An overview of MRTP Act, 1969.

Basic concept of mrtp Act,1969.

1. ASSIGNMENT
ON

“An Overview of Monopolistic and Restrictive Trade Practice Act, 1969”




Submitted to: Summitted by:
Dr. Sunil Kumar Jyotishmay Das
Associate Professor UID: 19mll1013
Chandigarh University(UILS) Chandigarh University(UILS)

2. Acknowledgement


I would like to express my special thanks of gratitude to my teacher Dr. Sunil Kumar, Associate
Professor, Chandigarh University (UILS) who gave me the golden opportunity to do this assignment
on the topic of “An Overview of Monopolistic and Restrictive Trade Practice Act 1969” which helped
me in doing a lot of Research and I came to know about so many new things, I am really thankful to
him.

Date: 31/03/2020 Jyotishmay Das

3. 1. Introduction
The MRTP Act was designed to check concentration of economic power, prohibit restrictive or unfair
trade practices and control of monopolies and protection of consumer interests. Premises on which the
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. India was among the first developing
countries to have a competition law in the form of the Monopolies and Restrictive Trade Practices
(MRTP) Act, 1969.
1

2. Trigger Causes:
The following were the Committees which insists for the enactment of the MRTP Act-
❖ Hazari Committee (1951) – This committee was appointed under the Chairmanship of Mr.
Hazari to study the licensing procedure under the Industrial Policy. In its report, the committee
found that Big Businessmen have succeeded in thwarting the Industrial Policy regulations to
meet their own selfish interests. Further, the States have become biased in granting Industrial
Licenses to Big Business Houses.
2

❖ Subimal Dutt Committee – This committee was appointed to study the institutional design
and the pattern of work of various Business Houses. The committee in its report found that 73
business houses were controlling around 56% of the economy; it therefore suggested
introduction of MRTP Bill.
3

❖ Mahanlobis Committee on the Distribution of Income and Levels of Living (1964) – This
committee headed by PC Mahanlobis also found concentration of wealth and power in the
hands of few wealthy entrepreneurs. It was further observed that the economic model of the
country was planned in such a manner that only supported the wealthy few and the same should
be reformed.
4

❖ Monopolies Inquiry Commission [MIC] (1965) – This committee was headed by Justice K.C
Das Gupta. It found that there was high concentration of power in private hands and the
industrial licensing policy as well as IPR was not effective in addressing the same. Moreover,
there was also not any law to govern and regulate the irregularities that were prevailing in the
market. MIC therefore drafted a bill to curb the monopolistic and restrictive trade practices.
This Bill later became the MRTP Act, 1969.
The new MRTP Act was greatly influenced by its foreign counterparts such as Sherman Act and
Clayton Act of USA, the MRTP (Inquiry and Control) Act, 1948 and the Resale Prices Act, 1964 of
the UK, etc.
3. 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 in hands of few rich. It extended to whole of India except Jammu and
Kashmir. The act came into force from 1st June, 1970. The Act aims to prevent concentration of

1
Shodhganga, “Monopolies and Restrictive Trade Practices Act 1969; MRTP Mechanism, its establishment, features and
Functioning” available at: https://shodhganga.inflibnet.ac.in/bitstream/10603/74926/6/chapter%203.pdf (last visited on
10/02/2020).
2
Shreyaa Chaturvedi, “Monopolies and Restrictive Trade Practices Act, 1970” available at:
https://blog.ipleaders.in/mrtp/ (last visited on 28/03/2020).
3
Ibid.
4
Ibid.

4. economic power, provide for control of monopolies, and protect consumer interest. Currently, the
MRTP Act has been renamed as the Competition Act, 2002, with a few changes to it.
The main objectives of the MRTP Act are as follows:
5

➢ to ensure that the operation of the economic system does not result in the concentration of
economic power in hands of few rich,
➢ to prohibit of monopolistic trade practices;
➢ to prohibit of restrictive trade practices;
➢ to prohibit of unfair trade practices;
➢ to control monopolies.
4. Non-Applicability of MRTP Act:
Unless the Central Government otherwise directs, this act shall not apply to:
6

➢ Government company and undertaking owned by Government.
➢ Company establish by a Central or State Act.
➢ Trade Unions.
➢ Companies which have been taken over by the Central Government.
➢ Any financial institution.
5. Definitions:
5.1.1 Monopolistic trade practice
Monopolistic trade practice as covered under the 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-consumer-welfare. In simple words, a monopolistic
trade practice is a trade practice which has, or is likely to have, the effect of reasonably preventing or
lessening competition in the production, supply or distribution of any goods or services; limiting
technical development and capital investment to the common detriment; or allowing the quality of
goods or services to deteriorate.
7

5.1.2 Unfair trade practice
Unfair Trade Practice is basically an act of false, deceptive, misleading or distorted representation of
facts pertaining to goods and services by the firms. Section 36-A of the MRTPA prohibits firms from
indulging in Unfair Trade Practices. This provision was inserted by the landmark 1984 Amendment to
the MRTP Act. In other words, an unfair trade practice means a trade practice, which, for the purpose
of promoting any sale, use or supply of any goods or services, adopts unfair method, or unfair or
deceptive practice.
8

5.1.3 Restrictive Trade Practice
Restrictive Trade Practice are activities that block the flow of capital or profits in the market. Some
firms tend to control the supply of goods or products in the market either by restricting production or

5
Supra note 1.
6
Owlgen, “Monopolistic and Restrictive Trade Practices (MRTP) Act, 1969?”available at: https://www.owlgen.in/what-
is-monopolistic-and-restrictive-trade-practicesmrtp-act-1969/ (last visited on 22/02/2020).
7
Supra note 2.
8
Ibid.

