MRTP ACT

INTRODUCTION

Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act),

which came into force was the first substantive legislation aimed

at regulating free and unfettered trade. The main object of

enacting the MRTP Act was to ensure that the economic system

does not result in the concentration of economic power to the

common determinant, for the control of monopolies and foe the

prohibition of monopolistic and restrictive trade practices. The

MRTP Act regulates three types of trade practices, monopolistic

trade practices, restrictive trade practices and unfair trade

practices.

Under the MRTP Act, a Commission has been established, the

Chairman of which is always a person who is or has been or is

qualified to be a judge of the Supreme Court or of High Court (of a

state). The commission is assisted by the Director General of

Investigation & Regulation (DG) for carrying out investigations or

maintaining a register of agreements. The powers of the

commission include the power vested in a Civil Court.

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MRTP ACT

MRTP ACT- 1969:-

Post independence, many new and big firms have entered

the Indian market. They had little competition and they were

trying to monopolize the market. The Government of India

understood the intentions of such firms. In order to safeguard the

rights of consumers, Government of India passed the MRTP bill.

The bill was passed and the Monopolies and Restrictive Trade

Practices Act, 1969, came into existence. Through this law, the

MRTP commission has the power to stop all businesses that

create barrier for the scope of competition in Indian economy.

The MRTP Act, 1969, aims at preventing economic power

concentration in order to avoid damage. The act also provides for

probation of monopolistic, unfair and restrictive trade practices.

The law controls the monopolies and protects consumer interest.

About the MRTP Act, 1969

The MRTP Act extends to the whole of India except the state of

Jammu and Kashmir. This law was enacted:

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To ensure that the operation of the economic system does

not result in the concentration of economic power in hands

of few,

To provide for the control of monopolies, and

To prohibit monopolistic and restrictive trade practices.

Unless the Central Government otherwise directs, this act shall

not apply to:

1. Any undertaking owned or controlled by the Government

Company,

2. Any undertaking owned or controlled by the Government,

3. Any undertaking owned or controlled by a corporation (not

being a company) established by or under any Central,

Provincial or State Act,

4. Any trade union or other association of workmen or

employees formed for their own reasonable protection as

such workmen or employees,

5. 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,

6. Any undertaking owned by a co-operative society formed

and registered under any Central, Provincial or state Act,

7. Any financial institution.

Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act),

which came into force was the first substantive legislation aimed

at regulating free and unfettered trade. The main object of

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MRTP ACT

enacting the MRTP Act was to ensure that the economic system

does not result in the concentration of economic power to the

common determinant, for the control of monopolies and foe the

prohibition of monopolistic and restrictive trade practices. The

MRTP Act regulates three types of trade practices, monopolistic

trade practices, restrictive trade practices and unfair trade

practices.

Resale Price:

 The MRTP Act also provides for measures controlling/prohibiting

the resale price for the sale or supply of goods in certain

circumstances. It is to be noted that the resale price maintenance

is not applicable to supply of services. Under the Act, there is also

no prohibition on the assigning of a maximum price at which

goods may be sold.

 

Assigning of Minimum Price:

 Any clause or term or condition in a contract for the sale of goods

by a person to a wholesaler or retailer or agreement between a

person and wholesaler or retailer or relating to the sale of goods

would be void if it either assigns or provides for the assignment of

a minimum price to be charged upon the resale of goods in India.

A supplier of goods who either directly or through any person or

association of persons acting on his behalf is prohibited from

either requiring its dealers or otherwise publishing in respect of

any goods, a price which as stated or calculated could be

understood to be a minimum price to be charged upon resale of

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MRTP ACT

the goods in India. Such a prohibition is also applicable to

patented articles, which would include articles made by a

patented process and articles made under a trade mark.

However, this provision would not affect the term or conditions of

a license granted by owner or licensor of any patent or trademark

or for any assignment of the same, so far as it regulates the price

at which the article may be sold by the licensee or assignee.

Monopolistic Trade Practice

Such practice indicates misuse of one’s power to abuse the

market in terms of production and sales of goods and services.

Firms involved in monopolistic trade practice tries to eliminate

competition from the market. Then they take advantage of their

monopoly and charge unreasonably high prices. They also

deteriorate the product quality, limit technical development,

prevent competition and adopt unfair trade practices.

