Progression of MRTP Act to Competition Act in the era of globalization where world is a single...
Transcript of Progression of MRTP Act to Competition Act in the era of globalization where world is a single...
Progression of MRTP Act to Competition Act in the era of globalization where world is a single platform for carrying out trade and commerce.
GROUP NUMBER :6
Introduction to MRTP Act MRTP (Monopolistic and Restrictive Trade Practice) Act 1969 came into
force from 01st June 1970.
The act has been amended in 1974,1980,1982,1984 and 1991.
The MRTP Act was extended to the whole of India except Jammu and Kashmir.
Objectives To control monopolies and monopolistic trade practices
Prevention of concentration of economic power in few hands only
To regulate restrictive trade practice
After amendment of act in 1984 a 4th objective was introducedRegulation 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
Any trade practice which seeks to prevent competition and which results in
high price.
Monopolistic practices can be categorized as under:Unreasonably high prices
Limiting technical development
Limiting capital investment
Lower quality of goods and services
Preventing or lessening competition
Restrictive Trade Practice A practice which tends to obstruct the flow of capital or resources into the
stream of production is an RTP.
Restrictive practices can be categorized as under:Refusal to deal
Tie in sales
Exclusive dealing agreements
Price discrimination
Unfair Trade PracticeAn 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.
Unfair practices may be categorized as under:
False Representation
False offer of Bargain Price
Free gifts offer and Prize Schemes
Hoardings
Need for SubstitutionMany difficulties were encountered, particularly in regard to interpretations of
expressions and provisions therein.
Many changes were made in the MRTP Act after 1991.
The law needed to yield to the changed and changing scenario on the economic
and trade front.
Competition Act,2002 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
Competition Commision of India(CCI)Favourable to competition policy
Enable free and fair competition
Government of India
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
Anti-Competitive Agreements
Abuse of Dominance
Combinations Regulation
Competition Advocacy
Main Components of Competition Act
Components of Competition Act1. Anti-Competitive Agreements
The agreements which cause or are likely to cause appreciable adverse effect on
competition ("AAEC”).
For a market economy to function properly the competition must be free and
fair.
The Agreements can be :Horizontal - those among competitors
Vertical - between enterprises at different stages of the production chain.
Tie-in arrangements
Exclusive supply
Exclusive distribution
Refusal to deal
2. Abuse of Dominance
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
3. Combinations Regulation
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
In india Outside india
Individual Assets-1500crTurnover-4500cr
Assets-US$ 750 millions Turnover-US$ 2250 millions
Group Assets-6000crTurnover-18000cr
Assets-US$ 3 billion Turnover-US$ 9 billion
• Thresholds for Combination
4. Competition Advocacy
To prevent practices having adverse effect on competition.
To foster conditions that will lead to a more competitive market.
It can be enhanced by the CCI establishing good media relations and
explaining the role and importance of competition policy.
Comparison with EU & US Antitrust LawIndian Competition Law
U.S. Antitrust Policy EU Antitrust Policy
Policies • Anti-Competitive Agreements
• Abuse of Dominance
• Regulation of Combinations
• Competition Advocacy
• Monopolization• Conspiracy to
restrain trade
• Antitrust• Cartels• Mergers• Liberalization• State Aid
Legislation CCI • Department of Justice(DoJ)
• Federal Trade Commission (FTC)
Treaty
Difference between MRTP act and Competition Act
MRTP ACT,1969 COMPETITION ACT,2002
Based on the pre-reforms scenario Based on the post-reforms scenario
Reactive and rigid Proactive and flexible
Competition offences implicit or not defined Competition offences explicit and defined
Complex in arrangement and language Simple in arrangement and language
Frowns upon dominance Frowns upon abuse of dominance
Competition Commission appointed by the Government
Competition Commission selected by a Collegium (search committee)
No penalties for offences Penalties for offences
Unfair trade practices covered Unfair trade practices omitted (consumer forum will deal with them)
ConclusionThe 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.
Thank you!