MRTP COMMISSION AND COMPETITION COMMISSION OF INDIA

AUTHOR- LEELA KUMAR

INTRODUCTION

Since attaining Independence in 1947, India, for the better part of half a century thereafter,
adopted and followed policies comprising what are known as “Command-and-Control” laws,
rules, regulations and executive orders. The competition law of India, namely, the
Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act, for brief) was one such.
It was in 1991 that widespread economic reforms were undertaken and consequently the
march from “Command-and-Control” economy to an economy based more on free market
principles commenced its stride. As is true of many countries, economic liberalisation has
taken root in India and the need for an effective competition regime has also been recognised.

In the context of the new economic policy paradigm, India has chosen to enact a new
competition law called the Competition Act, 2002. The MRTP Act has metamorphosed into
the new law, Competition Act, 2002. The new law is designed to repeal the extant MRTP
Act. As of now, only a few provisions of the new law have been brought into force and the
process of constituting the regulatory authority, namely, the Competition Commission of
India under the new Act, is on. The remaining provisions of the new law will be brought into
force in a phased manner. For the present, the outgoing law, MRTP Act, 1969 and the new
law, Competition Act, 2002 are concurrently in force, though as mentioned above, only some
provisions of the new law have been brought into force.

A commission known as the Monopolies and Restrictive Trade Practices Commission was
established under MRTP act, 1969. The MRTP Act, 1969 also provides for appointment of a
Director General of Investigation and Registration for making investigations for the purpose
of enquiries by the MRTP Commission and for maintenance of register of agreements
relating to restrictive trade practices.

Competition commission of India establish under Indian Competition Act, 2002. This
administrative is more proactive than reactive for the administration of the competition
policy. This is not a mere law enforcement agency. This administrative set up should take a
proactive stand to be specified and adopted to promote competition by not only proceeding
against those who violate the provisions of the competition law, but also by proceeding

Electronic copy available at: http://ssrn.com/abstract=2429261

against institutional arrangements and public policies that interfere with the fair and free
functioning of the markets.

CONSTITUTIONAL PROVISION

Competition Law for India was triggered by Articles 38 and 39 of the Constitution of India.1
These Articles are a part of the Directive Principles of State Policy. Pegging on the Directive
Principles, the first Indian competition law was enacted in 1969 and was christened the
MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969 (MRTP Act).
Articles 38 and 39 of the Constitution of India mandate, inter alia, that the State shall strive
to promote the welfare of the people by securing and protecting as effectively, as it may, a
social order in which justice – social, economic and political – shall inform all the institutions
of the national life, and the State shall, in particular, direct its policy towards securing

1. That the ownership and control of material resources of the community are so distributed
as best to subserve the common good; and

2. That the operation of the economic system does not result in the concentration of wealth
and means of production to the common detriment.

Premises on which the Monopolies and Restrictive Trade Practise Act, 1969 (MRTP Act)
rests are unrestrained interaction of competitive forces, maximum material progress through
rational allocation of economic resources, availability of goods and services of quality at
reasonable prices and finally a just and fair deal to the consumers. An interesting feature of
the statute is that it envelops within its ambit, fields of production and distribution of both
goods and services.

HISTORY OF EVOLUTION OF COMPETITION LAW IN INDIA

The first competition law, the Monopolies and Restrictive Trade Practise Act (MRTP Act),
was enacted in 1969 following the recommendations of the Monopolies Inquiry Committee

1
Article 38 and 39 of the Constitution of India is part IV of the Constitution, referred to as Directive Principles
of State Policy (DPSP). DPSP is guidelines to the central and state governments of India, to be kept in mind
while framing laws and policies. DPSP is not enforceable by courts, however the principles laid DPSP are
considered fundamental in the governance of the country, making it a duty of the State to apply these principles
in making laws to establish a just society in the country

Electronic copy available at: http://ssrn.com/abstract=2429261

(MIC) and sought to provide structural remedies in its attempt to curb monopolistic
behaviour since it presumed size beyond a threshold to affect competition adversely. This
was reflected in the enactment.

In 1984, a High- Powered Expert Committee (Sachar Committee) was set up to consider and
report on changes necessary in the MRTP Act, 1969, so as to make it more effective.

