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First of all, I thank God, the almighty for providing me this opportunity and granting me the

capability to proceed successfully. This project appears in its current form due to the assistance

and guidance of several people.

Immeasurable appreciation and deepest gratitude is extended to Dr Manoj Mishra, the

professor of the Managerial Economics for his valuable suggestions towards this project work.

I am highly indebted to my parents for their constant support, guidance and supervision.

Appreciation is also extended to the internet and library for providing me the resources to finish

this project.
Competition is a situation in a market in which firms or sellers independently strive for the

buyers patronage in order to achieve a particular business objective for example, profits, sales or

market share (World Bank, 1999). Competition Law is structured to promote and provide a fair

chance for healthy competition between contending competitors in the market and to protect the

consumers interests. In the wake of liberalization and privatization that was triggered in India in

early nineties, a realization gathered momentum that the existing Monopolistic and Restrictive

Trade Practices Act, 1969 ("MRTP Act") was not equipped adequately enough to tackle the

competition aspect of the Indian economy. With starting of the globalization process, Indian

enterprises started facing the heat of competition from domestic players as well as from global

giants, which called for level playing field and investor-friendly environment. Hence, need arose

with regard to competition laws to shift the focus from curbing monopolies to encouraging

companies to invest and grow, thereby promoting competition while preventing any abuse of

market power.

Competition is inevitable in todays modern world. Its presence can be felt in almost all the

countries across the globe and India is not an exception to it. During the nineteenth century, both

law and economics began to develop theories of competition as well s ideological defenses of

competition as a social good. These were the socio-economic settings in which the founding

fathers had to chart out a programme of nation-building. To eliminate poverty and to raise the

level of development through rapid industrialization, they adopted the method of economic

planning. The planning commission was set up80 and India adopted five year plans for the

development of the economy. The framers of the independent India were deeply influenced by

Socialism and the same is reflected in the manner in which India followed the Soviet style of
industrialization that required extensive State intervention along with import substitution. The

Government of free India wanted rapid industrial development and equitable distribution of

wealth. The same is reflected under the Constititution of India as adequate provisions were made

in the Directive Principles of State Policy

The Government of India enacted Monopolies and Restrictive Trade Practices 1969, with an
objective of preventing the concentration of economic power to the common detriment of the
public, for the control of the monopolies and prohibition of monopolistic and restrictive trade
practices. The MRTP Commission was set up to deal with the cases pertaining to the provisions
of the MRTP Act. In the wake of globalization, the Indian Government liberalized its regulations
making the flow of foreign investment into India simply thereby increasing the number of
foreign investors doing business in India. Here in this chapter we shall discuss about the role of
the MRTP Act as the competition regulator of India. The impact of the Industrial policies in
framing the said legislation, and the Amendments made to the Act. And the International
pressure cast on India to frame New-legislation owing to the failure of the MRTP Act.

Current Status of MRTP Act

This act is not in force in India currently as it was repealed and was replaced by Competition Act
2002 with effect from September 1, 2009. The MRTP commission was replaced by Competition
Commission of India.1

Aims & Objectives of MRTP Act

On the basis of recommendation of Dutt Committee, MRTP Act was enacted in 1969 to ensure
that concentration of economic power in hands of few rich. The act was there to prohibit
monopolistic and restrictive trade practices. It extended to all of India except Jammu & Kashmir.

The aims and objectives of this act were:

To ensure that the operation of the economic system does not result in the concentration
of economic power in hands of few rich.
To provide for the control of monopolies, and
To prohibit monopolistic and restrictive trade practices.

Non-applicability of MRTP Act

Government Company and undertaking owned by Government.

Company established by a Central or State Act.
Trade Unions
Companies which have been taken over by the central Government.
Companies owned by registered Cooperative Societies.
Any financial institution.

Definition of Monopolistic Trade Practice

The act defines the Monopolistic Trade Practice as Such practice indicates misuse of ones
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

Definition of Restrictive Trade Practice

The act defines Restrictive Trade Practice as 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.

What is MRTP Company?

The firms with assets of Rs. 25 Crore or more were put under the obligation of taking permission
from the government of India and they were called MRTP companies. This upper limit of Rs. 25
Crore was known as MRTP limit. It was later relaxed to Rs. 50 crore in 1980, Rs. 100 Crore in
1985 and in 1991 this limit was removed. Now only companies having more than 25% market
share were called Monopolies.

Monopolies and Restrictive Trade Practices Commission

Monopolies and Restrictive Trade Practices Commission (MRTPC) was set up under section 5 of
the Monopolies and Restrictive Trade Practices Act, 1969. The MRTPC is an organ of
Department of Company Affairs, Ministry of Company Affairs, Government of India.