Module2.01Monopoly and Restrictive Trade Practices Act Prepared by: Dr. Mainak Roy for AIMA Course, 27.02.

2011 Governing Body Chairman (In the rank of High Court/Supreme Court Judge) Members (Not less than Two Not more than eight) Tenure-Not more than 2 Terms; A term is valid for 5 Years First Step- Before the enquiry of MRTP Commission, for preliminary investigation the case will be referred to DGIR. Power of MRTP:
1. Power is equivalent to that of a Civil Court. 2. Proceedings before the commission are deemed as judicial proceedings. 3. To require any person to produce before it and to examine and to keep any books, accounts or other documents relating to the trade practice in its custody. 4. To require any person to furnish such information in 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 authorize any of its offices to enter or search any undertaking or seize any books or papers relating to an undertaking in relation to which the enquiry is being made. 6. Commission has the power to order compensation and damage if person found to be indulging in unfair, monopolistic restrictive trade practices.

Restriction on power:

1. Commission can not restrict any right attached by Patent. 2. Firms engaged in production, supply, distribution or control of goods exclusively for exports, can not be restrained by the Commission. 3. Defense production does not come under the purview of the MRTP Act. 4. Judgments of High Court are bindings to MRTP Commission.

(1991)Amendment of MRTP Act:

With growing complexities of industrial structure and need for achieving of economies to scale for ensuring higher productivity and competitive advantage in international market the 1

interference of government through the MRTP Act has to be registered Pre-Entry scrutiny of investment decisions by MRTP Companies will no longer be required Thrust of policy will be more on controlling unfair and restrictive trade practices.

The Monopolistic & Restrictive Trade Practice Act, 1969 was enacted with an objective of removal or reduction of
concentration of wealth and means of production as per the Directive Principle of our Constitution To ensure that the operation of the economic system does not result in concentration of economic power. To provide control of monopoly. To prohibit monopolistic & restrictive trade practices. This MRTP Act was amended in 1974, 1980, 1984, 1988, and in 1991 Before 1991amendment, the MRTP law sought to control the concentration of economic power by requiring undertaking that has asset over Rs. 100 Crore and /or were dominant undertaking to register themselves with the MRTP Commission. If such undertaking wish to expand enter new line of production or participate in merger, amalgamation and take-over, they had to seek permission from the government. MRTP controls the following aspects of economic activity. 1. Restrictive Trade Practice 2. Unfair Trade Practices 3. Monopolistic Trade Practices 4. Concentration of Economic Power. RESTRICTIVE TRADE PRACTICES: 1. Restriction on buying and selling 2. Tie in sales or full line forcing. 3. Exclusive dealing agreement. 4. Collective price fixation and tendering (cartel/knock-out agreement). 5. Restriction by Association: Association not allowing non members to carry goods 6. Discriminatory Dealing. 7. Resale price maintenance. 8. Restriction on output or supply. 9. Restriction on manufacturing methods. 10. Price control Agreements. 11. Collective Bidding.

The MRTP Commission after enquiring if found any trade practice is prejudicial to public, commission may give the following directionsPractice shall be discontinued Agreement relating to RTP be modified as may be specified by the MRTP Commission. UNFAIR TRADE PRACTICES (UTP): (a) False Representation Standard, quality grade, composition, style or model. Any rebuilt, secondhand, renovated, reconditioned or old goods and new good. Sponsorship, approval, performance, characteristics, accessories, uses and benefits. Concerning the need for or usefulness of any goods and services. Warranty and guarantee as durability or promise to replace. False Offer or bargain price Offering Gifts, prices etc. and conducting promotional contests Product safety standard Hoarding or destruction of goods act. REMEDIAL MEASURES IN U.T.P After receiving complain if commission found that the particular action is unfair, it can issue the following orders: It can ask to discontinue and not to repeat the practice. It can declare any agreement in relation to UTP as void or declare that the terms 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 1. Limiting or controlling production, supply or distribution of goods and thereby maintaining price of goods or charge or service at unreasonable price. 2. Unreasonably preventing or lessening competition. 3. Limiting technical development or capital investment or allouring quality of goods or services to deteriorate. 4. Unreasonable increasing prices of goods and services.

5. Unreasonable increasing cost of production or changes for any services. 6. Unreasonable increasing profit on production, supply, distribution of goods and services. 7. Adopting unfair or deceptive method to reduce or prevent competition in goods or services. If MRTP Commission reports that the trade practice is against public interest government can order following: Regulation production, supply, storage, or control of goods and services and fixing terms of sales price and supply. Prohibiting undertakings from reporting to such trade practices which reduces competition. Fixing quality standards for goods. Declaring some time of agreement as unlawful Asking any party to cancel the whole or part of any agreement. Regulate profits which may be derived from production, storage, supply, distribution or control of goods or provision or services. Regulate quality of goods and services. Commission can enquire into any restrictive, unfair, or monopolistic trade practices. a) On receiving a complaint from any consumer or consumers association. b) On reference made by central and/or state government. c) On application made by DGIR (Director General of Investigation & Registration). d) On its own.