BACKGROUND OF MONOPOLISTIC RESTRICTIVE TRADE PRACTICES (MRTP) ACT, 1969




 BACKGROUND OF MONOPOLISTIC RESTRICTIVE TRADE PRACTICES (MRTP) ACT,1969 


MRTP Act,1969

India after independence adopted a centrally planned economic structure also referred as Nehruiwan socialism model, a model neither market economy nor socialist economy like of USSR. In such a system both public and private sector existed, the reason behind adopting such model was to ensure that government played vital role in capital formation of the country as well as to promote an inclusive economic growth and social justice.
To promote this objective government reserved heavy and strategic industries under is domain, for e.g mining, electricity etc. On the other hand, the private industries were subject to industrial(department and regulation act, 1951). With the passage of time, the licensing system resulted in the enormous power in the hands off government officials.
The Nehruwian model needed few changes with the change on time. In the year 1960 The Mahalanobis committee, was constituted under the edges of the financial department to find out the inequality in the distribution of income on the recommendation of this commission, in1964, a monopoly inquiry commission was committed to inquire the extent of concentration of power and economic wealth in the hands off private sector. The suggestion of commission suggested the passing of MRTP Act, 1969. MRTP or Monopolies restrictive trade practices Act, 1969

MRTP Act aimed at preventing-

(a) Economic wealth concentration in few hands,
(b) Prohibition of monopolistic practices,

However, after the great economic depression, a world wide effect of which also realised in the Indian markets. The Indian economy as a result adopted the policy of liberalization, privatisation and globalization. The new policy needed the new laws to tackle the challenges and to attain new economic heights for the Indian markets.

In this era, the substantial pat of MRTP Act, which focussed only around monopolistic behavior and regulation of the economic concentration was not sufficient.
Big economic enterprises were ready to enter the Indian markets and they needed a policy which will be fruit full for a healthy competition in the relevant market.
The change was needed towards fostering the competition in the market. Against this background, then the finance minister of India in buut budget speech in February 1999 made following statements (The MRTP Act has become absolute and we need to look forward with the change time).
In light of this, a committee was made of 9 members, headed by Mr. Raghvan was constituted to recommend a suitable legislative frame work relating to competition law.
It suggested that " Although MRTP act seemingly had provisions regulating, anti competitive practices, but in comparison to other economics of the world with regard to competition law, it was inadequate ".

Reasons for new legislation (Competition Act) :

(a) Inadequacy of MRTP Act to provide adequate remedy to complainants. For e.g MRTP commission was not empowered to impose penalties or fines. It can only direct a respondents to desist from the alleged monopolistic, restrictive or unfair trade practice.
(b) Generally accepted principle of competition law has extra territorial application while MRTP Act did not provide extra territorial.
(c) MRTP Act did not define certain key terms such as- abuse of dominance, collusion of relevant market, in pursuance of this mandane (Lucanaes), Raghvan committee suggested amending the MRTP Act.
Since, amendment of whole law was very difficult, thus a new Act was enacted in the year 2002, as Competition Act, 2002.
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