Birth and Objectives Birth and Objectives of MRTP Actof MRTP Act

The MRTP Act 1969 is an important but The MRTP Act 1969 is an important but very controversial piece of economic very controversial piece of economic legislation. The act came into force from legislation. The act came into force from 11stst june 1970 and has been amended in june 1970 and has been amended in 1974,1980,1982,1984 and 1991. This act 1974,1980,1982,1984 and 1991. This act applies to whole states except J&Kapplies to whole states except J&K..

OBJECTIVESOBJECTIVES – – Initially it had 3 Initially it had 3 objectivesobjectives

To control monopolies and monopolistic To control monopolies and monopolistic trade practicestrade practices

To regulate the concentration of economic To regulate the concentration of economic power to the common detriment. power to the common detriment.

To prohibit restrictive trade practices To prohibit restrictive trade practices unless any of them can be justified to unless any of them can be justified to be in the public interest.be in the public interest.

The Monopolies Amendment Act The Monopolies Amendment Act 1984 has introduced a 41984 has introduced a 4thth objective. objective.

Regulation of unfair trade practices.Regulation of unfair trade practices. After the amendment of act in 1991, After the amendment of act in 1991,

the objectives now are:the objectives now are: Regulating unfair trade practices.Regulating unfair trade practices. Controlling monopolistic trade Controlling monopolistic trade

practces. practces.

So after going through these objectives So after going through these objectives of MRTP Act we can say that this act of MRTP Act we can say that this act provides that operation of the provides that operation of the economic system does not result in economic system does not result in the concentration of economic power the concentration of economic power to the common detriment, for the to the common detriment, for the control of the monopolies, for the control of the monopolies, for the prohibition of monopolistic and prohibition of monopolistic and restrictive trade practices and for restrictive trade practices and for matters connected there with. matters connected there with.

Basic Provisions Of Basic Provisions Of MRTP ActMRTP Act

MRTP Act can be divided into two major parts.MRTP Act can be divided into two major parts. 1.1.MONOPLIES VIS-A-VIS CONCENTRATION MONOPLIES VIS-A-VIS CONCENTRATION

OF ECONOMIC POWER OF ECONOMIC POWER (i) The monopolies and industrial units which (i) The monopolies and industrial units which

are constructed to have a concentration of are constructed to have a concentration of economic or monopoly power are identified.economic or monopoly power are identified.

(ii) Such units are to made to register (ii) Such units are to made to register themselvesthemselves

(iii) The directors of such organizations are (iii) The directors of such organizations are brought under some scrutiny with reference to brought under some scrutiny with reference to the number of directorships held by them. the number of directorships held by them.

(iv) The expansion, establishment of new (iv) The expansion, establishment of new undertakings, diversifications, mergers undertakings, diversifications, mergers and amalgamations of such units are and amalgamations of such units are subject to approval by the government.subject to approval by the government.

(v) In exceptional cases, the government (v) In exceptional cases, the government may even force an industrial undertaking may even force an industrial undertaking to divide into a number of smaller to divide into a number of smaller divisions.divisions.

This act is not applicable toThis act is not applicable to (i) Any undertaking owned or controlled by (i) Any undertaking owned or controlled by

a government (central or state)a government (central or state) (ii) Any undertaking the management of (ii) Any undertaking the management of

which has been taken over by the which has been taken over by the government.government.

(iii) Any undertaking owned by a (iii) Any undertaking owned by a cooperative societycooperative society

(iv) Any public financial institution.(iv) Any public financial institution. (v) Any trade union formed for their own (v) Any trade union formed for their own

reasonable protection.reasonable protection.

2. MONOPLISTIC, RESTRICTIVE 2. MONOPLISTIC, RESTRICTIVE AND UNFAIR TRADE PRACTICESAND UNFAIR TRADE PRACTICES

The Industrial policy statement of 1991 bring The Industrial policy statement of 1991 bring drastic changes in MRTP Act. These drastic changes in MRTP Act. These provisions were criticised very much provisions were criticised very much because of their negative impact on because of their negative impact on growth and competition. So following are growth and competition. So following are the important points regarding new policy: the important points regarding new policy:

(i) Prior approval of the central government (i) Prior approval of the central government for establishment of new undertakings, for establishment of new undertakings, expansion of existing undertakings, expansion of existing undertakings, merger, amalgamation and take over and merger, amalgamation and take over and appointment of certain directors will no appointment of certain directors will no longer be required. longer be required.

(ii) The provisions regarding restrictions on (ii) The provisions regarding restrictions on acquisition of transfer of shares are acquisition of transfer of shares are proposed to be appropriately incorporated proposed to be appropriately incorporated in the Companies Act.in the Companies Act.

(iii) The provisions of MRTP Act , will be (iii) The provisions of MRTP Act , will be strengthened in order to enable the MRTP strengthened in order to enable the MRTP commission to take appropriate action in commission to take appropriate action in the respect of the monopolistic, restrictive the respect of the monopolistic, restrictive and unfair trade practices.and unfair trade practices.

(iv) Also the MRTP commission will be (iv) Also the MRTP commission will be empowered and encouraged to investigate empowered and encouraged to investigate on complaints received from individual on complaints received from individual consumers or classes of consumers. consumers or classes of consumers.

ENFORCEMENT ENFORCEMENT MACHINERYMACHINERY

(i) The Monopolies and Restrictive (i) The Monopolies and Restrictive Trade Practice Commission.Trade Practice Commission.

(ii) The Director General of (ii) The Director General of investigation and registration.investigation and registration.

(iii) The Central Government and (iii) The Central Government and Supreme court. Supreme court.