The Monopolistic and Restrictive Trade Practices Act, 1969

The Monopolistic and Restrictive Trade Practices Act, 1969, 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.
The MRTP Act extends to the whole of India except Jammu and Kashmir.
Unless the Central Government otherwise directs, this act shall not apply to:
a. Any undertaking owned or controlled by the Government Company,
b. Any undertaking owned or controlled by the Government,
c. Any undertaking owned or controlled by a corporation (not being a company established
by or under any Central, Provincial or State Act,
d. Any trade union or other association of workmen or employees formed for their own
reasonable protection as such workmen or employees,
e. 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,
f. Any undertaking owned by a co-operative society formed and registered under any
Central, Provincial or state Act,
g. Any financial institution.

RESTRICTIVE TRADE PRACTICE

A restrictive trade practice is a trade practice, which
• Prevents, distorts or restricts competition in any manner; or
• Obstructs the flow of capital or resources into the stream of production; or
• Which tends to bring about manipulation of prices or conditions of delivery or effected
the flow of supplies in the market of any goods or services, imposing on the consumers
unjustified cost or restrictions.
INQUIRY INTO RESTRICTIVE PRACTICES
The Commission may inquire into any restrictive trade practice
• Upon receiving a complaint from any trade association, consumer or a registered
consumer association, or
• Upon a reference made to it by the Central or State Government or
• Upon its own knowledge or information
RELIEF AVAILABLE
The commission shall if after making an inquiry it is of the opinion that the practice is prejudicial
to the pubic interest, or to the interest of any consumer it may direct that –
• The practice shall be discontinued or shall not be repeated;
• The agreement relating thereto shall be void in respect of such restrictive trade practice or
shall stand modified.
• The Commission may permit the party to any restrictive trade practice to take steps so
that it is no longer prejudicial to the public interest
However no order shall be made in respect of
a. any agreement between buyers relating to goods which are bought by the buyers for
consumption and not for ultimate resale;
 b. a trade practice which is expressly authorised by any law in force.

WHAT IS UNFAIR TRADE PRACTICE?

