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The MRTP Act, 1969

Post independence, many new and big firms have entered the Indian market. They had little competition and they were trying to monopolize the market. The Government of India understood the intentions of such firms. In order to safeguard the rights of consumers, Government of India passed the MRTP bill. The bill was passed and the Monopolies and Restrictive Trade Practices Act, 1969, came into existence. Through this law, the MRTP commission has the power to stop all businesses that create barrier for the scope of competition in Indian economy.

The MRTP Act, 1969, aims at preventing economic power concentration in order to avoid damage. The act also provides for probation of monopolistic, unfair and restrictive trade practices. The law controls the monopolies and protects consumer interest.

Monopolistic Trade Practice

Such practice indicates misuse of one's power to abuse the market in terms of production and sales of goods and services. Firms involved in monopolistic trade practice tries to eliminate competition from the market. Then they take advantage of their monopoly and charge unreasonably high prices. They also deteriorate the product quality, limit technical development, prevent competition and adopt unfair trade practices.

Unfair Trade Practice

The following may result in an unfair trade practice:

  • False representation and misleading advertisement of goods and services.
  • Falsely representing second-hand goods as new.
  • Misleading representation regarding usefulness, need, quality, standard, style etc of goods and services.
  • False claims or representation regarding price of goods and services.
  • Giving false facts regarding sponsorship, affiliation etc. of goods and services.
  • Giving false guarantee or warranty on goods and services without adequate tests.

Restrictive Trade Practice

The traders, in order to maximize their profits and to gain power in the market, often indulge in activities that tend to block the flow of capital into production. Such traders also bring in conditions of delivery to affect the flow of supplies leading to unjustified costs.

About the MRTP Act, 1969

The MRTP Act extends to the whole of India except the state of Jammu and Kashmir. This law was enacted:

  • 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 prohibit monopolistic and restrictive trade practices.

Unless the Central Government otherwise directs, this act shall not apply to:

  1. Any undertaking owned or controlled by the Government Company,
  2. Any undertaking owned or controlled by the Government,
  3. Any undertaking owned or controlled by a corporation (not being a company) established by or under any Central, Provincial or State Act,
  4. Any trade union or other association of workmen or employees formed for their own reasonable protection as such workmen or employees,
  5. Any undertaking engaged in an industry, the management of which has been taken over by any person or body of persons under powers by the Central Government,
  6. Any undertaking owned by a co-operative society formed and registered under any Central, Provincial or state Act,
  7. Any financial institution.

MRTP Commission and Filing of Complaint

For the purpose of this Act, the Central Government has established a commission to be known as the Monopolies and Restrictive Trade Practices Commission. This commission shall consist of a Chairman and minimum 2 and maximum 8 other members, all to be appointed by the Central Government. Every member shall hold the office for a period specified by the Central Government. This period shall not exceed 5 years. However, the member will be eligible for re-appointment.

In case of any unfair trade practice, monopolistic trade practice and/or restrictive trade practice, a complaint can be filed against such practices to the MRTP commission. The procedure for filing a complaint is as follows:

  • Complaint is filed either by the individual consumer or through a registered consumer organization.
  • The Director General of the MRTP commission would carry on the investigation for finding facts of the case.
  • If the prima facie case is not made, the complaint is dismissed. If the compliant is true, an order is passed to its effect.
  • The commission restricts and restrains the concerned party from carrying on such practices by granting temporary injunction.
  • Then the final order is passed. The complainant may be compensated for his loss.

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