The rubric of the undertaking is ‘MRTP Act: Rise, Fall and Need for Change: Eco-Legal Analysis ‘ and is portion of the entries to be made for the internal appraisal for the class of Economics II.
1.2 Overview of Topic
India, in its formative old ages of freedom, laid down the seeds of socialistic attack towards economic development. Five-year programs were designed with the purpose of self-realance and autonomy of the Indian industry and in this procedure of indigenuity, focal point was laid on strong governmental government to guarantee equal and comfortable distribution of resources. One such effort of the province resulted in the passage of the MRTP Act, 1969 with the basic purpose of comprehensive control over way, form and quantum of investing to guarantee that wealth is non concentrated in the custodies of the few.
However, with the outgrowth of the new Industrial Policy statement of 1980, a demand was felt for advancing competition in domestic market, technological upgradation and modernisation which was so followed by the monolithic New Policy Reforms of 1991 which emphasized attainment of technological dynamism and international fight, by opening up the Indian economic system to foreign investing. This could non be met by the Indian industry since it was non in competitory footings with the remainder of the universe and operated in an over-regulated environment. Hence, as was concluded in the Raghavan Committee Report, 2000[ 1 ]– alterations were sought in the competition policies of India and therefore, the MRTP Act was laid to rest.
This undertaking will follow the public presentation of the MRTP and point out the mistakes that led to its failure and therefore its abrogation by the Competition Act.
1.3 Objective of Project
This undertaking is aimed at recommending and analyzing the public presentation of the Monopolies and Restrictive Trade Practice Act, 1969 ( henceforth, MRTP Act ) in the Economic-Legal facet. The undertaking will chiefly analyze the public presentation of the MRTP Act over the assorted Industrial development stages ( From 1951 to post-1991 Reforms ) and so seek to set up how and why it paved the manner for Competition Act, 2002.
Therefore, the basic purpose is to set up the grounds for the failure of the MRTP and the subsequent grounds for the constitution of the Competition Act.
1.4 Data Set Explanation
In the class of this undertaking, the following data-sets have been used:
1 ) MRTP Commission Data: Picturing the figure of instances considered and disposed of by the MRTP Commission in its last old ages of being, i.e. from 2002-2004. This information has been computed in the signifier of Bar-Graph for exemplifying intent.
This information has been sourced from the work of Sh. Pradeep S. Mehta, Gen. Sec. , CUTS International in A Functional Competition Policy for India published by Academic Foundation, New Delhi, 2005. This information is available online and has been accessed through www.books.google.com [ Link has been provided at the concerned graph ]
2 ) Annual Growth Rate of Industrial Production Index: Picturing the tendency in the growing of Industrial Production from the Year 1951 to the twelvemonth 2007. This has been represented in the signifier of Data-Table, and the information divided into the assorted Industrial stages.
This information has been sourced chiefly from the book of S. K. Misra and V. K. Puri titled Economic Environment of Businees, 5th erectile dysfunction, Himalaya Publishing House, 2008. This book is available at the Reference Section of the NALSAR Law Library.
This information is originally sourced in the above-named book from:
( a ) Government of India, Handbook of Industrial Statistics, 1992, Table 50, p.150 ;
( B ) S. L. Shetty, Structural Retrogression in the Indian Economy since the Mid-1960s ” , Economic and Political Weekly, Special Supplement, 1978, Table 4, p. 9 ;
( degree Celsius ) Government of India, Economic Survey, 2000-01, Box 7.1, p.130 ;
( vitamin D ) RBI, Handbook of Statistics on Indian Economy, 2000, Table 199, p. 409 ;
( vitamin E ) Government of India, Economic Survey, 2004-05, Table 7.2, p.142 ;
( degree Fahrenheit ) RBI, Handbook of Statistics on Indian Economy, 2006-07, Table 237, p. 606 and Table 238, p. 607.