The Sachar Committee noticed the small number of references to the Monopolies and
restrictive Trade Practices Commission (MRTPC) under provisions dealing with
monopolistic trade practices and recommended that certain types of cases should be
compulsorily referred to the MRTPC, which could pass final orders in such cases. But this
was not accepted by the government. The Sachar committee sought to include unfair trade
practices like misleading and disparaging advertisement into the existing law since it was
convinced that consumers had no protection against such practices. The committee suggested
the introduction of the concept of deemed illegality to a host of specific trade practices.

The Sachar committee sought to include unfair trade practices like misleading advertisement
into the existing law since it was convinced that consumer had no protection against such
practices. The committee was categorical in providing power to the Monopolies & Restrictive
Trade Practise Commission (MRTPC) to compensate against injury on account of unfair
trade practices. Power to grant interim injunction sought to incorporated was to safeguard
consumers against irreparable loss during the pendency of inquiry. Further, the MRTPC was
to be provided with power of contempt as well as power to try offences against itself. These
measures were found necessary to provide teeth to the body in order to make it more
effective. The Sachar Committee desired to transform the MRTPC from an advisory body
into an adjudicating one. The Committee also recommended combining the position of
Registrar and Director into a Director General of Trade with power to conduct dawn raids
and limited civil court powers to summon witnesses as well as documents.

The law was amended in 1984 on the basis of the Sachar Committee report though these
amendments also made significant departure from the recommendations. The powers of the
central government to deal with monopolistic practices and division of enterprises were not
touched. Since the role of the MRTPC remained advisory, it did not bother to take up cases
dealing with either monopolistic practices or recommending division of enterprises.

3
The amendments made to the Provisions2dealing with restrictive trade practices in 1984
brought in the concept of deemed illegality to a host of trade practices for which registration
was made mandatory. This was to overcome court rulings to the effect that even when a trade
practices fell under section 33(1), the MRTPC had to establish that it was a restrictive trade
practices under section 2(o)3 of the Act. These trade practices were exclusionary behaviour,
tie-in sales, resale price maintenance, bid rigging, allocation of market, boycott, predatory
pricing etc. The presumption of such practices to be anti-competitive made sanctions by the
MRTPC easy. There was no longer the need to prove the harmful effects of a trade practices
on competition.

The 1984 amendments introduced provisions relating to unfair trade practices in section 36A.
This dealt with cases of misrepresentation as well as misleading of disparaging
advertisements. Injury or harm to the consumer was necessary before it could be taken up by
the MRTPC. These provisions became the bread and butter of the MRTPC and numerous
cases were brought to it.

ENACTMENT OF THE MONOPLIES AND RESTRICTIVE TRADE PRACTISE

ACT, 1969

The Bill, drafted by MIC and amended by a committee of the Parliament, became The
Monopolies and Restrictive Trade Practice Act, 1969 and was enforced from June 1, 1970.
The Act drew its inspiration from the mandate enshrined in the Directive Principle of State
Policy in the Constitution, which aims at securing social justice with economic growth.

The Preamble to the Act says that the statute is enacted to provide that the operation of the
economic system does not result in the concentration of economic power to the common
detriment, for the control of monopolies, for the prohibition of monopolistic and restrictive
trade practices and for matters connected therewith or incidental thereto.

The premises on which MRTP Act rest are unrestricted interaction of the competitive forces,
maximum material progress through rational allocation of economic resources, availability of
goods and services of quality at reasonable prices, and finally, a just and fair deal to the

2
Section 33(1) of the MRTP Act
3
Section 2(o) defines restrictive trade practice

4
consumers. An interesting feature of the statute is that is envelops within its ambit, fields of
production and distribution of both goods and services.

Thus, one of the products of the planned and controlled economy was the MRTP Act 1969.
Its cousin, to regulate, control and grant foreign exchange, was born in 1973 christened the
Foreign Exchange Regulation Act. In the planned and controlled regime, the market suffered
from little or no competition resulting in detriment to economic efficiency and productivity.
Self- reliance was synonymous with import substitution and consequently, indigenous
availability criteria ensured automatic protection to domestic producers, regardless of cost,
efficiency and comparative advantage.

THRUST AREA
Three areas informed till 1991 (when the MRTP Act was amended) the regulatory provisions
of the MRTP Act, namely, concentration of economic power, competition law and consumer
protection. A criticism is often voiced that the statute was designed to prohibit growth. This
is fallacious and erroneous. The statute, till 1991 regulated growth but did not prohibit it.
Even in its regulatory capacity, it controlled the growth only if it was detrimental to the
common good. In terms of competition law and consumer protection, the objective of the
MRTP Act is to curb Monopolistic, Restrictive and Unfair Trade Practices which disturb
competition in the trade and industry and which adversely affect the consumer interest
(Monopolistic, Restrictive and Unfair Trade Practices are described later in this paper). A
parallel legislation known as the Consumer Protection Act, 1986 has also come into being,
which prevails essentially in the realm of Unfair Trade Practices.

