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MRTP ACT

AND
COMPETITION ACT
MRTP ACT,1969

The MRTP, 1969, aimed to prevent concentration


of economic power to the common detriment,
provide for control of monopolies and probation of
monopolistic, restrictive and unfair trade practice,
and protect consumer interest i.e
1. To ensure that the operation of the economic
system does not result in the concentration of
economic power in hands of few,
2. To provide for the control of monopolies, and
3. To prohibit monopolistic and restrictive trade
practices.
1991 AMENDMENTS TO MRTP
ACT

1. Size concept given up


2. Curbs on growth of monopoly companies deleted
3. Merger control removed
4. More emphasis on prohibition of RTPS, UTPS and
MTPS
In sum, big becoming bigger was no more ugly
NEED FOR A NEW ACT

Need for a new law has its origin in finance


ministers budget speech in february,1999 :
the MRTP act has become obsolete in certain areas
in the light of international economic developments
relating to competition laws. We need to shift our
focus from curbing monopolies to promoting
competition. The government has decided to appoint
a committee to examine this range of issues and
propose a modern competition law suitable for our
conditions.
HIGH LEVEL COMMITTEE

Government appointed a high level committee to advise a modern


competition law for India in line with international developments and
to suggest a legislative frame work.

The committee included competition expert, representatives of


industry and consumers, economist, chartered accountant, advocate
etc.
TRIGGER FOR METAMORPHOSIS FROM
MRTP ACT TO COMPETITION ACT

RECOMMENDATIONS OF EXPERT GROUP


RECOMMENDATIONS OF HIGH LEVEL COMMITTEE
RECOMMENDATIONS OF STANDING COMMITTEE
OF PARLIAMENT
UNANIMITY TO REPEAL MRTP ACT AND TO ENACT
A NEW LAW
APPRECIATION THAT THE MRTP ACT WAS MORE
CONCERNED WITH CURBING MONOPOLIES
RATHER THAN WITH PROMOTING COMPETITION
APPRECIATION THAT PRE-1991 LPG HAS CHANGED
TO POST-1991 LPG
RECOGNITION THAT INDIAN ENTERPRISES ARE
SMALL IN SIZE AND NEED TO GROW TO BECOME
GLOBALLY COMPETITIVE
COMPETITION ACT,2002

An Act was enacted to provide, keeping in view of the economic


development of the country, the establishment of a Commission
with the following objectives:-
Prevent practices having adverse effect on competition.

Promote and sustain competition in markets.

Protect the interests of consumers.

Ensure freedom of trade carried on by other participants in markets in


India
FOUR COMPARTMENTS

1. ANTI-COMPETITION AGREEMENTS

2. ABUSE OF DOMINANCE

3. MERGERS, AMALGAMATIONS, ACQUISITIONS AND


TAKEOVERS

4. FOSTERING COMPETITION
ANTI-COMPETITION AGREEMENTS

For example:
Cartels
Tie-in arrangement
Exclusive supply agreement
Exclusive Distribution Agreement
ABUSE OF DOMINANCE

There shall be an abuse of dominant position:


directly or indirectly, imposes unfair or discriminatory-
a) condition in purchase or sale of goods or services, or
b) price in purchase or sale of goods or services
limits or restricts:
a) production of goods or provision of services or market therefor
b) technical or scientific development relating to goods or services to
the prejudice of consumers
Indulges in practices resulting in denial of market access
Uses its dominant position in one relevant market to enter into, or
protect other relevant market
COMBINATIONS, MERGERS AND AMALGAMATIONS

1. REDUCTION IN NUMBER OF PLAYERS


2. ACQUISITION OF ENORMOUS ECONOMIC STRENGTH
3. DISCOURAGEMENT OF NEW ENTRANTS
4. DICTATION OF PRICES
5. DOMINANCE
THE COMPETITION COMMISSION OF
INDIA

IS ENABLED TO PARTICIPATE IN THE


FORMULATION OF POLICIES AND REVIEWING
OF POLICIES RELATING TO COMPETITION AT
THE INSTANCE OF THE GOVERNMENT
IS REQUIRED TO CREATE COMPETITION
CULTURE
IS REQUIRED TO ACT AS COMPETITION
ADVOCATE
COMPETITION COMMISSION OF
INDIA
Establishment of Commission.
(1) With effect from such date as the Central Government may, by
notification, appoint, there shall be established, for the purposes of
this Act, a Commission to be called the Competition Commission
of India.
(2) The Commission shall be a body corporate by the name
afore-said having perpetual succession and a common seal with
power, subject to the provisions of this Act, to acquire, hold and
dispose of property, both movable and immovable, and to contract
and shall, by the said name, sue or be sued.
(3) The head office of the Commission shall be at such place as the
Central Government may decide from time to time.
(4) The Commission may establish offices at other places in India
COMPOSITION OF COMMISSION

(1) The Commission shall consist of a Chairperson and not less


than two and not more than six other Members to be appointed
by the Central Government.
(2) The Chairperson and every other Member shall be a person
of ability, integrity and standing and who has special knowledge
of, and such professional experience of not less than fifteen
years in, international trade, economics, business, commerce,
law, finance, accountancy, management, industry, public affairs
or competition matters, including competition law and policy,
which in the opinion of the Central Government, may be useful
to the Commission.
(3) The Chairperson and other Members shall be whole-time
Members.
POWERS AND FUNCTIONS OF
COMMISSION

Inquiry into certain agreements (section 19)


Inquiry whether an enterprise enjoys dominant position
Inquiry into combination by commission (Section 20)
Power to Grant Interim Relief (Section 33)
Power to Award Compensation (Section 34)
DIFFERENCE B/W MRTP ACT AND
COMPETITION ACT

1. Based on pre-1991 LPG 1. Based on post-1991 LPG


2. Premised on size 2. Premised on behavior/ conduct
3. Procedure oriented 3. Result oriented
4. No teeth (reformatory) 4. Can bite (punitive )
5. Offences defined implicitly 5. Offences defined explicitly
(cartels, bid-rigging etc.) 6. Frowns on abuse of dominance
6. Frowns on dominance (25% of (no percentage of market share)
market share) 7. Just four are per se offences
7. A large no. of per se offences (rest by rule of reason)
(against principles of natural
justice) 8. Unfair trade practices excluded
8. Covers unfair trade practices (covered under consumer
(individual consumer interest) protection act)
9. Appointments by a collegium
9. Political appointments of
chairperson/members
10. No competition advocacy role 10. CCI has competition advocacy
role
11. Reactive 11. Proactive

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