An 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 categorised as under:
1. FALSE REPRESENTATION
The practice of making any oral or written statement or representation which:
• Falsely suggests that the goods are of a particular standard quality, quantity, grade,
composition, style or model;
• Falsely suggests that the services are of a particular standard, quantity or grade;
• Falsely suggests any re-built, second-hand renovated, reconditioned or old goods as new
goods;
• Represents that the goods or services have sponsorship, approval, performance,
characteristics, accessories, uses or benefits which they do not have;
• Represents that the seller or the supplier has a sponsorship or approval or affiliation
which he does not have;
• Makes a false or misleading representation concerning the need for, or the usefulness of,
any goods or services;
• Gives any warranty or guarantee of the performance, efficacy or length of life of the
goods, that is not based on an adequate or proper test;
• Makes to the public a representation in the form that purports to be-
a. a warranty or guarantee of the goods or services,
b. a promise to replace, maintain or repair the goods until it has achieved a specified
result,
if such representation is materially misleading or there is no reasonable prospect that
such warranty, guarantee or promise will be fulfilled
• Materially misleads about the prices at which such goods or services are available in the
market; or
• Gives false or misleading facts disparaging the goods, services or trade of another person.
2. FALSE OFFER OF BARGAIN PRICE-
Where an advertisement is published in a newspaper or otherwise, whereby goods or services are
offered at a bargain price when in fact there is no intention that the same may be offered at that
price, for a reasonable period or reasonable quantity, it shall amount to an unfair trade practice.
The ‘bargain price’, for this purpose means-
a. the price stated in the advertisement in such manner as suggests that it is lesser than the
ordinary price, or
b. the price which any person coming across the advertisement would believe to be better
than the price at which such goods are ordinarily sold.
FREE GIFTS OFFER AND PRIZE SCHEMES
The unfair trade practices under this category are:
• Offering any gifts, prizes or other items along with the goods when the real intention is
different, or
• Creating impression that something is being offered free alongwith the goods, when in
fact the price is wholly or partly covered by the price of the article sold, or
 • Offering some prizes to the buyers by the conduct of any contest, lottery or game of
chance or skill, with real intention to promote sales or business.
4.NON-COMPLIANCE OF PRESCRIBED STANDARDS
Any sale or supply of goods, for use by consumers, knowing or having reason to believe that the
goods do not comply with the standards prescribed by some competent authority, in relation to
their performance, composition, contents, design, construction, finishing or packing, as are
necessary to prevent or reduce the risk of injury to the person using such goods, shall amount to
an unfair trade practice.
5.HOARDING, DESTRUCTION, ETC.
Any practice that permits the hoarding or destruction of goods, or refusal to sell the goods or
provide any services, with an intention to raise the cost of those or other similar goods or
services, shall be an unfair trade practice.
INQUIRY INTO UNFAIR TRADE PRACTICES
The Commission may inquire into
Any unfair trade practice
• Upon receiving a complaint from any trade association, consumer or a registered
consumer association, or
• Upon reference made to it by the Central Government or State Government
• Upon an application to it by the Director General or
• Upon its own knowledge or information.
RELIEF AVAILABLE
After making an inquiry into the unfair trade practice if the Commission is of the opinion that the
practice is prejudicial to the pubic interest, or to the interest of any consumer it may direct that –
• The practice shall be discontinued or shall not be repeated;
• The agreement relating thereto shall be void in respect of such unfair trade practice or
shall stand modified.
• Any information, statement or advertisement relating to such unfair trade practice shall
be disclosed, issued or published as may be specified
• The Commission may permit the party to carry on any trade practice to take steps to
ensure that it is no longer prejudicial to the public interest or to the interest of the
consumer.
However no order shall be made in respect a trade practice which is expressly authorised by any
law in force.
The Commission is empowered to direct publication of corrective advertisement and disclosure
of additional information while passing orders relating to unfair trade practices.
UNFAIR: An Unfair Method or an unfair deceptive practice adopted for the purpose of
promoting the sale, use or supply of any goods or for the provision of any services, is an unfair
trade practice under the Monopolies and Restrictive Trade Practices Act, 1969. Unfair Trade
Practices under the Act include, practices such as making false statements in relation to the
quality, quantity (the statement could either be oral or in writing or even by visible
representation), sponsorship, uses or benefits of goods, passing off old goods as new, or giving
of warranty/guarantee which is not based on proper test, making public representation that
purports to be a guarantee or warranty or a promise to replace or replace articles if there is no
reasonable guarantee that the warranty/repair or replacement will not be carried out.
Further practices such as misleading the public concerning the prices at which certain goods are
to be sold or giving misleading facts or disparaging the goods or services of the other person,
advertising the sale or services at a bargain price which is not intended to be sold at such bargain
price, offering gifts or prices that are fully or partly covered by the amount charged, sale or
supply of goods knowing fully well that they do not comply with the standards prescribed,
hoarding or destruction of goods, etc. are also included in the definition of unfair trade practices.
REMEDY:
Any trade association, consumer or registered consumers' association aggrieved by such of the
practices mentioned above can seek relief by filing a complaint before the Monopolies and
Restrictive Trade Practices Commission, which on such complaint has powers to conduct an
inquiry into such practices. Any consumer can approach the Commission irrespective of whether
such consumer is a member of the consumers' association or not. The Commission can also
conduct inquiry on the reference of the Central/State Government, on an application by the
Director General or on its own knowledge or information.
POWERS OF THE COMMISSION:
The Commission may, on satisfaction that the practice is an unfair trade practice, direct that such
practice shall be discontinued, and in cases in which agreements in relation to such practices are
made, the Commission may also direct that such agreement shall be void or specify the manner
in which it shall be modified. Further the Commission also has the power to direct that any
information relating to such unfair trade practices shall be disclosed, issued or published. Where
such party takes such steps to ensure that the trade practice is no longer prejudicial to public
interest, or the interest of any consumer or consumers generally, the Commission may permit
such party to carry on such trade.

