This is a practice of temporarily selling at
prices below cost with the intention of driving out existing
competitors about to enter the market so that the market
power of the person is either enhanced or maintained.
4. Tie up Sales: Manufacturers or suppliers of fast moving
products may tie-up sales of such products with the sales
of slow moving products resulting in distortion in
competition in the field of slow-moving products.
Mr. Rohit Kumar Vishwakarma (UIM 011) 9
Possible restrictive trade practices:
5. Fulltime Forcing: This is the practice that requires a
buyer to purchase quantities of each item in a product
range in order to be able to buy one of them.
6. Exclusive Dealing: Under it, the supplier insists that
dealer will exclusively deal in the products of supplier
and not in the products of competitors.
7. Area Restriction: Under this a restriction is placed by
the manufacturer on the dealer to make supplies only
within a fined area.
8. Resale Price Maintenance: Under it, a manufacturer
fixes a price at which retail must resell his product to
the public or at a wholesale business must resell that
product to a retailer.
Mr. Rohit Kumar Vishwakarma (UIM 011) 10
 Control of Restrictive Trade Practices
• Under the MRTP, Act, restrictive trade practices are not
prohibited except in so far as resale price maintenance
is concerned. Once the MRTP commission finds that
the impugned restrictive trade practice is prejudicial to
the public interest, it has powers to pass an order
directing;
a) That the practice shall be discontinued or not repeated
(cease and desist orders)
b) That the agreement relating to the said practice shall be
void;
c) That the agreement relating to the practice be modified
in a specified manner
• An appeal against the order of the commission lies only
to the Supreme Court.
Mr. Rohit Kumar Vishwakarma (UIM 011) 11
 Restrictive Trade Practice
Exemptions
• The following restrictive trade practices are outside the
purview of the MRTP Act:
a) These that take place in Jammu & Kashmir;
b) To public Sectors units and any trade Union or other association
of workman or employees formed for their own reasonable
protection;
c) Restrictive trade practices to safeguard the rights of patentees
under the Indian Patents Acts in regard to certain
infringements;
d) Practices relating to production, supply distribution or control
of goods for export;
e) Practices as a result of any agreement between buyers relating
to goods bought by them for consumption and not for resale;
f) These expressly authorized by any law.

Mr. Rohit Kumar Vishwakarma (UIM 011) 12

 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.

Mr. Rohit Kumar Vishwakarma (UIM 011) 13

 Unfair Trade Practice
1. False Representation
2. False Offer of Bargain Price
3. Free Gifts Offer and Prize Schemes
4. Non-Compliance of Prescribed Standards
5. Hoarding, Destruction, etc

Mr. Rohit Kumar Vishwakarma (UIM 011) 14

Inquiry into Unfair Trade Practices
• The Commission may inquire into Any unfair
trade practice
a) Upon receiving a complaint from any trade
association, consumer or a registered consumer
association, or
b) Upon reference made to it by the Central
Government or State Government
c) Upon an application to it by the Director General
or
d) Upon its own knowledge or information.

Mr. Rohit Kumar Vishwakarma (UIM 011) 15

 Relief Available
After making an inquiry into the unfair trade practices if the Commission is
of the opinion that the practice is prejudicial to the public interest, or to
the interest of any consumer it may direct that-
• The practice shall be discontinued or shall not be repeated;
• The agreement relating thereto shall be void in respect of such unfair
trade practice or shall stand modified.
• Any information, statement or advertisement relating to such unfair trade.
Practice shall be disclosed, issued or published as may be specified
• The Commission may permit the party to carry on any trade practice to
take steps to ensure that it is no longer prejudicial to the public interest or
to the interest of the consumer.

However no order shall be made in respect a trade practice which is

expressly authorized by any law in force.

• The Commission is empowered to direct publication of corrective

advertisement and disclosure of additional information while passing
orders relating to unfair trade practices.
Mr. Rohit Kumar Vishwakarma (UIM 011) 16
 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 Practices
Commission, the Act provides that the commission
shall consist of a Chairman and not less than two and
not more than eight other members to be appointed
by the Central Government. The Chairman shall be a
person who has the qualification to be a Judge of the
Supreme Court or a High Court. The Act empowers the
Central government to appoint a Director General of
Investigation and Registration to conduct investigation
for the purpose of this Act. Jurisdiction and Powers of
the Commission

Mr. Rohit Kumar Vishwakarma (UIM 011) 17

 MRTP Commission…
• The MRTP Commission is vested with powers
to inquire into restrictive monopolistic and
unfair trade practices the commission may
inquire into nay- restrictive trade practice
either on the application of the Director
General of Investigation or on receiving
complaint from any trade or consumer
association having a membership of not less
than 25 persons, or 25 or more consumers.
Mr. Rohit Kumar Vishwakarma (UIM 011) 18
 MRTP Commission…
• For the purpose of an inquiry under this Act, the
commission has the same powers as are vested in a
civil court under the civil Procedure Code, 1908, in
respect of:
1. Summoning a witness and his Examination on oath;
2. Discovery and production of Evidence;
3. Reception of Evidence on affidavits
4. Requisitioning public records from a court or an office;
and
5. Issuing a commission for the Examination of a witness.
6. Appearance of parties and consequence of non-
appearance.

Mr. Rohit Kumar Vishwakarma (UIM 011) 19

Besides these the commission can also exercise
the power in the following cases:
• Proceedings before the commission are deemed as judicial
proceedings within the meaning of sections 193 and 228 of
the Indian Penal Code.
• 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.
• 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.
• To authorize 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 that such books or papers are
being or may be destroyed, mutilated, altered, falsified or
secreted. Mr. Rohit Kumar Vishwakarma (UIM 011) 20
 Thank You

Mr. Rohit Kumar Vishwakarma (UIM 011) 21