Monopolies and Restrictive Trade Practices (MRTP),

ACT 1969
History
In the years preceding the sanction of the MRTP Act, 1969, India had gained
freedom for little more than 15 years. During this time period many big and new firms
were entering in the Indian market and the industrial policies which were adopted at
that time didnt borne the planned results instead showing negative trends by the
market and the industries. Moreover, since they were facing little competition, they
were trying to monopolize the market.
Hence for the welfare of the consumers the requirement for a stricter policy regime
was much needed in the Indian economy, and this resulted in implement of the
Monopolies and Restrictive Trade Practices (MRTP) Act which was passed by
government on 18 December 1969 and assented on 27 December 1969 by the
president. But it came into force from 1 June 1970. It extended to all of India except
Jammu & Kashmir. Later on this Act has been succeeded by The Competition Act,
2002.

Aims & Objectives of MRTP Act

The aims and objectives of this act were following:

To ensure that the economic systems operations does not result in the
concentration of economic power (wealth and means of production) to the
common detriment.

The ownership and control of material resources of the community are well
distributed as to best serve consumers; and means of production to the
common detriment.

To prohibit following trade practices:

1) Monopolistic Trade Practice Section 2 (i) of the MRTP Act, 1969 defines
as Such practice indicates misuse of ones power to abuse the market in terms of
production and sales of goods and services.

Preventing unreasonably or lessening competition in the production,

supply or distribution of any goods or services by adopting or not of unfair

method or fair or deceptive practices.

Limiting technical development or capital investment to the common

detriment.

Deteriorating the quality of any goods produced, supplied or distribute.

Taking advantage of monopoly and charging unreasonably high prices.

1) Restrictive Trade Practices

A trade practice, which adopts one or more of the following practices:
Trade practices which Prevents, distorts or restricts competition in any form.
Obstructing the flow of capital or resources into the stream of production.
Manipulation of prices or conditions of delivery effecting the flow of supplies in
the market of any goods or services.
Imposing on the consumers unjustified cost or restrictions.

1) Unfair Trade Practice

Section 36-A of the MRTP Act, 1969 which was inserted on the recommendation of
the Sachar Committee Report, defines Unfair Trade Practices as following:

False representation and misleading advertisement of goods & services.

Falsely representation of second-hand goods as new.

Misleading representation regarding usefulness, quality, style, need, standard

etc of goods & services.

False representation or claims regarding price of goods & services.

Giving false facts about sponsorship, affiliation etc. of goods & services.

Giving false warranty or guarantee on goods & services without adequate

tests.

Non-applicability of MRTP Act

MRTP act is not applicable to following:

Undertaking owned or controlled by the Government or Government company

All undertaking owned or controlled by a corporation (not being a company)
engaged in manufacture, supply and distribution, established by or under any
Central, Provincial or State Act.

Trade union or other association of workmen or employees formed for their

own reasonable protection.

Any Undertaking engaged in an industry, the management of which has been

taken over under powers by the Central Government.

Any Undertaking owned by a co-operative society registered and formed

under any Central, Provincial or state Act.

Any financial institution.

Monopolies and Restrictive Trade Practices Commission (MRTPC)
The Monopolies and Restrictive Trade Practices Commission (MRTPC) is a quasijudicial body which was established under Section 5 of the MRTP Act, 1969 on
August 2, 1970 to take up action against companies that indulged in monopolistic
and unfair trade activities. It discharged functions as per the provisions of the Act.
The main functions of the MRTP Commission were following:

Administrative role - In case of unfair trade practices and restrictive trade

practices to Investigate and take appropriate actions.

 Advisory role - In case of monopolistic trade practices, on reference being

made to it by the Central Government the commission is empowered to
inquire into such trade practices and submit its findings to Central
Government for further action.
References http://www.mca.gov.in/Ministry/annual_reports/annualreport2006/
http://www.tax4india.com/indian-laws/consumer-rights/mrtp/mrtp.html