1.5 Research Methodology
The methodological analysis adopted in this undertaking is descriptive. The research is based on findings and statistics provided in primary beginnings like Statistical informations and Committee Reports and on secondary beginnings of books and articles published in diaries, therefore the methodological analysis adopted is despcriptive in nature.
The research is limited to the resources available at the NALSAR Library and the informations sets available online and at the NALSAR Library in the mode of Study Reports and Research findings.
2. MRTP: WHY IT WAS ENACTED
2.1 Post-Independence: Socialistic Industrial Regime Structure
In the old ages predating the passage of the MRTP Act, 1969, India had merely been a free state for a little more than 15 old ages. Following independency, it had laid down the formative construction of its administration and organisation on the standard of socialism. The socialist attack was built-in in the operation of the authorities as it preached societal and economic equality, which was subsequently adopted in the Preamble to the Constitution of India[ 2 ]by the 42nd Amendment. In this procedure, the construct of planned economic development started since the early 1950s.
However, this attack did non give the coveted consequence of socio or economic equality. The initial industrial licensing policies had non borne the planned results- alternatively, the market and the industries were demoing negative tendencies and wealth was acquiring concentrated in the custodies of the few. This was observed by the Hazari Committee in its 1967 Report on Industrial Planning and Licensing Procedure, 1955 where it found that working of the licensing system had resulted in disproportional growing of some large industrial house.[ 3 ]
Similarly, the Mahalanobis Committee Report ( 1964 ) on Distribution and Level of Income, reported that the top 10 % of the population cornered 40 % of the income while the 20 of the largest houses in India owned 38 % of the sum built up capital of the private sector.[ 4 ]
2.2 Emergence of MRTP
The old industrial policies had clearly non worked in the way the province had hoped for since, station independency many new and large houses had entered the IndianA market and they had small competition and therefore, were seeking to monopolise theA market.
Therefore the demand for a stricter policy government was realised to safeguard the public assistance of the consumers by taking barriers to competition in the Indian economic system, and this resulted in the passage of the MRTP Act, 1969 which came into force in June 1970. The primary aims of the Act were listed down in the Preamble as follows:[ 5 ]
I ) Regulate the concentration of economic power to the common hurt,
two ) Control monopolies and monopolistic trade patterns,
three ) Prohibit restrictive trade patterns, and
four ) Regulate unjust trade patterns.
2.3 Primary Concepts
To understand the aims of the MRTP and for the apprehension of this undertaking, we will foremost continue to discourse the primary constructs related to the undertaking subject:
1 ) Monopolistic Trade Practices
Section 2 ( I ) of the MRTP Act, 1969 defines Monopolistic Trade Practice as trade patterns that have the consequence of forestalling or decreasing competition in the production, supply or distribution of any goods or in the supply of any services- by misapplying one ‘s power to utilize theA market conditions, A in footings of production and gross revenues of goods and services, and therefore mistreat its market position- are called monopolistic trade patterns.
Firms involved in monopolistic trade practiceA attempt to extinguish competition from theA market by taking advantage of their monopoly and charge unreasonably high monetary values. This in consequence leads to impairment in the merchandise quality and bounds technicalA development. Therefore, such patterns are anti-consumer-welfare.
2 ) Restrictive Trade Practices
Activities that houses indulge in that tend to barricade the flow of capital into production, in order to maximise their ain net incomes and to derive control over theA market- such activities are termed as Restrictive Trade Practices.[ 6 ]Such houses besides control conditions of bringing to impact the flow of supplies taking to undue costs of production and distribution- while set uping their monopoly in the market.
3 ) Unfair Trade Practices
Section 36-A of the MRTP Act, 1969 which was inserted on the recommendation of the Sachar Committee Report, laid down every bit to what mayA be termed asA UnfairA Trade Practices:[ 7 ]
False representation and misleadingA advertisementA of goods and services.
Misleading representation sing public-service corporation, quality and criterion of goods and services.
