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MRTP ActMRTP Act

TheThe MonopoliesMonopolies andand RestrictiveRestrictive TradeTrade PracticesPractices Act, Act,19691969,, brought brought intointo forceforce fromfrom 11st st JuneJune 19701970,, waswasaa veryvery commoncommon controversialcontroversial piecepiece of of legislationlegislation..

TheThe principalprincipal objectivesobjectives of of thethe MRTPMRTP Act, Act, whichwhichextendsextends toto thethe wholewhole of of IndiaIndia except except toto thethe StateStateof of JammuJammu andand Kashmir,Kashmir, werewere::

1.1. PreventionPrevention of of concentrationconcentration of of economiceconomic powerpower toto

thethe commoncommon detriment,detriment, andand2.2. ControlControl of of monopolistic,monopolistic, restrictiverestrictive andand unfairunfair

tradetrade practicespractices whichwhich areare prejudicialprejudicial toto publicpublicinterest interest. .

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TheThe MRTPMRTP Act Act waswas significantlysignificantly amendedamended inin 19821982,,19841984,, 19851985 andand 19911991..

TheThe amendment amendment of of 19851985 waswas toto raiseraise thethe asset asset thresholdthreshold of of undertakingundertaking (s)(s) fromfrom RsRs.. 2020 CroresCrores totoRsRs.. 100100 CroresCrores forfor applyingapplying thethe provisionsprovisions of of thetheMRTPMRTP Act Act relatingrelating toto preventionprevention of of concentrationconcentrationof of economiceconomic powerpower..

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Recent ChangesRecent Changes

TheThe IndustrialIndustrial PolicyPolicy Statement Statement of of JulyJuly 2424,, 19911991,,announcedannounced veryvery drasticdrastic changeschanges inin thethe MRTPMRTP Act, Act,vizviz::

1.1. RepealRepeal of of thethe provisionsprovisions of of Act Act pertainingpertaining toto

concentratingconcentrating of of economiceconomic power,power, except except thetheprovisionsprovisions empoweringempowering thethe government government toto defusedefuseconcentrationconcentration of of economiceconomic powerpower toto thethe commoncommondetriment detriment. .

2.2. TheThe provisionsprovisions of of thethe MRTPMRTP Act Act pertainingpertaining toto thetheconcentrationconcentration of of economiceconomic powerpower werewere muchmuchcriticizedcriticized becausebecause of of theirtheir negativenegative impact impact onongrowthgrowth andand competitioncompetition. .

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3 .3 . TheThe MRTPMRTP Act Act sought sought toto prevent prevent thetheconcentrationconcentration of of economiceconomic powerpower toto thethe commoncommon

detriment detriment byby preventingpreventing thosethose developmentsdevelopmentswhichwhich might might result result inin thethe concentrationconcentration of of economiceconomic powerpower suchsuch asas substantialsubstantial expansionexpansion of of existingexisting undertakingundertaking; ; mergersmergers andand

amalgamationsamalgamations; ; takeoverstakeovers; ; andand interconnectioninterconnection of of undertakingsundertakings. .

4.4. TheThe MRTPMRTP companiescompanies (i(i..ee.. dominant dominant undertakingundertakingwithwith assetsassets of of RsRs oneone crorecrore oror moremore andand otherotherundertakingsundertakings havinghaving assets,assets, includingincluding that that of of interconnectedinterconnected undertakings,undertakings, of of RsRs.. 100100 crorescrores orormore)more) hadhad toto obtainobtain priorprior approvalapproval of of thethe centralcentralgovernment government forfor anyany of of thethe developmentsdevelopments. .

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5.5. TheThe interferenceinterference of of thethe government government throughthrough thetheMRTPMRTP Act Act inin investment investment decisionsdecisions of of largelarge

companiescompanies becamebecame deleteriousdeleterious inin itsits effectseffects ononIndianIndian industrialindustrial growthgrowth.. TheThe thrust thrust of of thethe MRTPMRTP Act Act inin futurefuture willwill bebe onon thethe controlcontrol of of restrictiverestrictiveandand unfairunfair tradetrade practicespractices. .