MONOPOLISTIC TRADE PRACTICES

A monopolistic trade practice is one, which has or is likely to have the effect of:
i. maintaining the prices of goods or charges for the services at an unreasonable level by
limiting, reducing or otherwise controlling the production, supply or distribution of goods
or services;
ii. unreasonably preventing or lessening competition in the production, supply or
distribution of any goods or services whether or not by adopting unfair method or fair or
deceptive practices;
iii. limiting technical development or capital investment to the common detriment;
iv. deteriorating the quality of any goods produced, supplied or distribute; and
v. increasing unreasonably -
a. the cost of production of any good; or
b. charges for the provision, or maintenance,of any services; or
c. the prices for sale or resale of goods; or
d. the profits derived from the production, supply or distribution of any goods or
services.
A monopolistic trade practice is deemed to be prejudicial to the public interest, unless it is
expressly authorized under any law or the Central Government permits to carry on any such
practice.
INQUIRY INTO MONOPOLISTIC TRADE PRACTICES
The Commission may inquire into
Any monopolistic trade practice,
• Upon a reference made to it by the Central Government or
• Upon an application made to it by the Director General or
• Upon it own knowledge or information
RELIEF AVAILABLE
a. Where the inquiry by the Commission reveals that the trade practice inquired into
operates or is likely to operate against public interest, the Central Government may pass
such orders as it thinks fit to remedy or present any mischief resulting from such trade
practice.
b. On an inquiry report of the Commission, the Central Government may-
i. Prohibit the owner(s) of the concerned undertaking(s) from continuing to indulge
in a monopolistic trade practice; or
ii. Prohibit the owner of any class of undertakings or undertakings generally, from
continuing to indulge in any monopolistic trade practice in relation to the goods or
services.
c. The Central Government may also make an order:
i. Regulating the production, storage, supply, distribution, or control of any goods
or services by an undertaking and fixing the terms of their sale (including prices)
or supply;
ii. Prohibit any act or practice or commercial policy which prevents or lessens
competition in the production, storage, supply or distribution of any goods or
services;
iii. Fixing standards for the goods used or produced by an undertaking;
iv. Declaring unlawful the making or carrying out of the specified agreement;
v. Requiring any party to the specified agreement to determine the agreement within
the specified time, either wholly or to specified extent;
vi. Regulating the profits which may be derived from the production, storage, supply,
distribution or control of any goods or services; or
vii. Regulating the quality of any goods or services so that their standard does not
deteriorate.
POWERS OF THE COMMISSION
The MRTP Commission has the following powers:
1. Power of Civil Court under the Code of Civil Procedure, with respect to:
a. Summoning and enforcing the attendance of any witness and examining him on
oath;
b. Discovery and production of any document or other material object producible as
evidence;
c. Reception of evidence on affidavits;
d. Requisition of any public record from any court or office.
e. Issuing any commission for examination of witness; and
f. Appearance of parties and consequence of non-appearance.
2. Proceedings before the commission are deemed as judicial proceedings with in the
meaning of sections 193 and 228 of the Indian Penal Code.
 3. To require any person to produce before it and to examine and keep any books of
accounts or other documents relating to the trade practice, in its custody.
4. To require any person to furnish such information as respects the trade practice as may be
required or such other information as may be in his possession in relation to the trade
carried on by any other person.
5. To authorise any of its officers to enter and search any undertaking or seize any books or
papers, relating to an undertaking, in relation to which the inquiry is being made, if the
commission suspects tat such books or papers are being or may be destroyed, mutilated,
altered, falsified or secreted.
PRELIMINARY INVESTIGATION
Before making an inquiry, the Commission may order the Director General to make a
preliminary investigation into the complaint, so as to satisfy itself that the complaint is genuine
and deserves to be inquired into.

REMEDIES UNDER THE ACT

The remedies available under this act are -
TEMPORARY INJUNCTION
Where, during any inquiry, the commission is satisfied that any undertaking or any person is
carrying on, or is about to carry on, any monopolistic, restrictive or unfair trade practice, which
is a pre-judicial to the public interest or the interest of any trader or class of traders generally, or
of any consumer or class of consumers, or consumers generally, the commission may grant a
temporary injunction restraining such undertaking or person form carrying on such practice until
the conclusion of inquiry or until further orders.
COMPENSATION
Where any monopolistic, restrictive or unfair trade practice has caused damage to any
Government, or trader or consumer, an application may be made to the Commission asking for
compensation, and the Commission may award appropriate compensation.
Where any such loss or damage is caused to a number of persons having the same interest,
compensation can be claimed with the permission of the commission, by any of them on behalf
of all of them.