Giving false warrant or guarantee on goods and services without equal trials.
False claims or representation regardingA priceA of goods and services.
Giving false facts sing sponsorship, association etc. of goods and services.
Making false or deceptive representations of facts.
2.4 Doctrine of the Act
The MRTP Act, 1969 had its beginning in the Directive Principles of State Policy embodied in the Constitution of India. Article 39 [ ( B ) and ( degree Celsius ) ] of the Constitution lay down that the State shall direct its policy towards guaranting:[ 8 ]
( I ) that the ownership and control of material resources of the community are so distributed as to outdo serve the common good ; and
( two ) that the operation of the economic system does non ensue in the concentration of wealth and agencies of production to the common hurt.
Therefore, the philosophy behind the MRTP Act, 1969 was based on the construct of planned economic development that had started since early 1950s. The Public Sector Industrial ( Development & A ; Regulation ) Act, 1951 and Monopolies and Restrictive Trade Practices Act, 1969 together commanded a comprehensive control over way, form and quantum of investing. However, despite such control that the province exercised through these Acts, these did non wholly profit the consumers instead, these complex web of controls and ordinances fettered the freedom of the endeavors and yielded negative consequences for the economic system.
3. Operation AND Performance: THE MRTP COMMISSION
The Monopolies and Restrictive Trade Practices Commission ( MRTPC ) , a quasi- judicial organic structure, was established under Section 5 of the MRTP Act, 1969 to take up action against companies that indulged in monopolistic and unjust trade activities. It discharged maps as per the commissariats of the Act.
The chief maps of the MRTP Commission being:
to ask into and take appropriate action in regard of unjust trade patterns and restrictive trade patterns.
in respect to monopolistic trade patterns, to ask into such patterns:[ 9 ]
upon a mention made to it by the Cardinal Government, or
upon its ain cognition or information ;
submit its findings to Cardinal Government for farther action.
The Office of the Director General of Investigation & A ; Registration was created in the twelvemonth 1984 to execute certain statutory maps and responsibilities under the MRTP Act, 1969 so as to subserve its aim to protect the involvements of the consumers in the state.[ 10 ]The Act was amended from clip to clip and major amendments took topographic point in the old ages 1984 and 1991 and these reforms shall be discussed subsequently in this undertaking.
The working of the MRTP Commission can be put down in the undermentioned stairss:
1 ) As discussed above, the MRTP Commission was empowered under subdivision 10 of the Act to take either suo motu action or action upon mention by the authorities, against companies that were deemed to be following restrictive, monopolistic or unjust patterns.
2 ) All such trade patterns were considered to be damaging to public involvement. Hence, the burden was on the entity, organic structure or set abouting charged with the commission of such trade patterns, to plead under the MRTP Act to avoid being indicted.
3 ) If the pleadings were satisfactory to the Commission and if it was further satisfied that the limitation is non unreasonable, the Commission would get at the decision that the trade pattern is non damaging to public involvement and dispatch the question against the charged party.[ 11 ]Furthermore, if a trade pattern was expressly authorised by any jurisprudence for the clip being in force, the Commission was barred from go throughing any order against the charged party.
4 ) Otherwise, if the Commission deemed it to be fit, it could either:
a ) give impermanent injunction, or
B ) award compensation.
3.3 Exemplifying Cases
A ) Shyam Gas Company Case
This was a instance where the supply of cooking gas cylinders was in short supply, which led to unjust development of the state of affairs. Shyam Gas Co. was the exclusive distributer of BPCL for cooking gas cylinder at Hathras ( U.P. ) which was allegedly prosecuting in the undermentioned restrictive patterns:
giving gas connexions to the client merely when he purchased a gas range or a hot home base from the company ; and
bear downing clients twice the monetary value for supply of adjustments and contraptions.
The MRTP Commission held that the company was indulging in a restrictive trade pattern that was damaging to the involvement of the consumers.