Unfair Trade Practice

The following may result in an unfair trade practice:

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MRTP ACT

False representation and misleading advertisement of goods

and services.

Falsely representing second-hand goods as new.

Misleading representation regarding usefulness, need,

quality, standard, style etc of goods and services.

False claims or representation regarding price of goods and

services.

Giving false facts regarding sponsorship, affiliation etc. of

goods and services.

Giving false guarantee or warranty on goods and services

without adequate tests.

Restrictive Trade Practice

The traders, in order to maximize their profits and to gain power

in the market, often indulge in activities that tend to block the

flow of capital into production. Such traders also bring in

conditions of delivery to affect the flow of supplies leading to

unjustified costs.

Objectives of MRTP Act:

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MRTP ACT

The principal objectives sought to be achieved through the MRTP

Act are:

a. Prevention of concentration of economic power to the

common detriment;

b. Control of monopolies;

c. Prohibition of monopolistic trade practices;

d. Prohibition of restrictive trade practices;

e. Prohibition of unfair trade practices;

Out of these five, the first two have been de-emphasized, after

the 1991 amendment to the Act. The emphasis has not only

shifted to the three last mentioned objectives but they been re-

emphasized. Yet to the extent that monopolies tend to bring

about monopolistic trade practices, the Act provides for their

surveillance. Briefly, the act is designed to guard against different

aspects of market imperfections. For instance, a merger, which

can increase the dominance of the combine or has resulted in a

large share in the market can be looked at in terms of the

provisions of the Act and the objectives governing them.

Effects of MRTP Act:

The MRTP Act defines a MTP to be a trade practice, which has or

is likely to have the effect of either;

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 a)   maintaining the prices of goods or charges for the services at

an unreasonable level by limiting, reducing or otherwise

controlling the production, supply or distribution of goods of any

description or the supply of services or in any other manner;

 

b)  unreasonably preventing or lessening competition in the

production, supply or distribution of any goods or in the supply of

any services;

 

c)   limiting technical development or capital investment to the

common detriment or allowing the quality of any goods produced,

supplied or distributed, or any services rendered in India to

deteriorate;

 

d)   increasing unreasonably –

 (i)   the cost of production of any good; or

 (ii)  charges for the provision, or maintenance, of any services; or

 

e)  increasing unreasonably -

 i) the prices at which goods are, or may be, sold or resold, or for

the charges at which the services are, or may be provided; or

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MRTP ACT

 (ii) the profits which are, or may be, derived by the production,

supply or distribution of any goods (including the sale or

purchase) or by the provision of any services.

 

f)    preventing or lessening competition in the production, supply

or distribution of any goods or in the provision or maintenance of

any services by the adoption of unfair methods or deceptive

practices.

 

Once a trade practice falls under any one of the above categories,

it would be presumed that the same is a MTP and is prejudicial to

public interest, unless such trade practice has been expressly

authorized by law or the Central Government permits the carrying

on of such practice.

 

MONOPOLISTIC TRADE PRACTICE TO BE DEEMED TO BE

PREJUDICIAL TO THE PUBLIC INTEREST EXCEPT IN

CERTAIN CASES :-

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For the purposes of this Act, every monopolistic trade practice

shall be deemed to be prejudicial to the public interest, except

where -

(a) such trade practice is expressly authorized by any enactment

for the time being in force, or

(b) the Central Government, being satisfied that any such trade

practice is necessary -

(i) to meet the requirements of the defence of India or any part

thereof, or for the security of the State; or

(ii) to ensure the maintenance of supply of goods and services

essential to the community;

(iii) to give effect to the terms of any agreement to which the

Central Government is a party,

by a written order, permits the owner of any undertaking to carry

on any such trade practice.

MRTP COMMISSION: -

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MRTP ACT

Under the MRTP Act, a commission has been established, the

chairman of which is always a person who is or has been

qualified to be a judge of the Supreme Court or of High Court

(of a State). The members of the commission are persons of

ability, integrity and standing who have adequate knowledge

or experience of, or have shown capacity in dealing with,

problems relating to economics, law, commerce,

accountancy, industry, public affairs or administration. The

commission is assisted by the Director General of

Investigation & Registration (DG) for carrying out

investigations or maintaining a register of agreements and

for undertaking carriage of proceedings during the enquiry

before the MRTP Commission.