One could argue that the consumers need no special protection as they can be left to the
market forces. But a perfectly competitive market is just an utopia and the consumer
sovereignty a myth. Products are of great variety, many of them are complex and the
consumer has imperfect product knowledge. The supplier often has a dominant position vis-
à-vis the buyer who has little or no bargaining power in the market. There has been a
growing realisation for not depending on the old doctrine of Caveat Emptor – “let the buyer
beware”. The consumer, therefore, needs and deserves legal protection against certain trade
practices, business methods and unscrupulous forces.

In many countries and in particular developing countries like India, a large number of
consumers are illiterate and ill-informed and possess limited purchasing power in an

5
environment, where there is shortage of goods. Very often, one witnesses the spectacle of a
large number of non-essential, sub-standard, adulterated, unsafe and less useful products
being pushed through by unscrupulous traders by means of Unfair Trade Practices and
deceptive methods. Subtle deception, half truths and misleading omissions inundate the
advertisement media and instead of the consumer being provided with correct, meaningful
and useful information on the products, they often get exposed to fictitious information which
tends to their making wrong buying decisions. Transparent information is missing and needs
to be a goal to be chase

The regulatory provisions in the MRTP Act apply to almost every area of business –
production, distribution, pricing, investment, purchasing, packaging, advertising, sales
promotion, mergers, amalgamations and take over of undertakings (provisions relating to
mergers, amalgamations and take-overs were deleted in the MRTP Act by the 1991
amendments to it). They seek to afford protection and support to consuming public by
reducing if not eliminating from the market Monopolistic, Restrictive and Unfair Trade
Practices. One of the main goals of the MRTP Act is to encourage fair play and fair deal in
the market besides promoting healthy competition. Under the MRTP Act, a Regulatory
Authority called the MRTP Commission (briefly, Commission) has been set up to deal with
offences falling under the statute.

OBJECTIVES
The principal objectives sought to be achieved through the MRTP Act are:

i) prevention of concentration of economic power to the common detriment;

ii) control of monopolies;
iii) prohibition of Monopolistic Trade Practices (MTP);
iv) prohibition of Restrictive Trade Practices (RTP);
v) prohibition of Unfair Trade Practices (UTP).

6
MONOPOLIES AND RESTRICTED TRADE PRACTICE COMMISSION

An important organ of the Department of Company Affairs is the Monopolies and Restrictive
Trade Practices Commission (MRTP Commission) a quasi-judicial body. The MRTP
Commission established under Section 5 of the Monopolies and Restrictive Trade Practices
Act, 1969, discharge functions as per the provisions of the Act. The main function of the
MRTP Commission is to enquire into and take appropriate action in respect of unfair trade
practices and restrictive trade practices. In regard to monopolistic trade practices the
Commission is empowered under section 10(b) to inquire into such practices (i) upon a
reference made to it by the Central Government or (ii) upon its own knowledge or
information and submit its findings to Central Government for further action.

COMPOSITION OF MRTPC

Under the MRTP ACT, a commission has been established4, the Chairman of which is
required to be a person who is or has been or is qualified to be a judge of the supreme court
or high court.

The member of the commission are required to be person of ability, integrity and standing
who have adequate knowledge or experience of, or have shown capacity in dealing with
problem relating to economics, law, commerce, accountancy, industry, public affairs or
administration.

The commission is assisted by the Director General of investigation and Registration for
carring out investigation, for maintaining register of agreements and for undertaking carriage
of proceeding during the enquiry of the MRTPC.

POWERS OF MRTPC

The powers5 of the Commission include the power vested in a Civil Court and include further
power: -

4
Section 5 of MRTP Act, 1969
5
Section 12 of the MRTP Act, 1969

7
 i) To direct an errant undertaking to discontinue a trade practice and not to repeat the
same;
ii) To pass a cease and desist order;
iii) To grant temporary injunction, restraining an errant undertaking from continuing
an alleged trade practice;
iv) To award compensation for loss suffered or injury sustained on account of RTP,
UTP or MTP;
v) To direct parties to agreements containing restrictive clauses to modify the same;
vi) To direct parties to issue corrective advertisement;
vii) To recommend to the Central Government, division of undertakings or severance
of inter-connection between undertakings, if their working is prejudicial to public
interest or has led or is leading to MTP or RTP.