5. controlling the delivery. MRTPA discourages and prevents the firms from indulging in RTPs. In other
words, restrictive trade practice refers a trade practice which has the effect, actual or probable of
restricting, lessening or destroying competition. Such trade practice may tend to obstruct the flow of
production or to bring about manipulation of prices or conditions of delivery etc. to the common
detriment.
9

6. Inquiry by the Commission:
• Upon receiving a complaint from any trade association, consumer or a registered consumer
association, or
• Upon reference made to it by the Central Government or State Government.
• Upon an application to it by the Director General, or
• Upon its own knowledge or information.
10

7. MRTP Commission:
In accordance with the provisions of the Act, the Government of India set up a commission known as
the Monopolistic and Restrictive Trade Commission. The Act provides that the Commission shall consists of a
chairman, not less than two or not more than eight other members, to be appointed by the Central Government.
The following were the important power and functions of the MRTP Commission:
➢ Summoning and enforcing the attendance of any witness and examining him on oath;
➢ Discovery and production of any document or other material object producible as evidence;
➢ Reception of evidence on affidavits;
➢ Requisition of any public record from any court or office.
➢ Issuing any commission for examination of witness; and
➢ Appearance of parties and consequence of non-appearance,
➢ To require any person to produce before it and to examine and keep any books of accounts or
other documents relating to the trade practice, in its custody.
➢ To require any person to furnish such information as may be in his profession in relation to the
trade carried on by any other person.
➢ To authorise any of its officers to enter and search any undertaking or seize any books or papers,
relating to an undertaking, in relation to which the inquiry is being made, if the commission
suspects that such books or papers are being or may be destroyed, mutilated, altered, falsified
or secreted.
➢ Proceedings before the commission are deemed as judicial proceedings within the meaning of
sections 193 and 228 of the Indian Penal Code.
11

8. Remedies under MRTP Act:
8.1.1 Temporary Injunction
Where, during any inquiry, the commission is satisfied that any undertaking or any person is carrying
on, or is about to carry on, any monopolistic, restrictive or unfair trade practice, which is a pre-judicial

9
Supra note 2.
10
Bharti Goyal, “An Overview of MRTP Act” available at: https://www.slideshare.net/BhartiGoyal7/an-overview-of-
mrtp-act-1969 (last visited on 15/02/2020).
11
Akash Sharma, “Monopolistic and Restrictive Trade Practices Act, 1969” available at:
https://www.slideshare.net/akkiiyy/monopolies-and-restrictive-trade-practices-act (last visited on 20/03/2020).

6. to the public interest or the interest of any trader or class of traders generally, or of any consumer or
class of consumers or consumers generally, the commission may grant a temporary injunction
restraining such undertaking or person from carrying on such practice until the conclusion of any
inquiry or until further orders. In simple words it means, activities of the undertaking charged with,
will be stopped until further orders.
8.1.2 Compensation
Where any monopolistic, restrictive or unfair trade practice has caused damage to any Government, or
trader or consumer, an application may be made to the Commission asking for compensation, and the
Commission may award appropriate compensation. Where any such loss or damage is caused to a
number of persons having the same interest, compensation can be claimed with the permission of
Commission, by any of them on behalf of all of them. In simple words, we can say that the particular
concern is liable to pay the compensation to those who were affected.
9. Current Status of The 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.
12

Conclusion:
From the above discussion it can be said that the MRTP Act was successful to an extent. However,
due to scarcity of resources, lack of clearly defined procedures and cumbersome rules and regulations,
the Act wasn’t as effective as it was supposed to be. Also, the changing economic and trade
environment made it necessary for a change in the MRTP Act.

References
Websites:
1. https://shodhganga.inflibnet.ac.in/bitstream/10603/74926/6/chapter%203.pdf
2. https://blog.ipleaders.in/mrtp/
3. https://www.owlgen.in/what-is-monopolistic-and-restrictive-trade-practicesmrtp-act-1969/
4. https://www.slideshare.net/BhartiGoyal7/an-overview-of-mrtp-act-1969
5. https://www.gktoday.in/gk/the-monopolies-and-restrictive-trade-practices-act-1970/

12
“The Monopolistic and Restrictive Trade Practices” available at: https://www.gktoday.in/gk/the-monopolies-and-
restrictive-trade-practices-act-1970/ (last visited on (11/02/2020).