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Evolution from MRTP Act, 1969 to Competition Act ,2002


Author: Kajal Sharma

Designation: 4th Year Law Student, Gitarattan International Business School, IPU

Contact: +91-88604*****

Email ID: kajalsharma811@gmail.com



Evolution from MRTP Act, 1969 to Competition Act ,2002

Background

The National planning committee (NPC ) constructed a variety of studies on enormous subject matters focusing on the ultimate aim of the development of economy. NPC was framed in the year of 1938. As per the report of this committee, the state must control as well as own all the major industries ranging from railways, waterways, large scale industries .

In 1950 , i.e. in the era of post independence, Jawaharlal Nehru constituted a Planning commission. The commission concentrated towards articulation and enactment of such economic policies which would be appraised upon the needs of significant capital and human resources in substance.

The Planning commission had four long terms goals namely:

  • Setting up of a socialist society based upon justice , fairness , no discrimination and exploitation

  • Achievement of full employment

  • Reducing the inequalities of justice

  • Enhancing levels of production to achieve maximum national and per capita income

Monopolies Inquiry Commission (1965)

The most important reasons behind appointment of the MIC by our the government of India was two-fold: firstly to assess in terms of extent ,aspect and extent of how much power was in hands of the private sector as well as to study its consequences on our society; secondly on the basis of its findings, investigation and analysis to propound necessary measures.

Two exemplifications of the economic powers by which MIC was disquieted by were monopolistic practices & restrictive trade practices in Indian economy.

The first exposition was achievement by one or more industries of such a superior and domineering position that it enables them by virtue of such position in the market to control and regulate the prices along with eradicating the competition. Another was appropriation by distributor and producers ,who even though lacked such dominant position, of methods and procedures which would result in impeding ,hindering and hampering the competition.


Monopolistic & Restrictive Trade Practices Act ,1969

One of the most crucial discovery by MIC was the favourable/preferential treatment that was being awarded to the big firms, large scale industries, key industries by the financial institutions and the banks. JK Das headed the MIC. The commission also inquired that the licensing and the provisions of Industrial Policy Resolutions (IPR) lacked the efficiency and was not able to completely give justice to prevent the hampering of competition in the economy. MIC observed the provisions related to regulation of the market in India was vague and abstract. In order to regulate the market and prevent concentration of power in few hands, MIC propounded a the bill called Monopolistic & Restrictive Trade Practices, which at the end became the MRTP(Monopolistic & Restrictive Trade Practices) Act, 1969.

The Sherman and Clayton Act of USA had a huge influence on the Indian MRTP Act of 1969. The main aim for enactment of Monopolistic & Restrictive Trade Practices Act was to ensure:

  • To prevent the concentration of powers in hands of few rich firms/industries/members of the society;

  • To check and inquire into presence of any monopolies in the Indian markets;

  • To prohibit the monopolistic & restrictive trade practices if any

Raghavan Committee & evolution from MRTP Act to Competition Act, 2002

The government of India observed that the economic policies pertaining to globalization were not at par with in MRTP Act. The policies and laws must go hand in hand in order to achieve peace, justice and for the growth as well as development of the country. In the year 1999, Raghavan committee was constituted to analyse and assess the competitive regime of India. The following are observations of the committee:

  • the term “competition” was moderately and casually used in the act , it secured place under section 38 (1) (h) while defining the restrictive trade practices and u/s 2(0) wherein a general definition was provided for word competition

  • judicial interpretation were often contradictory due to lack of explicit and detailed definition provided in act in respect of various anti-competitive definitions eg; cartel, collusion, predatory pricing in the act

  • u/s 33 MRTP Act the term <cartel> was not defined in any of its clause

  • the policies, rules and legislations were not consistent to comply with the agreements of World Trade Organisation

  • absence of any provisions in respect of mergers

  • there was ambiguity and vagueness due to collision and coinciding of the provisions relating to unfair practices in the Consumer Protection Act and the MRTP Act

In order to overcome the various drawbacks as highlighted above according to the report of Raghavan committee, MRTP Act was repealed and Competition Act, 2002 came into force.


Differences between MRTP Act, 1969 & Competition Act ,2002


CONTENT MRTP ACT COMPETITION ACT,2002

1. Basis Based on pre liberalization scenario. Based on post–reforms policies and era.

2. Objective To eliminate the concentration of power Conservation and

in hands of few and to abolish the preservation of competition

monopolistic and restrictive trade in Indian economy


3. No. of 14 offences are entailed in MRTP Act Only 4 offences are offences provided for in this act


4. Penalty There is no provision of penalty for offences This act provides for the penalty in cases of commission of offences recognised by the act.


5. Power Power in respect of, cease & The commission

desist > orders only under this act , have the power to prevent and

punish.


6. Arrange Not comprehendible and quite difficult Not complex

-ment


7. Factor of The size of the firm as per this act is the The dominance as per ultimate factor of dominance this act depends entirely upon the very structure of the firm and not its size


8.Combinbations No provisions There is provision for it




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