B ) Bal Krishna Khurana Case
This was the first instance where a gross revenues publicity organiser was charged under unjust trade patterns. The respondent, Bal Krishna was celebrated all over North India for his merchandising ‘export quality ‘ hose at highly low monetary values wherein he sold goods deserving Rs. 210/- for every bit low as Rs. 15/-
The Commission received ailments from consumers who reported that they were being cheated into purchasing sub-standard goods. The Commission so put a keeping order against Bal Krishna from forming any such publicity ventures. In add-on, the Commission besides advised newspapers against transporting any such deceptive advertizements.[ 12 ]
The MRTP Commission ‘s public presentation can be understood by looking at the information which shows the operation of the Commission in its last stage ( till 2007 ) , picturing the volume of enquiries commissioned and alleviations awarded.
A ) Under Restrictive Trade Practices
Figure 1: Questions Considered and Disposed of by MRTP Commission as of 31.12.2004 ( RTP )
Beginning: Computed from informations available at- Pradeep S. Mehta, CUTS International, A Functional Competition Policy for India, p. 47, Academic Foundation, New Delhi 2005.[ 13 ]
B ) Under Unfair Trade Practices
Figure 2: Questions Considered and Disposed of by MRTP Commission as of 31.12.2004 ( UTP )
Beginning: Computed from informations available at- Pradeep S. Mehta, CUTS International, A Functional Competition Policy for India, p. 47, Academic Foundation, New Delhi 2005.[ 14 ]
4. MRTP AND INDUSTRIAL GROWTH Rate: Analysis
The aim of this undertaking is to analyze the public presentation of the MRTP Act, 1969 and so set up why it had to be replaced by a newer Competition Act, 2002. For this intent, and to set up the defects of the MRTP, we will now see the Industrial Production Growth Rates during the period get downing from 1951 boulder clay 2007 ( the twelvemonth MRTP was officially declared to be dysfunctional ) and so pull decisions by contrasting between the stricter government, pre-1991 reforms and the post-1991 reforms stage of industrial development.
4.1 Industrial Growth Rate: 1951-1980
Table 1: Annual GROWTH RATES OF INDUSTRIAL PRODUCTION IN INDEX NOS. , 1951-1980.
Use-Based or Function Classification
1. Basic Goods
2. Capital Goods
3. Intermediate Goods
4. Consumer Goods
( a ) Durabless
( B ) Non-Durables
Beginning: ( 1 ) Government of India, Handbook of Industrial Statistics, 1992, Table 50, p.150 ; S. L. Shetty, Structural Retrogression in the Indian Economy since the Mid-1960s ” , Economic and Political Weekly, Special Supplement, 1978, Table 4, p. 9. ( 2 ) Accessed in: S. K. Misra and V. K. Puri, Economic Environment of Businees, 5th erectile dysfunction, p. 399, Himalaya Publishing House, 2008. [ Available at NALSAR Law Library ]
4.2 Industrial Growth Rate: 1981-1991
Table 2: Annual GROWTH RATES OF INDUSTRIAL PRODUCTION IN INDEX NOS. , 1981-1991.
Use-Based or Function Classification
1. Basic Goods
2. Capital Goods
3. Intermediate Goods
4. Consumer Goods
( a ) Durabless
( B ) Non-Durables
Beginning: ( 1 ) Government of India, Handbook of Industrial Statistics, 1992, Table 50, p.150 ; S. L. Shetty, Structural Retrogression in the Indian Economy since the Mid-1960s ” , Economic and Political Weekly, Special Supplement, 1978, Table 4, p. 9. ( 2 ) Accessed in: S. K. Misra and V. K. Puri, Economic Environment of Businees, 5th erectile dysfunction, p. 400, Himalaya Publishing House, 2008. [ Available at NALSAR Law Library ]
4.3 Industrial Growth Rate: 1992-2007
Table 3: Annual GROWTH RATES OF INDUSTRIAL PRODUCTION IN INDEX NOS. , 1981-1991.
