Author Name:   pralika

Competition laws in India were governed by the Monopolistic Restrictive Trade Practices Act, 1969 which is substantially taken from U.K Legislations...

Competition laws in India were governed by the Monopolistic Restrictive Trade Practices Act, 1969 which is substantially taken from U.K Legislations, particularly the Restrictive Trade Practices Act, 1956 and Resale Prices Act, 1964. This Act established the Monopolistic and Restrictive Trade Practices Commission whose main functions was to control restrictive and monopolistic trade practices. With economic reforms and liberalization of the economy, it necessary to review the existing law. This exercise resulted in the enactment of the Competition Act, 2002 which was passed by Parliament in December, 2002 and it received the assent of the President in January, 2003. Certain provisions of the Act have been notified by Government but many other provisions of this new Act are still awaiting notification. This new Act establishes the Competition Commission of India in place of the earlier MRTP Commission.

The material difference in the framework and scheme of the two enactments are[1]:
1) The emphasis under the MRTP Act was in respect of trade practices that adversely affected competition and were subject to the rule of reason whereas under the Competition Act, the anti-competitive agreements are declared void.

2) Under the MRTP Act till the cease and desist order was passed by the MRTP Commission, a particular trade practice was not considered void or illegal whereas this is not the case under the Competition Act.

For a market economy to function properly the competition must be free and fair. In a competitive market all the competitors will try to gain consumer confidence and increase its market share by continuously trying to improve the quality of the goods, look to reduce prices and find more efficient means of production.

There is a very thin line of difference between acceptable business practices and practices which are considered to be anti-competitive in nature. Firms engage in anti competitive activities not to build on to their own advantage but to exploit their position in the market to the disadvantage of its competitors or consumers. Such activities usually lead to increase in prices, reduced output, decrease in quality, less consumer choice, barriers for new entrants etc.

A comparison of section 33 of the MRTP Act, 1969 with the corresponding provisions of Section 3 of the Competition Act, 2002 would show that the anti-competitive agreements particularized in sub section 3 and 4 of the Competition Act, 2002 are nothing but restrictive trade practices specified in clauses (a)-(d), (f)-(h), (j), (ja), (jb) of sub-section 1 of section 33 of the MRTP Act, 1969. Also the term ‘Restrictive Trade Practice’ under the old Act has now been changed to ‘Anti-Competitive Agreements’ under the new Act.

The  author can be reached at: pralika@legalserviceindia.com

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