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Competition Laws: Monopolies Trade Practices Act

The MRTP Act of 1969 was India's first competition law, aimed at preventing monopolies and unfair trade practices. However, it had limitations such as a lack of enforcement powers and an unclear definition of anti-competitive practices. This led to its replacement by the Competition Act of 2002, which established the Competition Commission of India to promote fair competition. The new law prohibits anti-competitive agreements and abuse of dominant market positions. It defines various offenses and penalties, and grants investigation powers to the Commission. In an example case, the CCI dismissed allegations of predatory pricing by Ola, finding it did not have a dominant position in the industry.

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60 views2 pages

Competition Laws: Monopolies Trade Practices Act

The MRTP Act of 1969 was India's first competition law, aimed at preventing monopolies and unfair trade practices. However, it had limitations such as a lack of enforcement powers and an unclear definition of anti-competitive practices. This led to its replacement by the Competition Act of 2002, which established the Competition Commission of India to promote fair competition. The new law prohibits anti-competitive agreements and abuse of dominant market positions. It defines various offenses and penalties, and grants investigation powers to the Commission. In an example case, the CCI dismissed allegations of predatory pricing by Ola, finding it did not have a dominant position in the industry.

Uploaded by

Arshdeep Singh
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Competition Laws

Monopolies Trade Practices Act

MRTP Act was passed in 1969 and was inherent in the Directive Principles of State Policy. It was
implemented to prevent monopolization of businesses and accumulation of wealth in few hands. A new
chapter for unfair trade practices was also added later in 1984 to regularize advertising.

MRTP Act was valid all over India with the exception of J&K. This law was not valid for entities controlled
by government or formed under any Central or State Act. Although this Act was by and large the only
competition law in India at that time, it had its set of flaws.

The Commission didnt have adequate powers to punish those involved in any unfair trade practices.
Sometimes, the culprits got away due to lack of proper procedures. The investigative resources were
scarce. There was no clear definition of anti-competition practices. Also, some of the non conventional
unfair trade practices like predatory pricing, rigging and cartels were not a part of MRTP Act. Moreover,
this Act was of the era when India was more socialist and less capitalist. So the provisions of the Act
were designed to suit License raj. With the Advent of Liberalization, needs of current trade environment
had changed. Due to these concerns, this Act had to be repealed. A new Act known as Competition Act
of India took its place in 2002.

Competition Act

Competition Act is the governing law of competition in India. A new Commission known as Competition
Commission of India was established to maintain healthy competition environment in the country. This
law is also valid in the whole country apart from J&K.

This law has been brought in order to prevent unfair trade practices and enforce competition policy in
India. It will also prevent government outreach in the market. This law has been amended from time to
time in 2007 and 2009 after including the necessary provision according to the changing business
scenario. It is designed in order to benefit both consumers and businessmen. Its key features are:

Any practices or agreements which restrict competition and free trading between trading
entities shall be prohibited
Monopoly situation should be banned and prevented from abusing the market
Entrepreneurs should get equitable opportunities for competition in the market
Enforcement network shall be set across the world
Fair and healthy competition should be promoted and any anti trade practices shall be
prevented

Anti competitive agreements


This Act identifies to types of agreements: Horizontal and Vertical. Horizontal agreements are done
between companies competing in the same business, whereas vertical agreement is done between
independent companies. Horizontal agreements are prohibited under this Act but Vertical agreements
are allowed within the rules of reason.

Misuse of Dominant position

If it is determined that a company has a dominant position in a particular industry and it is directly or
indirectly influencing the business environment and preventing new entrants, it is considered to be anti-
competitive. Any dominant player in the industry shall not abuse its peers restricting production or
imposing discriminatory practices. This will be considered against the guidelines of Competition Act.

Competition Commission of India

CCI is an independent body and possesses power to enter into contracts and sue businesses. It is
comprised of a Chairman with 2-10 members. It should promote healthy environment for competition,
prevent undesirable effects on competition and protect the interest of the end consumer. The
Commission has powers to set up a enquiry on misuse of dominant position or irreverent agreements.

Punishment

If a person/entity doesnt comply with the orders of CCI, it can be fined from 10 lakh to maximum of 10
crore. On defaulting of fine, one can be imprisoned for three years or a fine of 25 crore or both.

Ola vs Taxi for Sure Predatory pricing case

Taxi for Sure had alleged Ola for implementing abysmally low prices in radio taxi aggregator services so
as to hurt other players in the industry. Taxi for Sure filed a case of predatory pricing on Ola saying that
it had heavy losses due to this anti trade practice from the side of Ola. But CCI dismissed the plea of Taxi
for Sure on the basis that Ola doesnt enjoy dominant position in the industry. CCI took auto and radio
taxi as a relevant industry for this case. Seeing the market share of Ola, Commission said that Ola is a
small player and cant misuse its powers as it is not a dominant player in the industry. Hence Ola cant
impact the prices for the whole industry.

http://indianexpress.com/article/india/india-news-india/cci-rejects-predatory-pricing-allegations-
against-ola-3010352/

https://indiankanoon.org/doc/1113485/

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