Use-Based or Function Classification
1992-93 to 1996-97
1997-98 to 1996-97
1997-98 to 2001-02
2002-03 to 2006-07
1. Basic Goods
2. Capital Goods
3. Intermediate Goods
4. Consumer Goods
( a ) Durabless
( B ) Non-Durables
Beginning: ( 1 ) For Column 2, Government of India, Economic Survey, 2000-01, Box 7.1, p.130 ; For Column 3, RBI, Handbook of Statistics on Indian Economy, 2000, Table 199, p. 409 ; For All Columns 1 & A ; 4, Government of India, Economic Survey, 2004-05, Table 7.2, p.142 ; RBI, Handbook of Statistics on Indian Economy, 2006-07, Table 237, p. 606 and Table 238, p. 607. ( 2 ) Accessed in: S. K. Misra and V. K. Puri, Economic Environment of Businees, 5th erectile dysfunction, p. 401, Himalaya Publishing House, 2008. [ Available at NALSAR Law Library ]
4.4 Comparison of the Phases
Now establishing on the above data-set, the research worker would now continue to pull some illations while sing the economic and societal conditions predominating at the corresponding clip in India.
4.4.1 Phase of 1951-1980
1 ) If one observes closely, the general index ( G.I. ) , the time-band of 1951-55 shows an impressive figure of 5.7 ( impressive because India had merely gotten independency and was taking its foundational stairss in puting up the economic system ) . This rate moves positively as we trace the G.I till the twelvemonth 1965- where it reaches a extremum of 9.0. This is the stage where the Indian economic system was controlled by a smattering of large concern houses, and the authorities was fighting with its licensing and commanding policies- even in the absence of many participants, the industry saw a crisp growing.
2 ) However, as we move on to the twelvemonth 1965-76 we see a crisp autumn to 4.1 accompanied by crisp falls in the index of basic goods, capital goods and intermediate goods. This is the stage where the unchained growing of the few concern houses could non be controlled and the market had started demoing monopolistic trends- and demoing falling indexes.
More significantly, during the same stage, MRTP was introduced in the twelvemonth 1969. Though it was implemented to command any monopolistic tendencies by forestalling concentration of wealth in the custodies of the few and catalyse competition in the market, it clearly failed in the initial old ages. The market did non respond in a positive manner- the authorities had started with its nationalisation and rigorous licensing policy. Some economic experts were of the position that there was a considerable relaxation of existent investing and this was followed by a diminution in private-investment as good. This has been attributed to ‘loss of stimulation ‘ for investing, and this perchance stems from the rigorous government of MRTP, 1969.[ 15 ]
In add-on, other grounds can besides be adduced to the autumn in the index. Among them:
Wars fought in 1965 and 1971
Drought conditions in some of the old ages between 1965-71
Oil crisis of 1973
3 ) Though the new policy was easy get downing to give consequences, nevertheless the growing ne’er truly happened and this is apparent from the negative tendency observed in the stage 1979-80. It merely changed after the New Industrial Policy of 1984 which is discussed following.
4.4.3 Phase of 1981-1991
1 ) The stage of 1981-85 shows a positive growing, in contrast to the predating decennary chiefly because of the 1984 reforms. This broadened investing across the populace and private sectors, while some degree of deregulating was allowed. Most significantly, the cap on MRTP houses ( which were capable to particular ordinance ) was increased, which resulted in the more figure of small-sized houses to be free from authorities regulation- therefore, in bend taking to an addition in the production of consumer goods- particularly durables. Therefore, the relaxation of authorities clasp on little concerns was returning dividends to the consumers.
The Industrial Policy of 1984 made the most important alterations to the Indian market- it reduced the domestic barriers to entry and enlargement to shoot a step of competition in domestic industry, simplifying the processs and supplying easier entree to better engineering and intermediate stuff imports.[ 16 ]
2 ) Besides, this was the stage when the Green Revolution was giving positive consequences and the agricultural sector was seeing a multiplex addition in production.