Competition Law in the reform era

Competition law in this country is about to get a completely new look. In its important areas
there are going to be innovations too.
The draft competition bill, which was approved by the Union Cabinet during the last week of
June, is a major step forward for several reasons. At a philosophical level, the thinking behind
the bill represents a fundamental change in the way the interaction between the Government and
business interests is perceived. When enacted by Parliament, the new competition law will
replace the Monopolies and Restrictive Trade Practices Act (MRTP) of 1969.During the more
than three decades since the MRTP enactment, there has been a sea-change in the government-
business equation everywhere in the world. India cannot be an exception. The draft bill is based
on a report on competition prepared by a committee headed by Mr. S. V. S. Raghavan. Naturally
the report had to take cognisance both of global trends and circumstances special to India.
Needless to point out, in a globalising economy issues such as competition cannot be confined to
the geographical borders of a country.
The big change, however, lies in the official perception of business interests. In the 1960s and
1970s (and earlier) the belief in a command economy and the dominance of the state in economic
matters dominated Indian economic thinking. Through a system of licensing and numerous other
controls business groups were kept in fetters. It is questionable whether the MRTP regime
checked the abuse flowing from monopoly positions. For the Indian consumer, the problem has
been one of coping with lack of choice and often even with scarcity, which a system based on
licensing helped foster. The MRTP legislation has been a necessary adjunct to the economic
beliefs of those times.
Promoting stakeholders
The proposed competition law, in contrast, recognises the fact that business groups can and do
work for the betterment of their own interests as well as those of their several stakeholders. In the
new thinking the size of the firm and its market share are not by themselves a threat to the
consumer.
It is only when a firm that has acquired a dominant position and uses its dominance against
consumers' interests should the regulators step in. It is not the potential to exploit but the actual
commitment of a rapacious act that would bring in the enforcement machinery of the new
competition set up. This concept of abuse of dominance rather than just acquiring a dominant
position has become the central point of the new legislation and probably its most distinguishing
feature.
Elaborating the point further, under the MRTP Act all restrictive practices are presumed to be
anti-competitive. The draft competition bill adopts a radically different approach: not all
agreements between business groups (for expanding, consolidating) are prima facie anti-
competitive. Only when they impact adversely on competition do they become anti-competitive,
enabling the new regulator, the Competition Commission, to step in. This feature of the bill
which would determine anti-competition on the basis of specific acts and not by the potential to
carry out such acts has uniformly been praised.
Several other advantages have been claimed for the new dispensation. It will be more flexible
than the MRTP Act. While the MRTP Act listed out 14 offences the new law recognises just
four. Unlike the MRTC, the new Competition Commission can start suo motu proceedings.
Competition advocacy is enshrined in the new law for which purpose a new competition fund
will be put in place.
More clarification needed
More clarifications on the competition bill will emerge in the coming weeks. At this stage there
are a few points of criticism against the bill. The Federation of Indian Chambers of Commerce
and Industry (FICCI) and other industry organisations say that the norms for determining
whether an enterprise enjoys a dominant position are totally subjective and that there is a need to
spell out the extent of share and size to call a position dominant. Second, while the draft law
allows for the prohibition of predatory pricing by a dominant enterprise, the method by which
``below cost pricing'' will be determined by the regulator is unclear. Three, mergers and
amalgamations have been a sensitive area. The original bill provided for a mandatory pre-merger
notification beyond certain threshold limits. (Global assets exceeding Rs. 500 crores and
turnover Rs. 1,500 crores).
The Government has been seized of this matter and changes may emerge in the bill in the days to
come. Only after the bill is passed and the new Competition Commission becomes functional can
any judgement be made on the efficacy of the new start up. There is inevitably a measure of
subjectivity in the new law that cannot be wished away.
It is not the position of dominance per se as much as the abuse of dominance that is considered
anti-competitive.