6.6. TheThe Government,Government, howeverhowever retainsretains thethe powerpower totodefusedefuse oror breakupbreakup concentrationconcentration of of economiceconomicpowerpower toto thethe commoncommon detriment detriment. . If If thethe centralcentralgovernment government isis of of thethe opinionopinion that that thethe workingworking of of anan undertakingundertaking isis prejudicialprejudicial toto thethe publicpublic interest,interest,oror hashas ledled oror isis leading,leading, oror isis likelylikely toto lead,lead, toto thetheadoptionadoption of of anyany monopolisticmonopolistic oror restrictiverestrictive tradetradepractice,practice, thethe government government isis empoweredempowered byby thethe

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MRTPMRTP act act toto direct direct::1.1. TheThe divisiondivision of of anyany tradetrade of of thethe undertakingundertaking byby

thethe salesale of of anyany part part of of thethe undertakingundertaking oror

assetsassets thereof thereof: : oror2.2. TheThe divisiondivision of of anyany undertakingundertaking ororinterconnectedinterconnected undertakingsundertakings intointo suchsuch numbernumberof of undertakingsundertakings asas thethe circumstancescircumstances of of thethe

casecase maymay justify justify..

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MRTP CommissionMRTP Commission

InIn accordanceaccordance withwith thethe provisionsprovisions of of thethe Act, Act, thetheGovernment Government of of IndiaIndia hashas set set upup aaCommissionCommission knownknown asas thethe MonopoliesMonopolies andandRestrictiveRestrictive TradeTrade CommissionCommission. . TheThe Act Act

providesprovides that that thethe CommissionCommission shallshall consistsconsistsof of aa chairman,chairman, andand not not lessless thanthan twotwo andand not not moremore thanthan eight eight otherother members,members, toto bebeappointedappointed byby thethe CentralCentral Government Government. . TheThe

chairmanchairman shallshall bebe aa personperson whowho hashas thethequalificationqualification toto bebe aa judge judge of of aa SupremeSupremeCourt Court oror of of aa HighHigh Court,Court, andand thethe membersmembersthereof thereof shallshall bebe personspersons of of ability,ability, integrityintegrity

andand standing,standing, whowho havehave adequateadequate knowledgeknowledge

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experienceexperience of,of, oror havehave shownshown capacitycapacity inin dealingdealing withwithproblemsproblems relatingrelating toto economics,economics, law,law, commerce,commerce,

accountancy,accountancy, industry,industry, publicpublic affairsaffairs ororadministrationadministration. .TheThe Act Act empowersempowers thethe CentralCentral Government Government toto appoint appoint

aa DirectorDirector GeneralGeneral of of InvestigationInvestigation andandRegistration,Registration, andand asas manymany Additional, Additional, Joint,Joint,DeputyDeputy oror Assistant Assistant DirectorsDirectors--GeneralGeneral of of InvestigationInvestigation andand Registration,Registration, asas it it maymay thinkthink fit,fit,toto conduct conduct investigationsinvestigations forfor thethe purposespurposes of of thisthis

Act, Act, andand forfor maintainingmaintaining aa registerregister of of agreementsagreementssubject subject toto registrationregistration underunder thisthis Act, Act, andand forforperformingperforming suchsuch otherother functionsfunctions asas are,are, oror maymaybe,be, providedprovided by,by, oror underunder thisthis Act Act..

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TheThe DirectorDirector GeneralGeneral maymay authorizeauthorize anyany oneone of of thethe Additional, Additional, Joint,Joint, DeputyDeputy oror Assistant Assistant DirectorsDirectors--GeneralGeneral toto functionfunction asas thethe RegistrarRegistrar of of

Agreements Agreements subject subject toto registrationregistration underunder thisthis Act Act..

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Jurisdiction and Powers of the CommissionJurisdiction and Powers of the Commission

TheThe MRTPMRTP CommissionCommission isis vestedvested withwith powerspowers totoinquireinquire intointo restrictive,restrictive, monopolisticmonopolistic andand unfairunfairtradetrade practicespractices. .