The powers of the commission include the power vested in a

Civil Court and include further power:

1. To direct an errant undertaking to discontinue a trade

practice and not to repeat the same.

2. To pass a cease and desist order.

3. To grant temporary injunction, restraining an errant

undertaking from continuing and alleged trade practice.

4. To award compensation for loss suffered or injury sustained

on account of RTP, UTP, or MTP.

5. To direct parties to agreements containing restrictive

clauses to modify the same.

6. To direct the parties to issue corrective advertisements.

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7. To recommend to the Central Government division of

undertakings or severance of interconnection between

undertakings if their working is prejudicial to public interest

or has led or is leading MTP or RTP.

FURTHER POWERS OF THE COMMISSION :-

(1) The Commission shall, for the purposes of any inquiry under

this Act, have the same powers as are vested in a civil court

under the Code of Civil Procedure, 1908 (5 of 1908), while trying a

suit, in respect of the following matters, namely :-

(a) the summoning and enforcing the attendance of any witness

and examining him on oath;

(b) the discovery and production of any document or other

material object producible as evidence;

(c) the reception of evidence on affidavits;

(d) the requisitioning of any public record from any court or office;

(e) the issuing of any commission for the examination of

witnesses;

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MRTP ACT

(f) the appearance of parties and consequence of non-

appearance. 

(2) Any proceeding before the Commission shall be deemed to be

a judicial proceeding within the meaning of sections 193 and 228

of the Indian Penal Code, 1860 (45 of 1890), and the Commission

shall be deemed to be a civil court for the purposes of section 195

and Chapter XXVI of the Code of Criminal Procedure, 1973 (2 of

1974).

(3) The Commission shall have power to require any person -

(a) to produce before, and allow to be examined and kept by, an

officer of the Commission specified in this behalf, such books,

accounts or other documents in the custody or under the control

of the person so required as may be specified or described in the

requisition, being documents relating to any trade practice, the

examination of which may be required for the purposes of this

Act; and

(b) to furnish to an officer so specified such information as

respects the trade practice as may be required for the purposes

of this Act or such other information as may be in his possession

in relation to the trade carried on by any other person.

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(4) For the purpose of enforcing the attendance of witnesses the

local limits of the Commission's jurisdiction shall be the limits of

the territory of India.

(5) Where, during any inquiry under this Act, the Commission has

any grounds to believe that any books or papers of, or relating to

any undertaking in relation to which such inquiry is being made or

which the owner of such undertaking may be required to produce

in such inquiry, are being, or may be, destroyed, mutilated,

altered, falsified or secreted, it may, by a written order, authorise

any officer of the Commission to exercise the same powers of

entry, search and seizure in relation to the undertaking, or the

books or papers, aforesaid as may be exercised by the Director

General while holding a preliminary investigation under section

11. 67.

As a result, the Central Government could:

 a) Prohibit the continuation of the MTP completely; or

 

b) Regulate the manner of production, storage, supply,

distribution, or control of any goods or services by an undertaking

and fixing the terms of their sale (including prices) or supply; or

 

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c) Prohibit any act or practice or commercial policy which

prevents or could reduce the competition in the production,

storage, supply or distribution of any goods or services; or

 

d) Fix the standards for the usage or production of the goods;

 

e) Declare as unlawful the execution or implementation of any

specified agreement;

 

f)  Require either or all of the parties to any specified agreement

to terminate the agreement either in whole or in part, within a

time frame as stipulated by the Central Government; or

 

g) Regulate the making or manner of utilization of profits as

derived from the production, storage, supply, distribution or

control of any goods or services; or

 

h) Regulate the quality standards to be maintained for any goods

or services.

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MRTP ACT

PROCEDURE OF THE COMMISSION :-

(1) Subject to the provisions of this Act, the Commission shall have power to regulate -

(a) the procedure and conduct of its business;

(b) the procedure of Benches of the Commission;

(c) the delegation to one or more members of such powers or functions as the Commission may specify and subject to any general or special direction given, or condition imposed, by the Commission, a member, to whom any powers or functions are so delegated, shall exercise such powers or discharge those functions in the same manner and with the same effect as if they had been conferred on such member directly by this Act and not by way of delegation and any order or other act or thing made or done by such member in pursuance of the power or function so delegated shall be deemed to be an order or other act or thing made or done, by the Commission. 