Competition law on the anvil

PARLIAMENT is all set to consider the Draft Competition Regulation Bill shortly. From a
regime of over-regulation we have moved to the opposite extreme of unregulated competition
among national and multinational corporations. Time was when the Industries (Development and
Regulation) Act, 1951 sought to interfere in the day-to-day working of companies to channel
private investment through licensing.
The Monopolies and Restrictive Trade Practices Act, 1969 and the Foreign Exchange Regulation
Act 1973, created entry barriers to new firms. Clearances had to be obtained for expansion, and
capacity licences were issued under a control system. Even agreements for the import of foreign
technology required approval of the Government. Labour laws came in the way of closure of
unviable units. All this has changed. The reforms initiated by Dr Manmohan Singh in 1991 led to
a gradual withdrawal of the ``Licence Permit Quota Raj''. The Industrial Policy Statement of July
1991 declared: ``The attainment of technological dynamism and international competitiveness
requires that enterprises must be enabled to swiftly respond to fast-changing external conditions
that have become characteristic of today's industrial world. Government policy and procedures
must be geared to assisting entrepreneurs in their efforts. This can be done only if the role played
by the Government were to be changed from that of only exercising control to one of providing
help and guidance by making essential procedures fully transparent and by eliminating delays.''
Licensing has been abolished in all but seven industries. The public sector has lost its
importance. Export-import policy has been liberalised and tariffs reduced. It can be safely
asserted that the private sector never had it so good from the point of view of absence of
Government interference. It is in this context that the need for regulating unbridled competition
has been felt.
Global competitive environment
Many countries have competition laws to deal with anti-competitive agreements among firms
engaged in the same lines and firms with vertical integration. Mexican Competition Law seeks to
protect Free Market Participation through elimination of monopolies and monopolistic practices.
Anti-Trust laws have been popular in the US.
The core objective of competition policy in most countries is to maintain a healthy degree of
rivalry among firms in markets for goods and services. South Africa, the Netherlands and the UK
have come out with laws radically altering competition regulations. There has been a divergence
of views on competition policy in Europe and the US. American law focusses on the consumer
whereas in Europe, industry gets the focus. But in both regions, competition policy is based on
distrust of concentration of economic power.
The MRTP Act
The MRTP Act is now sought to be buried. It owes its inspiration to Articles 38 and 39 of the
Constitution which enjoins that the State should strive to promote public welfare by securing and
protecting a social order in which socio-economic justice shall inform all institutions of national
life, and ensure that the ownership and control of material resources are so distributed as to
subserve the common good.
The operation of the economic system should not result in the concentration of wealth and means
of production to the common detriment. The Act was amended in 1991 and the Government
realised that pre-entry restrictions under the MRTP Act on the investment decision of the
corporate sector outlived its utility, and became a hindrance to the speedy implementation of
industrial projects.
The Act was restructured with focus on curbing monopolistic restrictive and unfair trade
practices. Ten years after this amendment, the Government understood that the whole set up had
become an anachronism, and a committee was set up to suggest ways and means to promote
competition. On the basis of the S. V. S Raghavan Committee report, the Government came out
with a new tax law styled the Trade Related Competition Bill.
The new law
The proposed law will enable the Government set up a Competition Commission with a
chairman of the rank of Supreme Court Judge. The Commission will have nine other members --
all of the rank of High Court judges. The new law is different from the MRTP Act in that it
focusses on the firm's structure, not size. The MRTP Act lists 14 offences. The New Bill will
recognise only four such offences. The MRTP Act's role was only advisory. The proposed
competition commission can initiate suo motu proceedings and levy penalties.
The new law does not consider the firm's dominance per se inimical to competition. The MRTP
Act frowned upon dominance and laid down an arithmetical test. The proposed law frowns only
upon abuse of dominance. It seeks to regulate agreements that control production, supply,
markets, technical developments or investment in provision of services. All such agreements are
considered anti-competitive and penalty can be levied. The recent experience with cement cartels
is an example of price-rigging under agreements to share markets. Sources of production by way
of geographical allocation of market will be considered anti-competitive.
The Draft Law prohibits agreements arrived at between enterprises that directly result in bid
rigging or collusive tendering. The Bill also defines bid rigging as agreements between
enterprises or persons engaged in identical or similar manufacturing, trading or provision of
service that has the effect of eliminating or reducing competition for bids, or adversely
affecting/manipulating bidding. Apart from these guidelines, other restrictive trade practices will
fall under the rule of reason test before the Competition Commission of India (CCI).
Registration of agreements was mandatory under the MRTP Act, but the new law has no such
requirement. A combination is sought to be regulated beyond a threshold limit. The MRTP
Commission's Chairman was appointed by the Government. A Collegium consisting of the Chief
Justice, the Finance and other Cabinet Ministers, the Cabinet Secretary and the RBI Governor,
will select the CCI chairman.
An important difference lies in the fact that the new law leaves unfair trade practices to consumer
fora and not to the CCI. The MRTP Act had no proper definition of unfair trade practices. But
the new law will take care of cartelisation that imposes unjustified cost on the consumers. Cases
such as Sumitomo Corporation and others that quoted identical prices pursuant to a global tender
floated by the Steel Authority of India, will be easier to deal with under the new law.
The Supreme Court considered that in a price-fixing conspiracy, the conduct is illegal and no
further enquiry was needed on intent or anti-competitive effect. It pointed out: ``The critical
analysis in determining whether a particular activity constitutes a per se violation is whether the
activity on its face seems to be such that it would always or almost always restrict competition,
and decrease output instead of being designed to increase economic efficiency and make the
market more rather than less competitive.'' (Hindustan Development Corporation, 1993, 3 SCC
499). These unhealthy trends will henceforth attract severe penalties.
The new law dispenses with the requirement of pre-merger notifications. There will be a separate
Bench of the CCI styled as the Merger Commission to deal with mergers. This part of the Law
requires disposal of the case within 90 days. If there is no order, it will be presumed the merger
has been approved.
The new law also seeks to regulate predatory pricing though it is not clear how the Commission
will determine pricing below the cost. There is bound to be some overlap between the functions
of the High Court and the CCI when it comes to cases involving mergers, acquisitions and
amalgamations.
The Bill also expects the CCI to promote competition through advocacy. This is in line with the
thinking of the OECD. The OECD had pointed out that in every member-country where
significant reform efforts have been undertaken, the competition agencies have been active
participants in the reform process. Advocacy can include persuasion behind the scenes and
publicity outside. This part of the Bill appears to suggest that the CCI should interact through the
media to promote competition.
What the future holds
Modern economic legislation is becoming more complex. It has to take on giant MNCs thriving
ENACTING A NEW LAW ON COMPETITION AND REPEAL OF MRTP ACT, 1969