TheThe commissioncommission maymay inquireinquire intointo anyany restrictiverestrictive tradetradepracticepractice eithereither onon thethe applicationapplication of of thethe DirectorDirectorGeneralGeneral of of InvestigationInvestigation oror uponupon aa referencereferencemademade toto it it byby thethe CentralCentral oror aa StateState Government,Government,

oror onon receivingreceiving complaint complaint fromfrom anyany tradetrade ororconsumerconsumer associationassociation havinghaving aa membershipmembership of of not not lessless thanthan 2525 personspersons oror 2525 oror moremore consumers,consumers, ororuponupon itsits ownown knowledgeknowledge oror informationinformation. .

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ForFor thethe purposepurpose of of anan inquiryinquiry underunder thisthis Act, Act, thethecommissioncommission hashas thethe samesame powerspowers asas areare vestedvested inin

aa CivilCivil Court Court underunder thethe CivilCivil ProcedureProcedure Code,Code,19081908,, inin respect respect of of;;1.1. SummoningSummoning aa witnesswitness andand hishis examinationexamination onon

oathoath;;2.2. DiscoveryDiscovery andand productionproduction of of evidenceevidence; ;3 .3 . ReceptionReception of of evidenceevidence onon affidavitsaffidavits;;4.4. RequisitioningRequisitioning publicpublic recordsrecords fromfrom aa court court oror anan

officeoffice;; andand5.5. IssuingIssuing aa commissioncommission forfor thethe examinationexamination of of aa

witnesswitness. .

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The proceedings before the Commission are judicialThe proceedings before the Commission are judicialproceedings and the Commission is deemed to beproceedings and the Commission is deemed to be

a Civil Court.a Civil Court.

Control of Monopolistic Trade PracticeControl of Monopolistic Trade Practice

A A monopolisticmonopolistic tradetrade practicepractice isis aa tradetrade practicepractice whichwhichhas,has, oror isis likelylikely toto have,have, thethe effect effect of of reasonablyreasonablypreventingpreventing oror lesseninglessening competitioncompetition inin thetheproduction,production, supplysupply oror distributiondistribution of of anyany goodsgoods oror

servicesservices; ; limitinglimiting technicaltechnical development development andandcapitalcapital investment investment toto thethe commoncommon detriment detriment; ; ororallowingallowing thethe qualityquality of of goodsgoods oror servicesservices totodeterioratedeteriorate. .

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A A monopolisticmonopolistic tradetrade practicepractice shallshall bebe deemeddeemed toto bebeprejudicialprejudicial toto thethe publicpublic interest,interest, if if havinghaving regardregard

toto thethe economiceconomic conditionsconditions prevailingprevailing inin thethecountry,country, andand toto allall otherother mattersmatters whichwhich arearerelevant relevant inin thethe particularparticular circumstances,circumstances, thethe effect effect of of thethe tradetrade practicepractice isis oror wouldwould bebe::

1.1. ToTo increaseincrease unreasonablyunreasonably thethe cost cost relatingrelating toto thetheproduction,production, supplysupply oror distributiondistribution of of goodsgoods oror thetheperformanceperformance of of anyany serviceservice;;

2.2. ToTo increaseincrease unreasonablyunreasonably: :a)a) TheThe priceprice at at whichwhich goodsgoods areare sold,sold, ororb)b) TheThe profitsprofits derivedderived fromfrom thethe production,production, supplysupply prpr

distributiondistribution of of anyany goodsgoods (including(including theirtheir salesale ororpurchase)purchase) oror fromfrom thethe performanceperformance of of anyany serviceservice::

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3 .3 . ToTo reducereduce oror limit limit unreasonablyunreasonably competitioncompetition inin thetheproduction,production, supplysupply oror distributiondistribution of of anyany goodsgoods(including(including theirtheir salesale oror purchase)purchase) oror thethe provisionprovisionof of anyany serviceservice

4.4. ToTo limit limit oror prevent prevent unreasonablyunreasonably thethe supplysupply of of goodsgoods toto consumersconsumers oror thethe provisionprovision of of anyanyserviceservice

5.5. ToTo result result inin aa deteriorationdeterioration inin thethe qualityquality of of anyany

goodsgoods oror inin thethe performanceperformance of of anyany serviceservice..