2 ) This growing rate was successfully sustained over the following decennary till the clip predating 1990. However, parallel to this growing was the addition in govt. disbursement shortage. India had reached a phase where it could impart no more- its Foreign Reserves had dried up and investing in all signifiers had about ceased. This was the clip when India took the gigantic measure of Liberalization with the New Policy Reforms of 1991.
4.4.3 Post 1991 Reforms
1 ) The New Policy Reforms of 1991 brought about a host of alterations to the Indian economic system. The most major alteration being Liberalization- opening up of the market in conformity with the WTO Regime. This non merely opened the Gatess of foreign investing but besides brought approximately domestic policy alterations in the licensing and ordinance scenario.
2 ) The greatest alteration in the market was that made to the MRTP Act. Prior to the 1991 Reforms, a sum of 1,854 projects were registered under the MRTP Act- of these, 1787 belonged to big industrial houses and staying 67 were dominant projects.[ 17 ]The New Industrial Policy, 1991 now scrapped the assets limit for MRTP companies- this meant making off with the demand of anterior blessing from Cardinal authorities for set uping new projects, enlargements, amalgamations, mergers and coup d’etats.
Therefore, the alterations brought approximately in the 1991 Reforms opened up the market in more ways than one. And therefore, one can safely reason that maintaining with India ‘s liberalisation, MRTP had become unwanted, instead, an obstruction to the growing narrative and therefore, had to undergo multiple amendments in the period following the 1991 Reforms.
In the following chapter, the research worker will go on with this line of idea and convey about the other defects of the MRTP and how it eventually came to be replaced.
5. Defect OF MRTP
Continuing from the last chapter, we have observed by comparing the industrial informations that over the class of 4 decennaries from the clip MRTP was enacted, the industry reacted in manners non suited to the consumer. In this chapter, the research worker will discourse the other aspects associating to the jobs associated with the MRTP.
5.1 Anti-Welfaristic Consequences
Though the MRTP was enforced with the purpose of distribution of resources and leverage of competition in the market, the coveted consequences could non be obtained. Rather, the market conditions turned out to be hostile for the consumer, and small-businesses and big-businesses likewise, were subjected to excessive control. The heightened governmental control, where new projects and ventures were badly restrained by complex processs, created conditions wherein the houses, bing and new, found it hard to last and therefore, could non give back any benefits to the consumer.
5.2 Rigorous Commissariats
The Act aimed at get rid ofing all Acts of the Apostless which were anti-competition. The Act, over the old ages became really active in taking on houses head-on to do them stand in line with the commissariats of the Act. The commissariats, though aimed at profiting the consumers and the industrial growing, frequently played out tough- and the rigorous commissariats did non profit anyone.
For case, the construct of ‘Predatory Pricing ‘ , which is still a selling policy adopted by companies to hold an border over their rivals, was handed down to a great extent by the MRTP Commission. Predatory Pricing is defined as pricing a good or service below the cost of production of the good or service, with the aim of driving a rival out of trade or to train him and thereby achieve riddance of competition.[ 18 ]This is a agency for a house with strong market power to extinguish other rivals and so, rule the market.
This is efficaciously an anti-competitive mechanism, nevertheless, it can besides be used to drive competition i.e. it can be efficaciously used to set up a strong competitory market. Examples are mature in the current market where there are strong competitory conditions for the firms- they have to dole out quality at the best monetary value to maintain themselves established in the market, otherwise other competitory houses will drive them out of concern. Examples being:
A ) Tide, a detergent that was introduced in the Indian market in 2000 was successful in interrupting into a market which was strongly held by Surf ( so much so, that families used to utilize ‘Surf ‘ as a generic term for any sort of detergent ) . Tide used strong pricing, backed by its robust parent company, predatory in nature, to rapidly catch a big market portion for itself. It offered choice detergent at a monetary value than the other bing detergents. This in bend made the other companies lower their monetary value and offer better quality. Hence, the consumer emerged the victor from this competitory tendency between the detergent shapers.
