The Monopolistic and Restrictive trade practices act, 1969 The Monopolistic and Restrictive Trade Practices Act,

1969, was enacted 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. The MRTP Act extends to the whole of India except Jammu and Kashmir

Unfair Trade Practices Need Liberalization and globalization leading to express competitions Aggressive promotion of products and services. Questions about truthfulness and fairness of representation of products and services. Adherence to rules of the game. Not only the consumers but even the firms need adequate law against unfair trade practices to have some rules of game for competing among themselves. In a competitive environment, every representation of a product or service, is about what others are not.

Unfair Trade Practice u/s 36A Meaning A trade practice, which for the purpose of promoting the sale, use or supply of any goods or for the provision of any services, adopts any unfair method or unfair or deceptive practice is an unfair trade practice Trade means any trade, business, industry, profession or occupation relating to the production, supply, distribution or control of goods and includes the Provisions of any services False representation about the goods, services, warranty, uses, benefits, characteristics

Unfair Trade Practice Types of Unfair Trade Practice False representation or statements Misleading advertisements Offer of gift or prize Offer of contest Sale of sub standard goods Hoarding or destruction of goods

Unfair Trade Practice False representation or statements Adopting misrepresentation of facts to promote sale, use or supply of goods or services, e.g. Misleading buyers about another's goods or services. Eg. Pepsodent whitens teeth twice as effectively as Colgate. Falsely claiming a sponsorship, approval or affiliation. E.g. Our software is tested & approved by Microsoft. Offering misleading warranty or guarantee. Eg. A computer with 3 years warranty requires entering into an AMC from the beginning.

Unfair Trade Practice Misleading Advertisements A trade practice which permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature if the advertisement.

Case Law 1) New Pepsodent v/s Colgate case

Pepsodent, which, in its advertisements, claimed, "New Pepsodent is 102% better than the leading tooth paste. The ad showed two boys being asked the name of the tooth paste brand that they used. One happily exclaims Pepsodent, while the others disgruntled response, though muted, clearly points cynically towards Colgate (especially as a background jingle similar to the one in Colgates ads is used quite appropriately). At that time, Colgate toothpaste ruled the market with a massive 59% market share. Expectedly, Colgate took HLL(which owns Pepsodent) to court under Unfair Trade Practice HLL had to withdraw its ads.

2) Colgate Dental Cream-Double Protection Case In June, 1998, Colgate introduced its tooth paste as Colgate Dental Cream-Double Protection.(CDC-DP). It gave wide publicity through print and television that the tooth paste was 2.5 times superior to any ordinary tooth paste in fighting germs. Hindustan Lever Ltd. Moved the Monopolies Inquiry Commission alleging that the advertisements disparaged tooth pastes manufactured by it under various brand names. It contended that a reference to ordinary tooth paste was to all other brands than Colgate. The Commission took the position that the claim of 2.5 times superiority of CDC-DP over any ordinary tooth paste did not refer to any identifiable product or any identifiable manufacturer .As a result; it could not be a case of disparagement of goods. It should be noted that disparagement is not the only ground for an advertisement to be an unfair trade practice. The same advertisement could still be contested as an unfair trade practice under Section 36A(1) (a) on the grounds of misrepresenting quality. But this would be a different issue. As a matter of fact, the Commission took the view that there was nothing called an ordinary toothpaste. Thus, a claim of 2.5 times superiority was misleading and ordered the advertisement to be stopped.

Unfair Trade Practice Offer of gift or prize A trade practice which permits the offering of gifts, prizes or other items with the intention of not providing them as offered or creating the impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole.

Offering, then with holding gifts/prizes. False claim of offering gifts/services when cost is included partly in the price.

Case Law Horlicks Hidden Wealth Prize Offer The HMM Ltd. Manufactured and marketed Horlicks. In September 1985, it advertised a scheme called the Hidden Wealth Prize Offer for the buyers in Delhi. A lucky purchaser of a bottle of Horlicks could find a coupon inside the bottle. The coupons indicated the prizes. The prizes were to be claimed by January 15, 1986. The advertisements stated that even if the buyers coupon did not carry a winning message, he/she had several more chances to try. The Commission had held this to be an unfair trade practice as the system of getting coupon was nothing but a lottery. It was also of the view that such schemes did not benefit the general run of consumers as only as mall fraction of the buyers of Horlicks got the benefit of the said scheme. The prizes were many times costlier than the price of a bottle of Horlicks. The Commission gave its judgment in 1989. In the light of its own experiences, it was never an issue that schemes like this were not a contest, lottery ,game of chance for direct or indirect promotion of sales. As the case was for a period prior to 1991 amendment, what was to be emphasized was that it caused loss or injury to the consumers. The Supreme Court, in its short judgment in 1998, commented that this was not a case of lottery as there was no draw of lots or that a price was charged for participation in the draw. The fact that some bottles of Horlicks contained as lip of paper which entitled the buyer to a prize is not a lottery in the ordinary sense of the word.