INQUIRY AND INVESTIGATION BY MRTPC

Section 10 of the MRTP Act, 1969 empowered the MRTP Commission to enquire into
monopolistic or restrictive trade practices upon a reference from the Central Government or
upon its own knowledge or on information.
The procedures for inquiry have been provided in the law. The MRTPC can inquire into a
RTP on the basis of a compliant or reference made by the central or state government or
application made by the Director General (investigation and registration) or suo motu.
Inquiry into a MTP can be made on the basis of reference made by the central government or
suo motu.6 The MRTPC may ask the director general to make a preliminary investigation and
report before launching an inquiry. The director general is empowered to make preliminary
investigation suo motu or on a complaint made to him.7 The MRTPC has limited civil court
powers to enforce attendance, record statements on oath, and call for documents. However,
the director general has no such powers and has to rely on the MRTPC for enforcing
attendance and calling records from the respondents.

POWER OF THE COMMISSION TO GRANT TEMPORARY INJUNCTIONS8

The power to grant temporary injunction was incorporated by the 1984 amendment. This was
further amplified in 1991 to enable granting of injunction without issue of notice to the
affected parties. These amendments were made to make the MRTPC more effective in

6
It could also be made on the basis of application by DG (I&R) with effect from 1991.
7
This power led to allegation of emergence of a parallel power centre
8
Section 12A of the MRTP Act, 1969

8
dealing with anti-competitive practices. It was felt that without the authority to grant
injunction, anti-competitive practices would continue until the end of injury, by which time it
may be too late to intervene.

POWER OF THE COMMISSION TO AWARD COMPENSATION9

The MRTPC has the power to award compensation for loss or damage due to anti-
competitive practices since 1984, but it can be awarded only on an application by the central
government, state government, or a party suffering the loss or damage after the nature and
extent of loss or damage has been determined through an inquiry.

The amendment made to the law in 1984 enabled the MRTPC to enforce its orders granting
temporary injunction and compensation through courts of law. The MRTPC can call for a
compliance report of its orders through the Director General or any other officer. Its powers
relating to compliance were further enhanced by providing it with power of contempt by
amendment made in 1991.

EXTRA-TERRITORIAL JURISDICTION

The MRTPC has extra-territorial reach and can pass orders against parties situated outside
India to the extent the anti-competitive practices are carried on in India. This has been
acknowledged by the Supreme Court.10

REMEDIES

When it comes to remedies, the powers of the MRTPC are rather restricted. As far as the
structural remedy of division of an enterprise is concerned, it has only non-binding
recommendatory powers and the Central government has the authority to order such division.

Behavioural remedies against MTPs fare no better under the MRTP Act. The MRTPC is left
with only an advisory role and the remedies would not pass muster under modern competition
laws. The central government can regulate production/supply/distribution, fix price, fix
standard, regulate profit and quality.

9
Section 12B of the MRTP Act, 1969
10
Haridas Exports, AIR 2002 SC 2728

9
The 1984 amendment excepted trade practice authorized by law or agreement with the central
government, or to meet defence requirements or to ensure supply of essential goods and
services from being termed MTP.

Chapter V of the MRTP Act deals with RTPs and UPTs.11 These provisions provide the bread
and butter cases to the organization. Twelve kinds of trade practices are deemed to be
restrictive. The list of such practices is given below:

 Any agreement which restricts, or is likely to restrict, by any method the persons or
classes of persons to whom goods are sold or from whom goods are bought;
 Any agreement requiring a purchaser of goods, as a condition of such purchase, to
purchase some other goods;
 Any agreement restricting in any manner the purchaser in the course of his trade from
acquiring or otherwise dealing in any goods other than those of th seller or any other
person;
 Any agreement to purchase or sell goods or to tender for the sale or purchase of goods
only at prices or on terms or conditions agreed upon between the seller or purchasers;
 Any agreement to grant or allow concessions or benefits, including allowances,
discount, rebates or credit in connection with, or by reason of, dealing;
 Any agreement to sell goods on condition that the process to be charged on re-sale by
the purchaser shall be the prices stipulated by the seller unless it is clearly stated that
prices lower than those prices may be charged;
 Any agreement to limit, restrict or withhold the output or supply of any goods or
allocate any area or market for the disposal of the goods;
 Any agreement not to employ or restrict the employment of any method, machinery or
process in the manufacture of goods;
 Any agreement for the exclusion from any trade association of any person carrying on
or intending to carry on, in good faith the trade in relation to which the trade
association is forms;
 Any agreement to sell goods at such prices as would have the effect of eliminating
competition or a competition;
(i) Any agreement restricting in any manner, the class or number of wholesalers,
producers, or supplier from whom any goods may be bought;