The draft Competition Bill, 2001 and Repeal of the Monopolies and Restrictive Trade
Practices (MRTP) Act, 1969 which received the approval of the Union Cabinet on June 26, 2001
covers prohibition of anti-competitive agreements, prohibition of abuse of dominance, regulation
of combinations , such as acquisitions, mergers and amalgamation of certain size, establishment
of Competition Commission of India (CCI) and functions and powers of CCI.
The objectives of the Bill are to provide for the establishment of a Commission to prevent
practices having adverse effect on competition, to promote and sustain competition in markets in
India, to protect the interests of consumers, and to ensure freedom of economic action of the
participants in market in India and for matters connected therewith or incidental thereto.
The proposed Law will not apply to Government Departments and enterprises performing
sovereign functions and policy making aspects of Governmental activities (decision making by
Ministries/Departments/Offices of Central Government or State Governments)/ local bodies-like
reservation for SSI, preference in procurement from SSI units/PSUs and such similar policies.
The proposed Law will also provide for exemption of certain classes of enterprises and
international agreements from the applicability of the Act by way of specific notifications.
The Law would curb those practices, which would have an appreciable adverse effect on
Competition. The proposed Law identifies three such ways in which such practices could occur
as under:
Anti-competitive Agreements: (Horizontal Agreements, Vertical Agreements) can be inquired
into by CCI which could impose a penalty or an amount upto 10 per cent of its average turnover
in the last three years for the offence.
Abuse of Dominant Position (The criteria for deciding the dominant position are broader than
one included in MRTP Act). Enjoying a dominant position will not be a crime but its abuse will
be a crime.
Elimination/reduction of competitors in market achieved through acquisitions, amalgamations
or mergers (The proposed Law is not against every acquisition, merger or amalgamation, but it
refers only to those acquisitions, mergers and amalgamation, which are of a certain prescribed
size-size in terms of (a) assets or (b) turnover, Acquisition, merger or amalgamation would
become ‘Combination’ when:

