Monopolistic and Restrictive Trade Practices Act, 1969
To ensure that economic power is not concentrated in the hands of a select few, the Monopolistic and Restrictive Trade Practices Act was enacted. The Act’s goal in terms of consumer protection and competition legislation is to stop monopolistic, coercive, and unfair business activities that harm consumer interests by restricting trade and industry competition. The Consumer Protection Act of 1986, a comparable piece of legislation, also exists and governs the area of unfair business practices.
Objectives of the MRTP Act
The following are the main goals the MRTP Act aims to accomplish:
- Preventing the accumulation of economic power to the disadvantage of the general welfare
- managing monopolies
- forbidding monopolistic trade practices along with,
- restrictive trade practices and
- unfair trade practices
What are restrictive trade practices?
A restrictive trade practice is frequently one that hinders, stifles, or otherwise inhibits competition. For instance, an RTP is a tactic that frequently prevents money or resources from entering the production stream. Restrictive trade practices are those that may have the potential to impose on consumers unjustifiable costs or limitations through manipulation of pricing, delivery circumstances, or supply flow in the market.
Common forms of restrictive trade practices
The common ways in which RTPs are accomplished are through – Refusal to negotiate, tie-up sales, full-line forcing, exclusive deals, concert or collusion-cartel, price discrimination, resale price maintenance, region limitation, and predatory pricing are some examples of unethical business practices.
Instances where restrictive trade practices is given a sanction
- that the restriction is reasonably required in light of the nature of the products to which it applies to safeguard the public from harm.
- removing the restriction will prevent the public from enjoying additional particular and significant benefits and advantages that they already enjoy or are anticipated to enjoy as such as a result of the restriction itself or of any arrangements or operations that emerge from it;
- limiting or restricting competition in or in connection to the trade or activity in which the parties thereto are engaged; the restriction is reasonably required to counterbalance actions taken by any individual who is not a party to the contract;
- For the parties to the agreement to negotiate fair terms for the supply of products to or acquisition of goods from any one non-party, the restriction is arguably essential.
Restrictive trade practice under the consumer protection act
According to section 2(and) of the Consumer Protection Act of 1986, a restrictive trade practice is one that has the potential to manipulate prices, delivery terms, or market supply flows for products and services in a way that places unreasonable burdens or limits on customers. These practices include any delays in supplying goods or in rendering services past the time frame agreed upon by the trader, which may have increased prices or is likely to do so, as well as any commercial practise that requires a consumer to purchase, hire, or utilize one good or service before purchasing, employing, or utilizing another.
To monitor trade and competition, the government of India established an MRT commission which will consist of the following-
- commission with a minimum of two members and a maximum of eight.
- The commission’s chairman is required to be qualified to serve as a judge on the supreme court or a high court (for a state).
- Members of this commission have demonstrated their ability to handle matters relating to law, economics, business, industry, accountancy, or public affairs or have the necessary knowledge and expertise.
- The commission members’ terms of office may not last more than five years.
- The DG (Director General of Investigation and Registration) supported the commission during the investigation by conducting the investigation, keeping a registry of agreements, and carrying out the procedures.