Introduction:
The Monopolies and Restrictive Trade Practices Act (MRTP) 1969 is repealed with the enactment of the competition Act, 2002. On the dissolution of the Monopolies and Restrictive Trade Practices commission, the person appointed as a chairman of MRTP commission and every other member appointed and Direct General of MRTP commission, other employees including Additional, Joint, Deputy, Directors General of Investigation and Registration holding offices as such immediately before the dissolution of the commission vacated their respective offices with the compensation for premature termination.
Reasons for Development of MRTP Act:
India took regulatory measure by means of an untruth act named Monopolies and Restrictive Trade Practices Act (MRTP) 1969. From 1969 to 2003 Government provided the regulation to the monopolies trade for the first time by virtue of the enactment of this Monopolies and Restrictive Trade Practices Act, which inspired by the mandate of the Directive Principles of state policy in the constitution.
The Preamble of the MRTP Act preached a socialist Philosophy intended to ensure that the operation of the economic system did not led to the concentration of economic power to the common detriment.
Objectives of MRTP Act:
Some of the objectives of MRTP act are as follows:
1. Prevention of concentration of economic power to the common detriment.
2. Control of monopolies.
3. Prohibition of monopolies trade practices.
4. Prohibition of restrictive trade practices.
5. Prohibition of unfair trade practices.
They are discussed below:
1. Prevention of concentration of economic power to the common detriment: It mainly deals with the division of undertakings:
i. Upon receiving a complaint of facts from any trade association or form any consumer or a registered consumer’s association, whether such consumer is a member of that consumer’s association or not, or
ii. Upon a reference made to it by the Central government of the state government, or
iii. Upon its own knowledge or information, if it is of opinion that the working of an prejudicial to the public interest, or has led, or is leading, or is likely to lead, to the adoption of any Monopolies and Restrictive Trade Practices Act.
2. Control of monopolies: This act made it mandatory for enterprises having assets exceeding Rs. 20 Crores to take approval of the Central government before any kind of corporate restructuring or takeover. The criterion for identifying the dominant undertakings was also fixed. Enterprises having assets of more than Rs. 1 crore were automatically considered as dominant.
3. Prohibition of monopolies trade practices: MTPs as covered under Chapter IV of the MRTP Act are the activities undertaken by big business houses by abusing their market position that hamper or eliminate healthy competition in the market. Such practices are anti – income welfare.
4. Prohibition of restrictive trade practices: RTPs are activities that block the flow of capital or profits in the market. Some firms tend to control the supply of goods or practices or controlling the delivery. MRTPA discourages and prevents the firms from indulging in RTPs.
5. Prohibition of unfair trade practices: UTP is basically an act of false, deceptive, misleading or distorted representation of facts pertaining of goods and services by the firms. Section 36A of the MRTPA prohibits firms from indulging in Unfair trade practices. This provision was inserted by the landmark 1984 Amendment to the MRTPA.
Drawbacks of the MRTP Act:
Some of the drawbacks of the MRTP Act are as follow:
1. Excessive government control.
2. Vague and ambiguous law.
3. Per se rule instead of rule of reason.
4. Dominance per se bad.
5. Promotion of export6s at any costs.
6. A policy of voluntary disclosure.
7. Inefficiency of the MRTP commission.
8. Obsolescence.
9. No extraterritorial application.
10. No penalties for offences.
Case Analysis:
Tata Engineering and Locomotives Co. Ltd vs. Registrar of Restrictive Trade Practices Agreements, 1975
Facts: In this case, TELCO entered into an agreement with its dealers wherein the dealers were assigned certain fixed territories within which they had to sell Tata’s vehicles. This territories restriction was challenged to be Restrictive Trade Practices.
Held: Supreme Court in this case for the first time in India applied the rule of reason and held that such territorial restriction was not an anti – competitive practice as it was meant for equal distribution of goods throughout the country. The positive effect of this judgment was undermined by the 1984 Amendment, section 53 of which made territorial as per se RTP.
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