Unfair Trade Practice Offer of contest A trade practice which permits the conduct of any contest, lottery game of chance or skill, for the purpose of promoting, directly or indirectly the sale, use or supply of any product or any business interest. Examples: Shirt prices slashed by two third 50% discount clearance sale Buy fans at 30% discount Motors at 40% discount

Unfair Trade Practice Sale of sub standard goods A trade practice which permits the sale or supply or goods intended to be used by consumers, do not comply with the standards prescribed by complete authority relating to performance, compositions, content, designs, constructions, finishing or packaging. Examples: Medicines not manufactured according to IP standards Electrical items not manufactured as per standards Food purity not as required

Unfair Trade Practice Hoarding or destruction of goods A trade practices which permits the hoarding or destruction of goods, Or refuses to sell the goods or to make them available for sale, or to provide any services, if such hoarding or destruction or refusal raises or tends to raise or is intended to raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.

Inquiries & Investigations by Commission u / s 36B Upon receiving a complain to facts which constitutes such practice from any trace association or from any consumer or a registered consumers association, whether such consumer is a member of that consumers association or not; or Upon reference made to it by the Central Government or a State Government; Upon an application made to it by the Director General; or Upon its own knowledge or in formation.

Relief-Order of Commission u / s 36 D If, after inquiry, Commission is of the opinion that the practices is prejudicial to the public interest, or to the interest of any consumer or consumers generally, it may, by order direct that The practices shall be discontinued or shall not be repeated; Any agreement related to such unfair trade practices shall be treated as void

Any information or advertisement relating to such unfair trade practice shall be disclosed, issued or published in such manner as may be specified in the order. The company has to be given an opportunity to prove its case that it did not commit unfair trade

practice

Monopolistic trade practice A monopolistic trade practice is one, which has or is likely to have the effect of: Maintaining the prices at an unreasonable level; Unreasonably preventing or lessening competition Limiting technical development or capital investment Deteriorating the quality of any goods produced, supplied or distribute; and Increasing unreasonably cost, Charges, prices and profits

Inquiry into monopolistic trade practices The Commission may inquire into Any monopolistic trade practice, Upon a reference made to it by the Central Government or Upon an application made to it by the Director General or Upon it own knowledge or information

Relief available Central Government may pass such orders as it thinks fit to remedy On an inquiry report of the Commission, the Central Government may Prohibit the owner(s) of the concerned under taking(s) from continuing to indulge in a monopolistic trade practice; or Prohibit the owner of any class of under takings or under takings generally, from continuing to indulge in any monopolistic trade practice in relation to the goods or services.

Restrictive Trade Practice Meaning A restrictive trade practice means a trade practice which has or may have the effect of preventing, distorting or restricting competition in any manner and in particular Which tends to obstruct the flow of capital or resources into the stream of production; or Which tends to bring about manipulation of process or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner or to impose on the consumers unjustified costs or restrictions? A restrictive trade practice shall be deemed to be prejudicial to the public interest.

There are two parts to the definition of restrictive trade practice. 1. To carrying on of such trade practice which has or may have the effect of preventing, distorting or restricting competition in any manner 2. Carrying on of such trade practice which interalia has the effect on imposing unjustified costs or restrictions on consumers

Restrictive Trade Practice Price Price in relation to sale of any goods or to the performance of any services includes every valuable consideration, whether direct or indirect and includes any consideration which in effect relates to the sake of any goods or to the performance of any services although ostensibly relating to any other matter or thing.

Restrictive Trade Practice Goods Specific goods: Goods identified and agreed upon at the time of contract of sale is made. Unascertained or generic goods are indicated by description and are not separately identified Future goods: to be manufactured or purchased or acquired be the seller after the making of the contract of sale. These goods do not exist at the time of contract of sale but subsequently come into existence.

Goods
Existing Specific Goods Uncertain Goods
The following are also included Products manufactured, processed or made in India; Shares and stocks, including issue of shares before allotment; Goods imported into India where ever reference is made to goods supplied. Even things like goodwill, copyright, trademark, patent etc. are all goods. Gas and electricity have also been held to be goods. Current, money is not goods. Real estate transactions are not covered by the meaning of the term goods. Till the shares are actually issued, they are not goods

Future

Restrictive Trade Practice Service Service means service which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, chit fund, real-estate, transport,

processing, and supply of electrical or other energy boarding or lodging or both, entertainment, amusement or the purveying of news or other information. Service does not include the rendering of any service free of charge or under a contract of personal service.

Restrictive Trade Practice Registration of Agreements Any agreement relating to production, storage, supply, distribution or control of goods or for performance of any services, which restricts seller or buyer of goods or services in any manner, is an agreement relating to restrictive trade practice.

Inquiry into restrictive trade practices The Commission may inquire into any restrictive trade practice Upon receiving a complaint from any trade association, consumer or a registered consumer association, or Upon a reference made to it by the Central or State Government or Upon its own knowledge or information

Restrictive Trade Practice Relief available The commission shall if after making an inquiry it is of the opinion that the practice is pre judicial other public interest, or to the interest of any consumer it may direct that The practice shall be discontinued or shall not be repeated; The agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified. The Commission may permit the party to any restrictive trade practice to take steps so that it is no longer prejudicial to the public interest

Conclusion

This is true that Unfair Trade Practice is an inseparable part of the business but it is not the fair part of business. It may give you benefits for short time period but in long run it has a notable impact on business. It has a direct impact not only on that particular company but also on entire market. The impact of Unfair Trade Practice can effect the reputation of industry, country and the employee working in that organization. Therefore companies should not concentrate on the short cut ways and get involve in Unfair Trade Practice.