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The 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.
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:
• 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.
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:
• 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.
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
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.

MRTP Act repealed and is replaced


by the Competition Act, 2002, with
effect from September 1, 2009
September 3, 2009 in Government
Policy, competition act by admin
The Ministry of Corporate
Affairs, Government of India has
issued a Notification dated 28th
August 2009, whereby the most
controversial the Monopolies and
Restrictive Trade Practices Act, 1969
(“the MRTP Act”) stands repealed
and is replaced by the Competition
Act, 2002, with effect from
September 1, 2009.
As you would recall, the MRTP Act
was a grim reminder of the “licence-
quota- permit-raj” of 1970’s &
1980’s. The Act had become
redundant post July 1991 when the
new economic policy was announced
and Chapter III of the MRTP Act
dealing with restrictions on M&A
activities was made inoperative. The
MRTP Commission will continue to
handle all the old cases filed prior to
September 1, 2009 for a period of 2
years. It will, however, not entertain
any new cases from now onwards.
I wish to clarify that the provisions
relating to M&A transactions
(Sections 5 & 6 of the new
Competition Act dealing with
regulation of combinations) are yet to
be notified. As of now, there is no
clarity as to when these provisions
would be made effective. It is also not
clear whether these new provisions
will be applicable in cases where
definitive agreements have been
signed before the notification but
closing of the transaction has not
happened.
It would, therefore, be advisable to
put a clause in all M&A transaction
documents executed from now
onwards that the closing of the
transaction would be subject to any
prior clearance that may be
required from the Competition
Commission of India under the
provisions of the Competition Act,
2002, if applicable.
We are giving below details of the
transitional provisions:-
Date: September 1, 2009
Subject Transitional Provisions –
the MRTP Act, 1969 to the
Competition Act, 2002 w.e.f.
September 1, 2009)
The Ministry of Corporate Affairs,
Government of India has issued a
Notification dated 28th August 2009,
whereby the most controversial the
Monopolies and Restrictive Trade
Practices Act, 1969 (“the MRTP
Act”) stands repealed and is replaced
by the Competition Act, 2002, with
effect from September 1, 2009.
The following transitional provisions
would apply as provided in Section 66
of the Competition Act, 2002:-
1. MRTP Commission
a) The MRTP Commission will
continue to exercise jurisdiction and
power under the repealed MRTP Act
in respect of any case or proceeding
filed before 1 September 2009, for a
period of two years. It will not,
however entertain any new case
arising under the MRTP Act on or
after 1 September 2009.
b) Upon the expiry of the specified
two year period, the MRTP
Commission shall stand dissolved.
2. Transfer of pending cases
Upon the expiry of two years from 1
September 2009, cases pending before
the MRTP Commission will be
transferred as follows:-
a) Monopolistic or restrictive trade
practice cases: All pending cases
pertaining to monopolistic or
restrictive trade practices, including
cases having an element of unfair
trade practice, shall stand transferred
to the Competition Appellate
Tribunal, which shall adjudicate such
cases in accordance with the
provisions of the repealed MRTP Act.
b) Unfair trade practice cases: All
pending cases relating solely to unfair
trade practices shall stand transferred
to the National Commission as
constituted under the Consumer
Protection Act, 1986, which may in
turn transfer such cases to a State
Commission constituted under the
said Act under circumstances it deems
appropriate. These cases will be dealt
with by them in accordance with the
provisions of the Consumer
Protection Act.
c) Cases relating to giving false or
misleading facts disparaging the
goods, services or trade of another
person under the MRTP Act: All
such pending cases shall be
transferred to the Competition
Appellate Tribunal which will be
dealt in accordance with the
provisions of repealed MRTP Act.
3. Investigations/proceedings
undertaken by the Director General
under the MRTP Act
With effect from 1 September 2009,
all pending investigations and
proceedings by the Director General
relating to:-
a) Monopolistic/ restrictive trade
practices will be transferred to the
Competition Commission of India
(CCI), who may conduct such
investigations/ proceedings in any
manner it deems appropriate.
b) Unfair trade practices will be
transferred to the National
Commission under the Consumer
Protection) Act 1986.
c) Cases giving false or misleading
facts disparaging the goods, services
or trade of another person will be
transferred to the CCI.