MRTP Act 1969 and Competition Act 2002

MRTP ACT
1969 AND
COMPETITION
ACT 2002

CONTENT
 MRTP Act 1969
• Objectives of MRTP act 1969
• Monopolistic trade practices
• Unfair trade practices
• Restrictive trade practices
 Competition Act 2002
• Objectives of competition act 2002
• Main components of competition act
I. Anti- competitive agreements
II. Regulation of combination
III. Abuse of dominant position
IV. Competitive advocacy
 Competitive commission of India (CCI)
• Functions of CCI and its principle
 MRTP vs Competition Act
 Conclusion

INTRODUCTION TO MRTP
ACT 1969
 To ensure that the operation of the economic system
does not result in the concentration of economic power in
hands of few.
 To provide for the control of monopolies and to provide
for the control of monopolies.
 To prohibit monopolistic and restrictive trade practices.
 The MRTP Act extends to the whole of India except the
state of Jammu and Kashmir. This law was enacted:

OBJECTIVES
 To control monopolies and monopolistic trade
practices.
To Prevent the concentration of economic
power in few hands only.
 To regulate restrictive trade practice.
After amendment of act in 1984 a 4th objective was
introduced.
Regulation of Unfair Trade Practices.
After amendment of act in 1991, the objectives
now are:
Regulating unfair trade practice.
Controlling Monopolistic Trade Practices.

MONOPOLISTIC TRADE
PRACTICE
Section 2 (I) p of the Act defines MTP while section 31
provides for investigation into such practices by MRTP
commission.
 Monopolistic trade practice is that which represents
abuse of market power in the production and marketing of
goods and services by eliminating potential competitors
from market and taking advantage of the control over the
market by charging unreasonable high prices.
 Preventing or reducing competition.
 Limiting technical development.
 Deteriorating product quality or by adopting unfair or
deceptive trade practices.

UNFAIR TRADE PRACTICES
 Misleading advertisement and False Representation.
 Falsely representing that goods and services are of a
particular standard quality grade composition or style.
 Falsely representing any second hand renovated or old
goods as new as new.
 Representing that goods or services, seller or supplier
have a sponsorship approval or affiliation which they do
not have.
 Giving to public any warranty, guarantee of performance
that is not based on an adequate test or making to public a
representation which intends to be a guarantee or
warranty.

RESTRICTIVE TRADE
PRACTICES
Section 2(o) defines restrictive trade practices as:
 To maximize profits and market power, traders often
attempt to indulge in certain trade practices which tend to
obstruct the flow of capital into the stream of production
the flow of capital into the stream of production.
 It may also bring manipulation of prices or conditions of
delivery or affect the flow of supplies in the market so as
to impose unjustified costs.

WHAT IS COMPETITION
ACT 2002?
The Act prohibits anti-competitive agreements,
abuse of dominant position by enterprises and
regulates combinations (acquisition, acquiring of
control and Merger and acquisition), which causes
or likely to cause an appreciable adverse effect on
competition within India.

OBJECTIVES
Establish a Commission to prevent practices
having adverse effect on competition.
Promote and sustain competition in markets.
Protect the interests of consumers.
Ensure freedom of trade in the Indian markets
Ambit.
Regulates anti-competitive agreements.
Regulates abuse of dominant position.

ANTI-COMPETITIVE AGREEMENTS
No enterprise or association of enterprises or person or
association of persons shall enter into any agreement in
respect of production, supply, distribution, storage, acquisition
or control of goods or provision of services, which causes or is
likely to cause an appreciable adverse effect on competition
within India.
REGULATION OF
COMBINATION
No person or enterprise shall enter into a combination which
causes or is likely to cause an appreciable adverse effect on
competition within the relevant market in India and such a
combination shall be void.

