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MRTP Act

The MRTP Act was enacted in 1969 to prevent concentration of economic power and control monopolies and restrictive trade practices. It placed restrictions on large companies with assets over Rs. 100 crores. The Act was amended several times, most significantly in 1991 to remove pre-entry restrictions on large companies to encourage growth. The MRTP Commission oversees restrictive, unfair, and monopolistic trade practices. It has powers to investigate complaints, issue orders, and regulate anti-competitive business activities.

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492 views

MRTP Act

The MRTP Act was enacted in 1969 to prevent concentration of economic power and control monopolies and restrictive trade practices. It placed restrictions on large companies with assets over Rs. 100 crores. The Act was amended several times, most significantly in 1991 to remove pre-entry restrictions on large companies to encourage growth. The MRTP Commission oversees restrictive, unfair, and monopolistic trade practices. It has powers to investigate complaints, issue orders, and regulate anti-competitive business activities.

Uploaded by

nicoz2792
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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MRTP Act

MRTP Act
The Directive Principles of our constitution suggest that ownership and control of
material resources should be widely distributed and there should be no
concentration of wealth and means of production. With this in mind, the
Monopolistic and Restrictive Trade Practice Act, 1969, was enacted so as to:
i.

ensure that the operation of the economic system does not result in
concentration of economic power to the common man's detriment,

ii.

provide the control of monopolies,

iii.

prohibit monopolistic and restrictive trade practices.


The Act was amended in 1974,1980,1984,1988 and in 1991. The Act placed
many restrictions on companies having assets of more than Rs. 100 crores
in respect of new projects, expansion, diversification, mergers, and even in
the appointment of directors.

Scope of MRTP
Before the 1991 amendment, the MRTP law sought to control the concentration
of economic power by requiring undertakings that had assets over Rs. 100
crores and/or were 'dominant undertakings' to register themselves with the
Monopolies and Restrictive Trade Practices Commission.
MRTP controls the following aspects of economic activity:
Restrictive Trade Practices

Unfair Trade Practices

Monopolistic Trade Practices

Concentration of Economic Power.

Pre-entry Condition after the 1991 Amendment


Pre-entry restriction on MRTP companies hindered the rapid growth of industry
and in turn of the economy. For rapid industrialisation, the Act was amended in
September 1991 and all entry restrictions on MRTP companies i.e. companies
having group assets of over Rs. 100 crores were removed.

Restrictive Trade Practice (RTP)


A Restrictive Trade Practice

is one which has, or may have, the effect of

preventing, distorting or restricting competition in any manner and in particular:


a.
b.

which tends to or obstructs flow of capital or resources for production,


which tends to impose unjustified costs or restrictions on consumers,
relating to goods and services by manipulation of prices, or by conditions of
delivery or to affect supplies in market.

Cont.

The deemed RTPs are as follows:


1.

Restrictions on buying/selling

2.

Tie in Sales or Full Line Forcing

3.

Exclusive Dealing Agreement

4.

Collective Price Fixation and Tendering

5.

Restriction by Association

6.

Discriminatory Dealing

7.

Resale Price Maintenance

8.

Restriction on Output or Supply

9.

Restriction on Manufacturing Process

10. Price Control Arrangement


11. Restriction on Buying
12. Collective Bidding
13. Agreement Declared by government to be restrictive

Investigation into RTP


The MRTP commission will enquire into any RTP. If it finds that the trade practice
is prejudicial to public, the Commission may give the following directions:
a.

the practice shall be discontinued or shall not be repeated

b.

agreement relating to RTP shall be modified as may be specified by MRTP


Commission.

Unfair Trade Practice (UTP)


Section 36A defines 'unfair trade practice' as a trade practice, for the purpose of
promoting sale, use or supply of any goods or provision of services, adopts any
unfair method or unfair or deceptive practice. The practices which are 'Unfair
Trade Practices' as per the act are:
a. False representation
b. False Offer or Bargain Price
c. Offering of gifts, prize, etc., and conducting promotional contests
d. Product Safety Standards
e. Hoarding or Destruction of Goods Act
Remedial Measures in UTP
It can ask the concerned firm to discontinue and not to repeat the practice.
It can declare any agreement in relation to UTP as void or declare that the
term of agreement shall be modified in the manner prescribed in the order.
It can order that any information, statement or advertisement relating to UTP
shall be disclosed or published as may be specified in the order.

Monopolistic Trade Practices (MTP)


A Monopolistic Trade Practice is one that has or is likely to have any of
following effects:
i.

Limiting or controlling production, supply or distribution of goods or services


and thereby maintaining price of goods or charge or service at an
unreasonable price.
ii.

Unreasonably preventing or lessening competition.

iii.

Limiting technical development or capital investment or allowing quality of


goods or services to deteriorate.

iv.

Unreasonably increasing prices of goods or services.

v.

Unreasonably increasing the cost of production or charges for any services.

vi.

Unreasonably raising the profits on production, supply or distribution of


goods or services.

vii. Adopting unfair or deceptive methods to reduce or prevent competition in


goods or services.
Cont.

If the MRTP Commission reports that the trade practice is against public
interest, the government can order the following:
i.
Regulating production, supply, storage or control of goods or services and
fixing terms of sale, sales price and supply.
ii.
Prohibiting the undertaking from resorting to such trade practice, that
reduces competition.
iii. Fixing quality standards for goods.
iv. Declaring some type of agreements as unlawful.
v. Asking any party to cancel the whole or part of any agreement.
vi. Regulate profits that may be derived from production, storage, supply,
distribution or control or goods or provision or services.
vii. Regulate quality of goods or services.
Initiation of Inquiry by the Commission
The Commission can enquire into any restrictive, unfair or monopolistic trade
practice (a) upon receiving a complaint from any consumer or a consumers'
association, (b) on reference made by Central or state government, (c) on an
application made by DGIR, (d) on its own.

Governing Body
MRTP Commission
The Central government vides its powers under Section 5 of the MRTP Act. As
per the MRTP Act Commission, it is to consist of a chairman and not less than
two and not more than eight other members. The chairman should be a person
who has been or is qualified to be a judge of the High Court or the Supreme
Court.
A one time tenure of the office of a member is fixed for 5 years subject to
renewal. However, no member can hold office for more than 10 years or beyond
reaching age of 65 years (section 6).
Director General
The Central government has also appointed a Director General of Investigation
and Registration. The main function of the Director General is to make
preliminary investigation before an inquiry by the MRTP Commission and to
maintain a register of agreements required to be registered under the Act.
Cont.

Powers of the Commission


The MRTP commission has the following powers:
1. Power of a civil court under the Code of Civil Procedures, 1908.
2. Proceedings before the Commission are deemed as judicial proceedings
within the meaning of Sections 193 and 228 of IPC.
3. To require any person to produce before it and to examine and keep any
books, accounts or other documents relating to the trade practice in its
custody.
4. To require any person to furnish such information with respect to 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.
6. The Commission has the power to order compensation and damage, if a
person is found (after enquiry), to be indulging in unfair, monopolistic or
restrictive trade practice.
Cont.

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