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1.1. SectionSection 3 13 1 providesprovides that that wherewhere it it appearsappears toto thetheCentralCentral Government Government that that thethe ownersowners of of oneone orormoremore monopolisticmonopolistic undertakingsundertakings areare indulgingindulging ininanyany monopolisticmonopolistic tradetrade practice,practice, oror that that

monopolisticmonopolistic tradetrade practicespractices prevailprevail inin respect respect of of anyany goodsgoods oror services,services, thethe government government maymay referreferthethe mattermatter toto thethe MRTPMRTP CommissionCommission forfor anan inquiryinquiryandand thethe commissioncommission shall,shall, afterafter suchsuch hearinghearing asas it it

thinksthinks fit,fit, report report toto thethe CentralCentral Government Government itsitsfindingsfindings thereonthereon. .

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2.2. TheThe CommissionCommission maymay makemake suchsuch anan inquiryinquiry alsoalso

onon itsits ownown motionmotion.. If If suchsuch anan inquiryinquiry findsfinds that that anyany monopolisticmonopolistic tradetrade practicepractice operatesoperates oror isislikelylikely toto operateoperate against against thethe publicpublic interest,interest, thetheCentralCentral Government Government maymay passpass suchsuch anan inquiryinquiry

alsoalso onon itsits ownown motionmotion.. If If suchsuch anan inquiryinquiry findsfindsthat that anyany monopolisticmonopolistic tradetrade practicepractice operatesoperates oror isislikelylikely toto operateoperate against against thethe publicpublic interest,interest, thetheCentralCentral Government Government maymay passpass suchsuch anan ordersorders asas it it

maymay thinkthink fit fit toto remedyremedy oror prevent prevent anyany mischiefsmischiefswhichwhich result result oror maymay result result fromfrom suchsuch tradetradepracticepractice. .

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33 .. Any Any orderorder mademade byby thethe CentralCentral Government Government inin thisthis

regardregard maymay includeinclude anan orderorder::1.1. RegulatingRegulating thethe production,production, storage,storage, supply,supply, distributiondistributionoror controlcontrol of of anyany goodsgoods byby thethe undertakingundertaking oror thethecontrolcontrol oror supplysupply of of anyany serviceservice byby it it andand fixingfixing thethetermsterms of of salesale (including(including prices)prices) oror supplysupply thereof thereof

2.2. ProhibitingProhibiting thethe undertakingundertaking fromfrom resortingresorting toto anyany act act ororpracticepractice oror fromfrom pursuingpursuing anyany commercialcommercial policy,policy, whichwhichpreventsprevents oror lessens,lessens, oror isis likelylikely toto prevent prevent oror lessen,lessen,competitioncompetition inin thethe production,production, supplysupply oror distributiondistribution of of

anyany goodsgoods usedused oror producedproduced byby thethe undertakingundertaking; ;3 .3 . F ixingF ixing standardsstandards forfor thethe goodsgoods usedused oror producedproduced byby thethe

undertakingundertaking. .

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4.4. DeclaringDeclaring unlawful,unlawful, except except toto suchsuch extent extent andand inin suchsuchcircumstancescircumstances asas maymay bebe providedprovided byby oror underunder thetheorder,order, thethe makingmaking oror carryingcarrying out out of of anyany suchsuchagreement agreement asas maymay bebe specifiedspecified oror describeddescribed inin thethe

orderorder..5.5. RequiringRequiring anyany partyparty toto anyany suchsuch agreement agreement asas maymay bebe

soso specifiedspecified oror describeddescribed toto terminateterminate thethe agreement agreement withinwithin suchsuch timetime asas maymay bebe soso specified,specified, eithereither whollywhollyoror toto suchsuch anan extent extent asas maymay bebe soso specifiedspecified. .

