Birth and Objectives of MRTP Act,1969 : Birth and Objectives of MRTP Act,1969 The MRTP Act 1969 is an important but very controversial piece of economic legislation. The act came into force from 1st June 1970 and has been amended in 1974,1980,1982,1984 and 1991. This act applies to whole states except J&K.
OBJECTIVES – Initially it had 3 objectives
To control monopolies and monopolistic trade practices
Prevention of concentration of economic power in few hands only. Slide 2: To regulate restrictive trade practices
After amendment of act in 1984 a 4th objective was introduced:
Regulation of unfair trade practices.
After the amendment of act in 1991, the objectives now are:
Regulating unfair trade practices.
Controlling monopolistic trade practices. Basic Provisions Of MRTP Act : Basic Provisions Of MRTP Act MRTP Act can be divided into two major parts.
1.MONOPLIES VIS-A-VIS CONCENTRATION OF ECONOMIC POWER
(i) The expansion, establishment of new undertakings, diversifications, mergers and amalgamations of such units are subject to approval by the central government.
(ii) In exceptional cases, the government may even force an industrial undertaking to divide into a number of smaller divisions. 2. MONOPLISTIC, RESTRICTIVE AND UNFAIR TRADE PRACTICES : 2. MONOPLISTIC, RESTRICTIVE AND UNFAIR TRADE PRACTICES Monopolistic Trade practices
( Section 31 and 32):
A trade practice which has or is likely to have the effect of :-
i) maintaining the prices of goods or charges of services at unreasonable levels by limiting, reducing or other wise controlling the production, supply or distribution of such goods or services;
ii) causing deterioration in the quality of goods or provision of services or limiting technical development or capital investment in goods or services to the common detriment Slide 5: Restrictive Trade Practices (Section 22 to 36 and section 37 to 41):
The term restrictive trade practice is used for any strategy used by producers to restrict competition within a given market.
(a) the setting of minimum prices;
(b) the refusal to supply retailers that stock the products of other competitors;
(c) setting different prices for different buyers (discriminatory pricing); Unfair Trade Practice : Unfair Trade Practice Any trade practice which adopts one or more of the following practices:
Making misleading advertisements
Selling hazardous products.
Hoarding in order to push up the price level Slide 7: The Industrial policy statement of 1991 bring drastic changes in MRTP Act. These provisions were criticized very much because of their negative impact on growth and competition. So following is the important point regarding new policy:
Prior approval of the central government for establishment of new undertakings, expansion of existing undertakings, merger, amalgamation and take over and appointment of certain directors will no longer be required. This act is not applicable to : This act is not applicable to (i) Any undertaking owned or controlled by a government (central or state)
(ii) Any undertaking the management of which has been taken over by the government.
(iii) Any undertaking owned by a cooperative society ENFORCEMENT MACHINERY : ENFORCEMENT MACHINERY (i) The Monopolies and Restrictive Trade Practice Commission.
(ii) The Central Government and Supreme court.