B ) Tata Docomo, a nomadic service supplier that rolled out merely 2 old ages back in the Indian market, entered at a clip when there were established participants in the market like Airtel, Reliance and state-run BSNL. But Docomo with its pricing policy which was unlike the predominating market conditions, offered naming rates which changed the pulsation. The market prior to the reaching of Docomo was based on per/minute charges, but Docomo came up with a per/second policy- therefore, coercing other established participants to besides offer similar rates. Though such scheme was predatory in nature, but it helped in set uping a more competitory market which merely went onto aid the clients.
Therefore, the point that the research worker is seeking to drive place is that such marauding pricing is non needfully anti-competitive but instead an agent to convey about better options for the consumer. Hence, this is more good in footings of consumers ‘ public assistance.
However, the MRTP Commission took up a strong instance against such pricing and though it aimed at profiting the market by guaranting just competition, it alternatively closed down on the benefits to the clients. Hence, what was so required is a strong, individual footing of managing and non absolute prohibition on predatory pricing.
5.3 Ambiguity in Law
The MRTP Act, 1969 contained merely one peculiar subdivision, Section 2 ( O ) to cover all anti-competition practices- specifying Restrictive Trade Practice as a trade pattern which prevents, distorts or restricts competition and therefore, by specifying it in such wide footings that it was so believed that there is no demand for a new specific jurisprudence or proviso to regulate such patterns.[ 19 ]While ailments associating to anti-competition patterns could be tried under the generic definition of restrictive trade pattern, the absence of specific identifiable anti-competition patterns gave room to different readings by different Courts of Law which resulted in the true significance acquiring lost. While a generic definition might be necessary and might organize the substantial foundation of the jurisprudence, it is of great kernel that there be a stronger specific statute law to cover all possible facets of maltreatment of market place.
Furthermore, some of the anti-competition patterns like trusts, command tackle and other patterns are non specifically mentioned in the MRTP Act but the MRTP Commission, over the old ages, had attempted to suit such offenses under one or more of its subdivisions by manner of reading of the linguistic communication used in this.[ 20 ]
5.4 International Norms
Post 1991 and the WTO Regime, the MRTP was exposed to miss the resources to manage the incoming international investings or to run into the trade demands of the WTO. The Act was amended in many ways to suit for the New Policy Reforms of 1991 nevertheless such amendments could non convey it at par with the other anti-competition governments in the World.
Hence, the MRTP Act, 1969 was missing and deficient in certain ways and therefore, need for a new, comprehensive jurisprudence was recognized which gave birth to the Competition Act, 2002 which is discussed in the following chapter.
6. Emergence OF COMPETITION ACT, 2002
In the old chapters, we have seen the defects of the MRTP Act, 1969 and pull illations as to why there was a demand for it to be substituted by a newer Act. In this chapter, we will discourse as to how the Competition Act, 2002 came to be enacted.
6.1 High-level Committee on Competition Policy and Law
In October, 1999, the Government of India appointed a High Level Committee on Competition Policy and Competition Law to rede a modern competition jurisprudence for the state in line with international developments and to propose a legislative model which may imply a new jurisprudence or appropriate amendments to the MRTP Act.
