COMPETITION LAW
UNIT-3 MONOPOLIES AND RESTRICTIVE TRADE PRACTICE (MRTP) ACT, 1969 INDIAN
LAWS
Synopsis
Introduction
Main objectives
Scheme of the act
Unfair trade practices
Categories
INTRODUCTION
The Monopolies and Restrictive Trade Practices (MRTP) Act of 1969 was a landmark piece of
legislation enacted in India to prevent monopolistic practices and promote fair competition in the
market.
The Act aimed to curb the concentration of economic power, regulate monopolies, and prohibit
restrictive trade practices detrimental to consumer welfare and economic growth.
Under the MRTP Act, monopolistic trade practices, unfair trade practices, and restrictive trade
practices were identified and prohibited.
The Act empowered the Monopolies and Restrictive Trade Practices Commission (MRTPC) to
investigate complaints, conduct inquiries, and take enforcement actions against violators.
MAIN OBJECTIVES
The main objectives of the Monopolies and Restrictive Trade Practices (MRTP) Act, 1969 were:
1. Preventing Monopolistic Practices: One of the primary objectives of the MRTP Act was to
prevent the concentration of economic power in the hands of a few entities by regulating
monopolies and monopolistic practices in the market.
2. Regulating Restrictive Trade Practices: The Act aimed to regulate and prohibit restrictive
trade practices such as price-fixing, collusion, bid-rigging, and agreements that restricted
competition in the market.
3. Promoting Fair Competition: Another key objective of the MRTP Act was to promote fair
competition in the market by ensuring a level playing field for all market participants and
preventing unfair trade practices.
4. Protecting Consumer Interests: The Act sought to protect consumer interests by preventing
unfair trade practices, ensuring reasonable prices, and maintaining the quality of goods and
services available in the market.
5. Establishing Regulatory Authority: The MRTP Act established the Monopolies and
Restrictive Trade Practices Commission (MRTPC) as the regulatory authority responsible for
enforcing the provisions of the Act and ensuring compliance by businesses.
6. Investigating Complaints: The Act empowered the MRTPC to investigate complaints
regarding monopolistic or restrictive trade practices, conduct inquiries, and take enforcement
actions against entities found to be violating the provisions of the Act.
SCHEME OF THE ACT
The Monopolies and Restrictive Trade Practices (MRTP) Act, 1969, had a comprehensive scheme
comprising various provisions aimed at regulating monopolies, restrictive trade practices, and unfair
trade practices. Here's an outline of the scheme of the MRTP Act:
Preliminary Provisions:
Definitions: The Act provided definitions for key terms such as "monopoly," "restrictive trade
practice," "unfair trade practice," and "MRTP Commission."
Jurisdiction: Determined the jurisdiction of the MRTP Commission over matters related to
monopolistic and restrictive trade practices.
Monopolistic Trade Practices:
Prohibition: Outlined the prohibition of monopolistic trade practices, including practices that lead to
the abuse of dominant market position.
Exemptions: Provided exemptions for certain practices or agreements that were in the public interest
or necessary for promoting exports or small-scale industries.
Restrictive Trade Practices:
Definition: Defined restrictive trade practices and provided examples of practices considered
restrictive under the Act.
Prohibition: Outlined the prohibition of agreements or practices that restrict competition in the
market or adversely affect consumer interests.
Exemptions: Provided exemptions for certain agreements or practices deemed necessary for
promoting exports, technological advancements, or economic development.
Unfair Trade Practices:
Definition: Defined unfair trade practices, including false representations, misleading
advertisements, and deceptive practices.
Prohibition: Prohibited unfair trade practices that were likely to deceive or mislead consumers,
affect consumer interests, or harm public health or safety.
UNFAIR TRADE PRACTICES
Unfair trade practices (UTPs) encompass a wide range of deceptive, fraudulent, or unethical
business practices employed by firms to gain an unfair advantage over competitors or to mislead
consumers.
These practices can include false representations regarding the quality, quantity, or characteristics of
goods or services, misleading advertisements, deceptive pricing, false warranties or guarantees, and
bait-and-switch tactics.
Prohibited Practices:
Under the MRTP Act, several practices are deemed unfair and are prohibited. These include:
False Representations: Making false or misleading statements regarding the nature, quality, or
characteristics of goods or services. For example, falsely claiming that a product has certain benefits
or features that it does not possess.
Misleading Advertisements: Publishing advertisements that are likely to deceive or mislead
consumers. This could involve making false claims about a product's performance or efficacy in
order to attract customers.
Deceptive Pricing: Engaging in pricing strategies designed to mislead consumers, such as artificially
inflating prices and then offering fake discounts or discounts based on inflated original prices.
False Warranties or Guarantees: Offering warranties or guarantees that are false or misleading,
either in terms of their coverage or duration. For instance, providing a warranty that does not
actually cover certain types of damage or defects.
Bait-and-Switch Tactics: Luring customers with an attractive offer (the "bait") and then attempting
to sell them a different, usually more expensive, product or service (the "switch"). This can involve
advertising a product at a low price to attract customers, only to claim that it is out of stock or
unavailable once customers arrive at the store, and then attempting to sell them a higher-priced
alternative.
Role of MRTPC:
The Monopolies and Restrictive Trade Practices Commission (MRTPC) was entrusted with
the task of enforcing the provisions related to unfair trade practices under the MRTP Act.
The MRTPC was empowered to investigate complaints, conduct inquiries, and take
enforcement actions against entities found to be engaging in unfair trade practices.
It had quasi-judicial powers to adjudicate disputes and issue orders or penalties against
violators.
Enforcement Mechanisms:
The MRTPC had several enforcement mechanisms at its disposal to address unfair trade practices.
These included:
Imposing fines or penalties on businesses found to be engaging in unfair trade practices.
Issuing cease-and-desist orders requiring the offending party to stop engaging in the unfair
practice.
Requiring corrective actions to be taken by the violator to rectify the harm caused by the
unfair trade practice.
Impact and Significance:
The prohibition of unfair trade practices under the MRTP Act played a crucial role in creating a
more transparent and ethical business environment in India.
By deterring deceptive and fraudulent practices, the Act contributed to building consumer trust and
confidence in the marketplace. It also helped to promote fair competition and protect the interests of
consumers.
Overall, the provisions related to unfair trade practices under the MRTP Act were aimed at ensuring
a level playing field for businesses, protecting consumers from deceptive practices, and promoting
the efficient functioning of markets.