11
UPTs were inserted in 1984

10
 (ii) Any agreement as to the bids which any of the parties thereto may offer at an
auction for the sale of goods or any agreement whereby any party thereto
agrees to abstain from bidding at any auction for the sale of goods; or

ECONOMIC REFORMS AND MRTP ACT

1991 was a watershed year. Financial crisis faced by the government promped it to usher
economic reforms of a magnitude and at a pace not witnessed before. Liberalization became
the buzzword. The economy was opened up; privatization, liberalization of international
trade, inviting private investment to hitherto closed sectors, and other reforms took centre
stage.

The reforms and existence of entry barriers for enterprises coming under the ambit of the
MRTP Act were incongruous. While the need of the day was rapid expansion and setting up
of new ventures, prior approval of the government for enterprises above the threshold limit
slowed this effort. Consequently, the provisions dealing with monopolistic enterprises
seeking prior approval were deleted from the statute book.12 The MRTPC continued dealing
with restrictive and unfair trade practices.

A few court cases had exposed chinks in the armoury of the MRTP Act in dealing effectively
with anti-competitive practices. A complaint against a private school of taking interest-free
deposits from parents at the time of admission was taken up. The issue revolved around
whether this was a restrictive trade practice in terms of the definition in section 2(o) of the
MRTP Act. The Supreme court did not think so.13 Extra- territorial powers of the MRTPC
also came to be questioned. While the Supreme Court recognized its extra- territorial
authority, the case failed since goods being imported had not reached the customs authority
and did not fit into the definition of „goods‟ in section 2 (e) (iii) of the Act.14

12
Part A of chapter III was deleted.
13
Apeejay school, AIR 2001 SC 3858
14
Haridas Exports, AIR 2000 SC 2728

11
HIGH LEVEL COMMITTEE ON COMPETITION POLICY AND LAW

The government, not satisfy with a piecemeal approach desired to look into the whole issue
of competition law. A high level committee on competition policy and law under the
chairmanship of S. V. S. Raghavan was appointed.

The Raghavan Committee was set up in 1999. The existing law (the MRTP Act) was found to
lack provision to deal with anti-competitive practices in an era of globalization and
liberalization. The Raghavan Committee declared the MRTP Act to be falling short of
squarely addressing competition and anti-competitive practices. Based on its analysis, the
Raghavan committee found it more expedient to have a new competition law. While the
committee presumed some anti-competitive behaviour to be injurious to the competition, it
recognized the primacy of rule of reason test for the rest. The Raghavan Committee laid great
emphasis on competition advocacy role for the competition authority. This report gave birth
to a modern competition law, the Competition Act, 2202.

The committee desires the focus of the new law to be on preventing anti-competitive
practices that reduce welfare. While free markets produce desires outcomes, they do so only
when protected from abuses. Therefore, the only legitimate goal of comepititon law is the
maximization of economic welfare. The committee further desired that the competition
authority should be governed by established competition principles.

The Raghavan Committee was determined to have merger control provisions in the new
legislation. It sought to make a distinction between horizontal mergers, vertical mergers, and
conglomerate mergers on the basis of their differing degrees of impact on competition. But it
chose to opt for a soft regime which has voluntary notification for mergers above rather high
threshold limits and time bound decision to reduce transaction cost.

The Raghavan Committee laid great emphasis on a competition advocacy role for the
competition authority, and rightly so. The low awareness of competition issues among
stakeholders and the government in India clearly requires intensive advocacy initiative.

12
THE COMPETITION ACT, 2002

The Competition Act, 2002 was enacted by the Parliament of India and governs Indian
competition law. It replaced the archaic Monopoly and Restrictive Trade Practices Act, 1969.
Under this legislation, the Competition Commission of India was established to prevent
activities that have an adverse effect on competition.