The Committee presented its Competition Policy study to the Government in May 2000. Subsequently, the bill of exchange competition jurisprudence was drafted and presented to the Government in November 2000. After some polishs, following extended audiences and treatments with all interested parties, the Parliament passed in December 2002 the new jurisprudence, viz. , the Competition Act, 2002.[ 21 ]
6.2 Realm of the Competition Act
Constructing up on the lacks of the MRTP Act, 1969 and working on the recommendation of the High-Level Committee and the Raghavan Committee, the Competition Act was so enacted to run into the international criterions of competition governments. The Act loosely incorporates commissariats in countries of:[ 22 ]
Maltreatment of Laterality
6.3 MRTP v/s Competition Act
The two Acts of the Apostless on competition policy of the Indian market, are based on the same standard of easing competition. However, owing to the many reforms in the industrial policy and the time-setup of the two statute laws, there are differences between the two which are enlisted below:
MRTP ACT, 1969
COMPETITION ACT, 2002
Based on the pre-reforms scenario.
Based on the post-reforms scenario.
Based on size as a factor.
Based on construction as a factor.
Competition offenses implicit or non defined.
Competition offenses explicit and defined.
Complex in agreement and linguistic communication.
Simple in agreement and linguistic communication and easy comprehendible.
Frowns upon laterality.
Frowns upon maltreatment of laterality.
Registration of understandings compulsory.
No demand of enrollment of understandings.
No combinations ordinance.
Combinations regulated beyond a high threshold bound.
Competition Commission appointed by the Government.
Competition Commission selected by a Collegium.
Very small administrative and fiscal liberty for the MRTP Commission.
Relatively more liberty for the Competition Commission.
No punishments for offenses.
Punishments for offenses.
Reactive and stiff.
Proactive and flexible.
Beginning: S. K. Misra and V. K. Puri, Economic Environment of Businees, 5th erectile dysfunction, p. 477, besides S. M. Dugar, MRTP Law, Competition Law and Consumer Protection Law, 4th ed. , Vol. 1, p. 583.
The research worker ‘s primary aim of this undertaking was to analyse the MRTP Act, 1969 and so to pull decisions as to why there was a demand for alteration in the passage. This has been attempted in the old chapters by first, looking at the demand for the passage of the MRTP Act, so appreciating the operation of the MRTP Commission in footings of its maps and instances handled, and so, pulling a elaborate analysis of the Industrial informations through 1951 to post-1991 in the visible radiation of the MRTP Act to foreground the alterations in the assorted stages of Industrial development. Finally, we looked at what facets was the MRTP statute law missing in and so, speaking about the new statute law, i.e. the Competition Act, 2002.
After undergoing this exercising of following the MRTP Act, 1969 from its origin to the impact it has had on the market- the industrial development and the public assistance of the consumers- the research worker is now in a place to confirm with the determination of the Raghavan Committee Report ( 2000 ) that had foremost suggested the permutation of the MRTP Act with a new competition government, viz. the Competition Act, 2002. Since so, economic experts, attorneies and industrialists have hailed the determination of the Ministry of Corporate Affairs to pass the MRTP and do manner for the statute law of the Competition Act, 2002 to convey India ‘s competition government in conformance with the international criterions.
Having spanned the Industrial information, through the 50 twelvemonth time-frame of pre-1991 Reforms and post-1991 Reforms and holding gone through the competitory policies the MRTP lacked in, the research worker is content with the replacing of the MRTP with the Competition Act.
In this respect, the research worker would wish to cite from the analysis in chapter 4 of this Undertaking. The alterations brought approximately in the 1991 Reforms opened up the market in more ways than one. And therefore, one can safely reason that maintaining with India ‘s liberalisation, MRTP had become unwanted, instead, an obstruction to the growing narrative and therefore, had to undergo multiple amendments in the period following the 1991 Reforms.
Last, to drive the research worker ‘s observation place, it is imperative to state that is that while the focal point of the MRTP was on commanding the concentration of economic power, the focal point of the Competition Act on guaranting free and just competition in the markets. Traveling off from the MRTP political orientation, the spirit of the Competition Act can be justly captured in what the economic expert Dr. S. Chakravarthy quoted: “ Big is no more bad, aching competition and involvement is. ”[ 23 ]
Hence it can be safely inferred that the toothless MRTP Act was laid to rest by the Competition Act and, justly so.[ 24 ]