(2) In particular, and without prejudice to the generality of the

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foregoing provisions, the powers of the Commission shall include the power to determine the extent to which persons interested or claiming to be interested in the subject-matter of any proceeding before it are allowed to be present or to be heard, either by themselves or by their representatives or to cross-examine witnesses or otherwise to take part in the proceeding.

 

APPOINTMENT OF DIRECTOR GENERAL AND

STAFF OF THE COMMISSION.

(1) The Central Government may, by notification, appoint a

Director General of Investigation and Registration, and as many

Additional, Joint, Deputy or Assistant Directors General of

Investigation and Registration, as it may think fit, for making

investigation for the purposes of this Act and for maintaining a

Register of agreements subject to registration under this Act and

for performing such other functions as are, or may be, provided

by, or under, this Act.

(2) The Director General may, by written order, authorize one of

the Additional, Joint, Deputy or Assistant Directors General to

function as the Registrar of agreements subject to registration

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under this Act.

(3) Every person authorized to function as the Registrar of

agreements and every Additional, Joint, Deputy or Assistant

Director General shall exercise his powers, and discharge his

functions, subject to the general control, supervision and direction

of the Director General.

(4) The Central Government may provide the staff of the

Commission and may, in addition, make provisions for the

conditions of service of the Director General, Additional, Joint,

Deputy or Assistant Director General and of the members of the

staff of the Commission.

(5) The conditions of service of the Director General or any

Additional, Joint, Deputy or Assistant Director General or of any

member of the staff of the Commission shall not be varied to his

disadvantage after his appointment.

REMEDIES UNDER THE ACT :-

Under the Monopolistic and Restrictive Trade Practices Act, 1969,

the commission has the power to attend complaint, inquire facts

and pass orders regarding any unfair trade practice, monopolistic

trade practice and/or restrictive trade practice. The commission

can order any person to bring in any books of accounts, or other

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documents to investigate the matter of such practices. During

investigation, if the commission has grounds to believe that any

books or papers are being destroyed, mutilated, altered, falsified

or secreted, it may authorize any officer of the Commission to

search and seizure any such books or papers. The commission

after inquiring the case shall pass the remedial order.

The remedies under this Act are:

Temporary Injunction

Compensation

INVESTIGATION AND ENQUIRIES:

The MRTP Commission can be approached with complaint on

restrictive or unfair trade practices by:

a. An individual consumer

b. A registered association of consumers; and

c. A trade association.

The Commission can be moved by an application from the

Director General (DG) or by a reference by the Central or State

Government. The law provides for suo motu actions on the part of

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the commission, if it receives information from any source or on

its own knowledge.

The procedure followed by the commission is that, on receipt of

a complaint, the matter is in many cases referred to the DG for

investigation and report. The law provides for a temporary

injunction against the continuance of alleged monopolistic,

restrictive or unfair trade practices pending enquiry by the

Commission. A salutary provision in the Act is the power of the

Commission to award compensation for losses or damage

suffered by a consumer, trader, and class of traders or

government as a result of any monopolistic / restrictive / unfair

trade practice indulged in by any undertaking or person.

MRTP COMMISSION AND FILING OF COMPLAINT:

For the purpose of this Act, the Central Government has

established a commission to be known as the Monopolies and

Restrictive Trade Practices Commission. This commission shall

consist of a Chairman and minimum 2 and maximum 8 other

members, all to be appointed by the Central Government. Every

member shall hold the office for a period specified by the Central

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Government. This period shall not exceed 5 years. However, the

member will be eligible for re-appointment.

In case of any unfair trade practice, monopolistic trade practice

and/or restrictive trade practice, a complaint can be filed against

such practices to the MRTP commission. The procedure for filing a

complaint is as follows:

Complaint is filed either by the individual consumer or

through a registered consumer organization.

The Director General of the MRTP commission would carry on

the investigation for finding facts of the case.

If the prima facie case is not made, the complaint is

dismissed. If the compliant is true, an order is passed to its

effect.

The commission restricts and restrains the concerned party

from carrying on such practices by granting temporary

injunction.

Then the final order is passed. The complainant may be

compensated for his loss.

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