Objects and reasons:

The Competition Act was enacted in 2002 keeping in view the economic development that
resulted in opening up of the Indian economy, removal of controls and consequent economic
liberalization which required that the Indian economy be enabled to allow competition in the
market from within the country and outside. The Competition Act, 2002 provided for the
establishment of a Competition Commission, to prevent practices having adverse effect on
competition, to promote and sustain competition in markets, to protect the interests of
consumers and to ensure freedom of trade carried on by other participants in markets in India,
and for matters connected therewith or incidental thereto.
Section 66 of the Competition Act, 2002 declared that the Monopolies and Restrictive Trade
Practices Act, 1969 [“MRTP Act”] be repealed and the Monopolies and Restrictive Trade
Practices Commission [“MRTPC”] be dissolved.
In addition to providing for the settlement of the status of the employment of those working
in the MRTPC, consequent on such dissolution, it also laid down the principle on which cases
and investigations pending under the MRTP Act were to be transferred to the Competition
Commission of India or the National Commission constituted under the Consumer Protection
Act, 1986, as indicated in the section.
As a quasi-judicial body, the CCI is bound by principles of rule of law in giving decisions15
and the doctrine of precedents. As per the Competition Act the Commission is duly
empowered to receive documents and testimonial by way of evidence and therefore is well
suited to adjudicate disputes before it on the basis of material adduced by parties and by
application of the principles of evidentiary proof under the Evidence Act. This is important

15
These are (a) predictability in the judicial reasoning (b) uniform and consistent application of law

13
since unlike the United States, a suit for anti-competitive practices cannot be brought in a
civil court. Nor does intent in cartel like conduct take the case outside the jurisdiction of the
CCI. Further, the scope of investigation of the Federal Trade Commission (FTC) and the
Department of Justice (DOJ) are slightly different; however in India all cases relating to anti-
competitive practices can only be investigated by the CCI.

Section 27 of the Act lays down remedies for the violation of Section 3 and 4 of the
Competition Act. The CCI may issue a “cease and desist‟ order, or impose a penalty not
exceeding „10 percent of the average turnover during the preceding three years‟ from the date
of order. In cartel cases CCI could impose a penalty that could be higher of either up to 10
percent of the turnover or three times the amount of profit derived from the cartel agreement.
In the cases of „contravention by companies‟, CCI may under the provision of Section 48 of
the Competition Act proceed against and punish any person who, at the time of the violation,
was in charge of the company, unless that person can show that the violation was committed
„without his knowledge‟ or that he had exercised „all due diligence to prevent the violation‟.
Section 43 A provides that in case of a failure to notify a combination, the Commission shall
impose a penalty of 1% of the total assets or turnover of the combination. Section 42A of the
Competition Act provides for the compensation in case of contravention of orders of the CCI.
This section provides that a person may make an application to the Competition Appellate
Tribunal for recovery of compensation from an enterprise for any loss or damage suffered by
him for violating the directions of the CCI under sections 27, 28, 32, 33 and 41 of the
Competition Act.

COMPETITION COMMISSION OF INDIA (CCI)

Chapter III of the competition act deals with competition commission of India.
Administration and enforcement of the competition law requires an administrative set up.
This administrative set up should be more proactive than reactive for the administration of the
competition policy. This is not a mere law enforcement agency. This administrative set up
should take a proactive stand to be specified and adopted to promote competition by not only
proceeding against those who violate the provisions of the competition law, but also by
proceeding against institutional arrangements and public policies that interfere with the fair
and free functioning of the markets.

14
It is in this context that the CCI in the Act has been entrusted with the following two basic
functions:

a) Administration and enforcement of competition law and competition policy to foster

economic efficiency and consumer welfare.
b) Involvement proactively in Governmental policy formulation to ensure that markets remain fair,
free, open, flexible and adaptable.

Involvement proactively in Governmental policy formulation to ensure that markets remain

fair, free, open, flexible and adaptable INVESTIGATION, PROSECUTION, ADJUDICATION,
MERGERS COMMISSION AND COMPETITION COMMISSION

INVESTIGATION AND PROSECUTION

Adjudicative wing is distinct and separate from the investigative wing in the Act. At the apex
level of the investigative wing, there is an official who has been designated as Director
General (DG). The Director General will not have suo motu powers of investigation. He will
only look into the complaints received from the CCI and submit his findings to it.
Investigators will be solely responsible for making enquiries, for examining documents, for
making investigations into complaints and for effecting interface with other investigative
agencies of the Government including Ministries and Departments. The DG has been vested
under the Act with powers, which are conferred on the CCI, namely, summoning of
witnesses, examining them on oath, requiring the discovery and production of documents,
receiving evidence on affidavits, issuing commissions for the examination of witnesses etc.