Nature of Combination Group Status Criterion Value

(a) Acquisition by No Group Assets In India World >Rs. 1,000 Cr.

enterprises over >US$500 million

(b)Acquisition by Turn over In India World >Rs. 3,000 Cr.

individuals over
>US$1500 million

©Mergers/ amalgamation Group Assets In India World >Rs. 4,000 Cr.

Over
>US $ 2 Billion

Turn over In India World >Rs. 12,000 Cr.

 over >US$ 6 Billion

The proposed Law provides for an adjudicating relief machinery by way of establishing the
Competition Commission of India (CCI) which would be a Quasi-Judicial Body. CCI will have a
Chairperson and not less than two and not more than ten other Members, as may be specified by
the Central Govenrment.
The CCI will have the following powers:
To issue "Cease and Desist" Orders
To grant such interim relief as would be necessary in each case
To award compensation
To impose fines on the guilty
To order division of dominant undertaking
Power to order de-merger
Power to order costs for frivolous complaints
In addition to the adjudication function, the CCI will have the roles of advocacy, investigation,
prosecution and merger control.
The Statutory Regulatory Authorities can make reference to CCI for advice.
The proposed Law provides for the post of Director Genral (and a host of his deputies in
various places) to assist the Competition Commission in its inquiries. Unlike in MRTP Act, the
Director General will not have powers to initiate investigations suo motu.
In view of the policy shift from curbing monopolies to promoting competition, there is a need
to repeal the Monopolies and Restrictive Trade Practices Act. Hence, the proposed Competition
Law to be brought in, aims at doing away with the rigidly structured MRTP Act. The
Competition Law proposed is flexible and behaviour – oriented. Other reasons are as follows:
MRTP Act is based on the pre-reforms scenario whereas the new Law will be based on the
post-reforms scenario.
MRTP Act is based on the size as a factor whereas the new Law will be based on the structure
as a factor.
MRTP Act has 14 per se offences negating the principles of natural justice where the new Law
has 4 per se offences, all the rest subjected to rule of reason.
MRTP Act provides for Registration of agreements as compulsory whereas in the new Law
there is no requirement of registration of agreement.
 Under the new Law, dominance per se is not bad but only the abuse of dominance is
considered bad whereas under the MRTP Law, dominance itself is bad.
Combination Regulation mentioned in the Bill, ensures that Competition is not reduced .
Combinations are not regulated by MRTP Act.
MRTP Act has powers only to pass "Cease and Desist" orders and did not have any other
powers to prevent or punish, whereas the Competition Law contains punitive provisions.
MRTP Act does not vest MRTP Commission to inquire into cartels of foreign origin in a
direct manner. The proposed Competition Law seeks to regulate them.
The concept of ‘Group’ under the MRTP Act had wider import and was unworkable whereas
the concept has been simplified in the proposed Law.
The proposed Law provides for a Competition fund which shall be utilised for promotion of
competition advocacy, creating awareness about competition issues and training in accordance
with the rules that may be prescribed.
Pending cases pertaining to Unfair Trade Practices other than those relating to tie in sales,
purchases or cases falling under clause (x) of sub-section (1) of Section 36A , the Monopolies
and Restrictive Trade Practices Act, 1969 under the repealed Act shall stand transferred to the
National Commission constituted under the Consumer Protection Act, 1986.

to drive out small firms from the market. The American Government has always been accused by
Leftist economists of promoting the interests of six giant corporations engaged in such varied
fields as agricultural seeds, biotechnology, pharmaceuticals. The European Commission recently
blocked the merger of two American giants -- GE and Honeywell Corporation -- a decision that
upset the Bush administration. The European Commission has shown its reluctance, in the words
of Prof T. T. Rammohan, to expose its national champions to serious competition, and has stood
in the way of measures that facilitate easier takeovers. Herein lies a cautious warning for the
policy-makers.