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Control of Restrictive Trade PracticeControl of Restrictive Trade Practice

A A restrictiverestrictive tradetrade practicepractice isis aa tradetrade practicepractice whichwhichhashas thethe effect,effect, actualactual oror probableprobable of of restricting,restricting,lesseninglessening oror destroyingdestroying competitioncompetition. . SuchSuch tradetradepracticespractices maymay tendtend toto obstruct obstruct thethe flowflow of of

productionproduction oror toto bringbring about about manipulationmanipulation of of pricesprices oror conditionsconditions of of deliverydelivery etcetc.. toto thethecommoncommon detriment detriment. .

TheThe distinctiondistinction betweenbetween thethe twotwo isis based,based, perhaps,perhaps, ononthethe MonopoliesMonopolies InquiryInquiry Commission,Commission, whichwhichconfinedconfined thethe wordword restrictive restrictive tradetrade practicespractices totomeanmean restrictiverestrictive tradetrade practicespractices otherother thanthan thosethosepursuedpursued byby monopolist monopolist. .

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TheThe wordswords restrictiverestrictive tradetrade practicepractice toto meanmean practicespracticesotherother thanthan thosethose pursuedpursued byby monopoliesmonopolies whichwhichobstruct obstruct thethe freefree playplay of of competitivecompetitive forcesforces ororimpedeimpede thethe freefree flowflow of of capitalcapital resourcesresources inin toto thethe

streamstream of of productionproduction oror of of finishedfinished goodsgoods inin thethestreamstream of of distributiondistribution oror of of anyany point point beforebefore theytheyreachreach thethe handshands of of thethe ultimateultimate consumerconsumer. .

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Possible Restrictive Trade PracticesPossible Restrictive Trade Practices

1.1. Concert Concert oror Collusion/CartelsCollusion/Cartels2.2. PricePrice DiscriminationDiscrimination

3 .3 . PredatoryPredatory PricingPricing4.4. TieTie--upup salessales5.5. FullFull--lineline ForcingForcing6.6. ExclusiveExclusive DealingDealing7.7. Area Area RestrictionRestriction8.8. ResaleResale PricePrice MaintenanceMaintenance

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Competition Act 2002Competition Act 2002

TheThe MinistryMinistry of of CorporateCorporate Affairs,Affairs,GovernmentGovernment of of IndiaIndia hashas issuedissued aahashas issuedissued aa NotificationNotification dateddated 2828 thth AugustAugust20092009,, wherebywhereby thethe mostmost controversialcontroversial thetheMonopoliesMonopolies andand RestrictiveRestrictive TradeTrade PracticesPracticesAct,Act, 19691969 ( the( the MRTPMRTP Act )Act ) standsstands repealedrepealed

andand isis replacedreplaced byby thethe CompetitionCompetition Act,Act, 20022002,,withwith effecteffect fromfrom SeptemberSeptember1 1,,20092009..

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Transitional ProvisionsTransitional Provisions

MRTP CommissionMRTP Commission

a) It will continue to exercise jurisdiction and power under thea) It will continue to exercise jurisdiction and power under therepealed MRTP Act in respect of any case or proceeding filedrepealed MRTP Act in respect of any case or proceeding filedbefore 1 September 2009, for a period of two years. It willbefore 1 September 2009, for a period of two years. It willnot, however entertain any new case arising under the MRTPnot, however entertain any new case arising under the MRTPAct on or after 1 September 2009.Act on or after 1 September 2009.

b) Upon the expiry of the specified two year period, the MRTPb) Upon the expiry of the specified two year period, the MRTPCommission shall stand dissolved.Commission shall stand dissolved.

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Transfer of pending casesTransfer of pending casesUpon the expiry of two years from 1 September 2009, casesUpon the expiry of two years from 1 September 2009, casespending before the MRTP Commission will be transferred aspending before the MRTP Commission will be transferred as

follows:follows:--

a)a) Monopolistic or restrictive trade practice casesMonopolistic or restrictive trade practice cases: : AllAllpending cases pertaining to monopolistic or restrictive tradepending cases pertaining to monopolistic or restrictive tradepractices, including cases having an element of unfair tradepractices, including cases having an element of unfair tradepractice, shall stand transferred to the Competition Appellatepractice, shall stand transferred to the Competition AppellateTribunal, which shall adjudicate such cases in accordance withTribunal, which shall adjudicate such cases in accordance withthe provisions of the repealed MRTP Act.the provisions of the repealed MRTP Act.