The Act mandates that the investigation staff would need to be chosen from among those,
who have experience in investigation and who are known for their integrity and outstanding
ability. They should have knowledge of accountancy, management, business, public
administration, international trade, law or economics. Hitherto, in terms of the dispensation
under the MRTP Act, they were drawn routinely from those working in the Department of
Company Affairs. The Act thus induces professionalism in the investigative wing, a step in
the right direction. .

Depending on the load, the Government would create Deputy Directors General in all the
cities where Benches of CCI are situated. They will investigate the cases referred to them

15
from the Additional (regional) Benches and submit their findings to them direct without
necessarily routing it through Director General at Headquarters. The Act envisages one
Principal Bench and Additional Benches, besides Merger Bench (es). The schema of
placement of the investigating staff and the procedure and drill for submission of their reports
to the CCI and its Benches will be laid down, it is expected, by the CCI and the Government,
under Statutory Rules, Statutory Regulations or otherwise.

It is desirable to prepare guidance manuals spelling out the nature, scope and manner of
investigation. By and large, the investigation staff should follow these manuals and any
departure there from must have the prior approval of the Director General. This is to ensure
that there are no “fishing and rowing” enquiries designed to threaten and harass corporates.

ADJUDICATION

Central to effective implementation and enforcement of competition policy and competition

law is an appropriate competent and effective adjudicative body, in th the instant case, the
Competition Commission of India. CCI will be the adjudicating body under the Act with
autonomy and administrative powers.

CCI will be a multi-member body with its Chairperson and Members chosen for their
expertise, knowledge and experience in Economics, Law, International Trade, Business,
Commerce, Industry, Finance, Accountancy, Management, Public Affairs or Administration.
The Act stipulates that the Chairperson and Members shall be selected from those, who have
been, or are qualified to be Judges of the High Courts or from those who have special
knowledge of any of the disciplines listed above. They should not only have special
knowledge in one or more of the aforesaid areas, but also have experience of not less than 15
years therein. Besides, they need to be persons of ability, integrity and standing.

COMPETITION COMMISSION OF INDIA AND SELECTION OF CHAIRPERSON AND MEMBERS

In order to ensure competent and effective implementation of competition policy and

competition law, it is important and imperative to select suitable persons, suitability having
been described in the earlier paragraphs. It cannot be over-emphasised that Government
ought to ensure that the CCI is free of political control. While, it is practically difficult to
eliminate political favouritism, it can be minimised to a great extent by resorting to what may

16
be described as a “Collegium Selection Process”. The Act, as passed by the Parliament, has
left the selection procedure to the Government, which will therefore frame Rules in this
regard. It is believed that the Government has opted for a search committee procedure for the
selection of Chairperson and Members.

APPEAL AND REVIEW PROVISIONS

Appeals against decisions and orders of the CCI lie to the Supreme Court within the
limitation period of 60 days. Appeals can be on one or more of the grounds specified in Sec.
100 of the Code of Civil Procedure. Thus, the status given to the CCI is very high with only
the Supreme Court having the power to overturn its orders.
The CCI has power under the Act to review its own order on an application made by the party
aggrieved by its order.

EXTRATERRITORIAL REACH

The Act has extra-territorial reach. Its arm extends beyond the geographical contours
of India to deal with practices and actions outside India which have an appreciable
adverse affect on competition in the relevant market in India. The Competition
Commission of India has the power to enquire into an agreement, abuse of dominant
position or combination, if it has or is likely to have an appreciable adverse affect on
competition in the relevant market in India, notwithstanding that an agreement has
been entered into outside India;
 any party to such agreement is outside India;
 any enterprise abusing the dominant position is outside India;
 a combination has taken place outside India;
 any party to combination is outside India; or
 any other matter or practice or action arising out of such
agreement or dominant position or combination is outside
India.

The above provisions are based on what is known as the „effects doctrine‟. This doctrine
implies that even if an action or practice is outside the shores of India but has an impact or
effect on competition in the relevant market in India, it can be brought within the ambit of the
Act, provided the effect is appreciably adverse on competition.

