Progression of MRTP Act to Competition Act in the era of globalization where world is a single platform for carrying out trade and commerce.

GROUP NUMBER :6

Introduction to MRTP Act MRTP (Monopolistic and Restrictive Trade Practice) Act 1969 came into

force from 01st June 1970.

The act has been amended in 1974,1980,1982,1984 and 1991.

The MRTP Act was extended to the whole of India except Jammu and Kashmir.

Objectives To control monopolies and monopolistic trade practices

Prevention of concentration of economic power in few hands only

To regulate restrictive trade practice

After amendment of act in 1984 a 4th objective was introducedRegulation of Unfair Trade Practices

After amendment of act in 1991, the objectives now are Regulating unfair trade practice Controlling Monopolistic Trade Practices

Monopolistic Trade Practice

Any trade practice which seeks to prevent competition and which results in

high price.

Monopolistic practices can be categorized as under:Unreasonably high prices

Limiting technical development

Limiting capital investment

Lower quality of goods and services

Preventing or lessening competition

Restrictive Trade Practice A practice which tends to obstruct the flow of capital or resources into the

stream of production is an RTP.

Restrictive practices can be categorized as under:Refusal to deal

Tie in sales

Exclusive dealing agreements

Price discrimination

Unfair Trade PracticeAn 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.

Unfair practices may be categorized as under:

False Representation

False offer of Bargain Price

Free gifts offer and Prize Schemes

Hoardings

Need for SubstitutionMany difficulties were encountered, particularly in regard to interpretations of

expressions and provisions therein.

Many changes were made in the MRTP Act after 1991.

The law needed to yield to the changed and changing scenario on the economic

and trade front.

Competition Act,2002 Objectives

Establish a Commission to prevent practices having adverse effect on competition

Promote and sustain competition in markets

Protect the interests of consumers

Ensure freedom of trade in the Indian markets Ambit

Regulates anti-competitive agreements

Regulates abuse of dominant position

Competition Commision of India(CCI)Favourable to competition policy

Enable free and fair competition

Government of India

Functions of CCI

Prevent adverse effect on competition

Promote competition

Protect consumers

Freedom of trade

Principles of CCI

Understanding of market forces

Minimize cost of compliance by

enterprise

Maintain transparency

Professional body

Anti-Competitive Agreements

Abuse of Dominance

Combinations Regulation

Competition Advocacy

Main Components of Competition Act

Components of Competition Act1. Anti-Competitive Agreements

The agreements which cause or are likely to cause appreciable adverse effect on

competition ("AAEC”).

For a market economy to function properly the competition must be free and

fair.

The Agreements can be :Horizontal - those among competitors

Vertical - between enterprises at different stages of the production chain.

Tie-in arrangements

Exclusive supply

Exclusive distribution

Refusal to deal

2. Abuse of Dominance

Abuse is prohibited abuse occurs when an enterprise uses its dominant position

in the relevant market in an exclusionary and/or exploitative manner. Three Stage process of determining Abuse of dominance: Stage 1 - Determination of Relevant Market Stage 2 - Dominance of the enterprise/group in the relevant market is ascertained Stage 3 - "Abuse" by the dominant enterprise in the relevant market is determined

3. Combinations Regulation

Combining parties exceed the thresholds set in the Act.

Combination which causes or is likely to cause an appreciable adverse effect on

competition is prohibited.Horizontal combinations are between rivals.

Vertical combinations are between enterprises that are at different stages.

Conglomerate combinations are between enterprises not in the same line of business

In india Outside india

Individual Assets-1500crTurnover-4500cr

Assets-US$ 750 millions Turnover-US$ 2250 millions

Group Assets-6000crTurnover-18000cr

Assets-US$ 3 billion Turnover-US$ 9 billion

• Thresholds for Combination

4. Competition Advocacy

To prevent practices having adverse effect on competition.

To foster conditions that will lead to a more competitive market.

It can be enhanced by the CCI establishing good media relations and

explaining the role and importance of competition policy.

Comparison with EU & US Antitrust LawIndian Competition Law

U.S. Antitrust Policy EU Antitrust Policy

Policies • Anti-Competitive Agreements

• Abuse of Dominance

• Regulation of Combinations

• Competition Advocacy

• Monopolization• Conspiracy to

restrain trade

• Antitrust• Cartels• Mergers• Liberalization• State Aid

Legislation CCI • Department of Justice(DoJ)

• Federal Trade Commission (FTC)

Treaty

Difference between MRTP act and Competition Act

MRTP ACT,1969 COMPETITION ACT,2002

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

Reactive and rigid Proactive and flexible

Competition offences implicit or not defined Competition offences explicit and defined

Complex in arrangement and language Simple in arrangement and language

Frowns upon dominance Frowns upon abuse of dominance

Competition Commission appointed by the Government

Competition Commission selected by a Collegium (search committee)

No penalties for offences Penalties for offences

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

ConclusionThe objective of MRTP act 1969 is promoting fair play & fair deal in market.

The competition act 2002,was passed to benefit the consumer, business houses

as well as government.

The main aim of this act was to encourage healthy and free competition in the

market.

World is not a free platform for trade and commerce.

Thank you!