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b)b) U nfair trade practice casesU nfair trade practice cases: :

All pending cases relating solely to unfair trade practices shallAll pending cases relating solely to unfair trade practices shall

stand transferred to the National Commission as constitutedstand transferred to the National Commission as constitutedunder the Consumer Protection Act, 1986, which may in turnunder the Consumer Protection Act, 1986, which may in turntransfer such cases to a State Commission constituted undertransfer such cases to a State Commission constituted underthe said Act under circumstances it deems appropriate. Thesethe said Act under circumstances it deems appropriate. Thesecases will be dealt with by them in accordance with thecases will be dealt with by them in accordance with theprovisions of the Consumer Protection Act.provisions of the Consumer Protection Act.

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Cases relating to giving false or misleading factsCases relating to giving false or misleading factsdisparaging the goods, services or trade of anotherdisparaging the goods, services or trade of anotherperson under the MRTP Act:person under the MRTP Act:

All such pending cases shall be transferred toAll such pending cases shall be transferred tothe Competition Appellate Tribunal which willthe Competition Appellate Tribunal which will

be dealt in accordance with the provisions of be dealt in accordance with the provisions of repealed MRTP Act.repealed MRTP Act.

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Investigations/proceedings undertaken byInvestigations/proceedings undertaken bythe Director General under the MRTP Actthe Director General under the MRTP ActW ith effect from 1 September 2009, all pending investigationsW ith effect from 1 September 2009, all pending investigations

and proceedings by the Director General relating to:and proceedings by the Director General relating to:- -

a)a) Monopolistic/ restrictive trade practicesMonopolistic/ restrictive trade practices will be transferredwill be transferredto the Competition Commission of India (CCI), who mayto the Competition Commission of India (CCI), who may

conduct such investigations/ proceedings in any manner itconduct such investigations/ proceedings in any manner itdeems appropriate.deems appropriate.

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b)b) U nfair trade practicesU nfair trade practices will be transferred to thewill be transferred to theNational Commission under the ConsumerNational Commission under the ConsumerProtection) Act 1986.Protection) Act 1986.

c)c) Cases giving false or misleading facts disparagingCases giving false or misleading facts disparagingthe goods, services or trade of another personthe goods, services or trade of another person willwillbe transferred to the CCI.be transferred to the CCI.

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Can Competition Act Replace MRTP ACTCan Competition Act Replace MRTP ACT

MRTP Act, 1969 Competition Act, 2002

Based on the pre-reforms scenario Based on the post-reforms scenario

Based on size as a factor

Based on structure as a factor

Competition offences implicit or not defined

Competition offences explicit anddefined

Complex in arrangement and language Simple in arrangement and languageand easily comprehensible

14 per se offences negating theprinciples of natural justice

4 per se offences and all the rest subjected to rule of reason

Frowns upon dominance Frowns upon abuse of dominance

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MRTP Act, 1969 Competition Act, 2002

Registration of agreementscompulsory

No requirements of registration of agreements compulsory

No combinations regulation Combinations regulated beyond athreshold limit

Competition Commission appointed bythe Government

Competition Commission selected by aCollegium (search committee)

Very little administrative and financialautonomy for the CompetitionCommission

Relatively more autonomy for theCompetition Commission

No competition advocacy role for theCompetition Commission

Competition Commission hascompetition advocacy role

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MRTP Act, 1969 Competition Act, 2002

No penalties for offences Penalties for offences

Reactive and rigid Proactive and fliexible

Unfair trade practices covered Unfair trade practices omitted(consumer for will deal with them)

Does not vest MRTP Commission toinquire into cartels of foreign origin ina direct manner.

Competition Law seeks to regulatethem.

Concept of Group Act had widerimport and was unworkable

Concept has been simplified