17
COMPARISON BETWEEN MONOPOLIES AND RESTRICTIVE TRADE
PRACTICES ACT, 1969 AND THE INDIAN COMPETITION ACT, 2002

MONOPOLIES AND RESTRICTIVE THE INDIAN COMPETITION ACT, 2002

TRADE PRACICES ACT, 1969

Enacted in pre-liberalization era Enacted in post-liberalization era

The aim of the act is to provide that the
operation of the economic system does
not result in the concentration of
economic power to the common
detriment, for the control of monopolies,
for the prohibition of monopolistic and
restrictive trade practices
It is based on concentration of economic
power
The aim of the act is to prevent practices
having adverse effect on competition, to
promote and sustain competition in
markets, to protect the interests of
consumers and to ensure freedom of
trade carried on by other participants in
markets
It focuses on effects of competition on
the market

It Prohibit monopolistic, restrictive and It seeks to prohibit anti-competitive

unfair trade practices
Cartel not specifically defined.
However, implicit jurisdiction in respect
of cartel exists
agreements, abuse of dominant position
and to regulate combinations
Cartel defined as including an association
of producers, sellers, distributors, traders
or service providers who, by agreement
amongst themselves, limit, control or
attempt to control the production,
distribution, sale or price of, or, trade in
goods or provision of services

Competition offences implicit or not Competition offences explicit and

Defined Defined

Based on reformative philosophy only Based on reformative-cum-deterrent

Theory

18
No enabling provision to render opinion
to Central Government on such issues
No penalties for offences
Prohibit monopolistic, restrictive and
unfair trade practices
Rule of law approach
No explicit power with the MRTPC in
respect of IPRs
Act implemented partly by Central
Government and partly by the MRTP
Commission
Lacked autonomy and independence
The “consumer” concept is not defined
19
Central government can seek opinion
on policy/law relating to competition
Penalties for offences
prohibit anti-competitive agreements,
abuse of dominant position and to
regulate combinations
Rule of reason approach
Commission to exercise jurisdiction in
case of unreasonable restraints
exercised in respect of IPRs
Primary duty to achieve the objectives of
the Act devolves on competition
commission of India
Comparatively more autonomous and
independent-establishment of competition
fund
Consumer includes both commercial
buyer and ultimate user
CONCLUSION

The MRTPC and CCI both are quasi-judicial body. The function of MRTPC is to inquire into
and take appropriate action in respect of unfair trade practice and restrictive trade practice, it
can take action upon a reference made to it by the central government or suo motu. The
MRTPC assisted by the Director General of investigation.
The MRTPC direct an errant understanding to discountinue a trade practice and not to repeat.
It can pass a cease and desist order. It grant temporary injunction, restraining an errant
understanding from continuing an alleged practice. The commission‟s task was to enquire
into the existence and effect of concentration of economic power in the organized private
sector. It excluded the public sector and agriculture from its study. It had to suggest
legislation and other measures to protect essential public interest and also suggest agency for
enforcement of the legislation. It award compensation for loss suffered an injury sustained on
account of restrictive trade practice, unfair trade practice or monopoly trade practice.
The MRTPC inquire into a restrictive trade practice on the basis of a complaint or reference
made by the Central government or suo motu. The power to grant temporary injunction was
incorporate by 1984 amendment. It made MRTPC more effective in dealing with anti-
competitive practices.
The MRTPC has the power to award compensation for lass or damages but only on an
application by Central government, state government or party suffering the loss or damage.it
grant injunction through court of law.
The MRTP Commission was poorly resourced, which further constrained its functioning. Its
budget was a very small proportion of both the Gross Domestic Product and the budget of the
Central Government.
The MRTPC‟s failure in curbing cartels is attributed to its toothless characterd. The “cease
and desist” orders were enforceable only through courts, while the absence of extra-territorial
jurisdiction, critical for according recognition to the “effects” doctrine arising out of cross
border anti competitive practices, made a mockery of such complaints as demonstrated in the
ANSAC case. 16

16
http://www.business-standard.com/article/economy-policy/-toothless-mrtp-is-laid-to-rest-
109091400054_1.html

20
Competition commission of India is bound by principles of Rule of Law – predictability in
the judicial reasoning and uniform & consistent application of law and Doctrine of precedent.
Competition commission of India is empowered to receive documents and testimonial by way
of evidence. The CCI may issue a “cease & desist” order or impose penality in case of
cartels.
Competition commission of India involve in proactive in governmental policy formulation to
ensure that market remain fair, free, open and flexible.
Director General will not have suo motu power to investigate. It only look into the complaint
received from the CCI and submit its finding to it. CCI is adjudicating body under the Act
with autonomy and administrative power.

21