ABUSE OF DOMINANT
POSITION
 Abuse is prohibited abuse occurs when an enterprise uses
its dominant position in the relevant market in an
exclusionary and/or exploitative manner.
 Three Stage process of determining Abuse of dominance:
• Stage 1 - Determination of Relevant Market
• Stage 2 - Dominance of the enterprise/group in the relevant
market is ascertained
• Stage 3 - "Abuse" by the dominant enterprise in the relevant
market is determined

COMBINATIONS
REGULATIONS
 Combining parties exceed the thresholds set in the Act.
 Combination which causes or is likely to cause an
appreciable adverse effect on competition is prohibited.
• Horizontal combinations are between rivals.
• Vertical combinations are between enterprises that are at
different stages.
• Conglomerate combinations are between enterprises not in the
same line of business

COMPETITION
COMMISSION OF INDIA
Competition commission of India is a body of government of
India responsible for enforcing the competition act 2002 through
India and to prevent activities that have an appreciable adverse
effect on competition in India . It was established on 14 oct 2003.
it became fully functional in May 2009 , with Dhanendra Kumar
as its 1st Chairman.

OBJECTIVES
The Competition Commission of India (CCI) has been
entrusted with the following task –
 To promote and then sustain an enabling competition
culture through engagement and enforcement which
would inspire businesses to be fair, competitive and
innovative.
 To enhance the consumer welfare
 To support economic growth.
 The Competition Commission of India aims to establish a
robust competitive environment through proactive
engagement with all the stakeholders including the
consumers, industry, government as well as international
jurisdictions.

FUNCTIONS OF CCI AND ITS
PRINCIPLES
Functions of CCI
Prevent adverse effect on
competition
Promote competition
Protect consumers
Freedom of trade
Principles of CCI
Understanding of market
forces
Minimize cost of
compliance by enterprise
Maintain transparency
Professional body

MRTPV/S COMPETITION ACT
2002
MRTP Act 1996 Competition Act 2002
 Competition offences implicit are not
defined.
 Competition offences explicit are defined.
 Complex in arrangement and language.  Simple in arrangement and language and
easily comprehensible.
 14% offences neglecting the principles of
natural justice.
 4% offences and all the rest subjected to
rule of reason.
 Frowns upon dominance.  Frowns upon abuse of dominance.
 No combinations regulation.  Combinations regulated beyond a high
threshold limit.
 No penalties for offences.  Penalties for offences.
 Reactive and rigid.  Proactive and flexible.
 Unfair trade practices covered.  Unfair trade practices omitted (consumer
forum will deal with them).
 Does not vest MRTP Commission to
inquire into cartels of foreign origin in a
direct manner.
 Competition Law seeks to regulate them.
 Concept of ‘Group’ Act had wider
importance and was unworkable.
 Concept has been simplified.

FEW CASES
Competition Commission of India (CCI) has received a total
number of 304 cases up to March 31, 2012 under various
sections of the Competition Act. Out of these, 227 cases have
been disposed off.

CCI PENALIZES CHEMISTS
& DRUGGISTS
ASSOCIATION, GOA (CDAG)
Anti-competitive practices followed:
• Supply of medicines to common man not at an affordable rate.
• Controls the supply of drugs in the market through a system of
seeking mandatory Product Information Service (PIS) approvals.
• The number of players is limited and controlled by insisting on
obtaining its "No Objection Certificate (NOC).
The Commission imposed a penalty of Rs.2 lakhs on CDAG.
(2008-2010)
On similar grounds, the Commission also found Chemists and
Druggists Association, Baroda (CDAB) and a penalty of 54,000 was
imposed. (2006-2009)

CONCLUSION
The objective of MRTP act 1969 is promoting fair play & fair deal
in market.
The competition act 2002, was passed to benefit the consumer,
business houses as well as government.
The main aim of this act was to encourage healthy and free
competition in the market.
World is not a free platform for trade and commerce.

MRTP Act 1969 and Competition Act 2002

MRTP Act 1969 and Competition Act 2002

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