The MRTP Act was introduced to provide that the operation of the economic
system does not result in the concentration of economic power in hands of few.
Through this article, an overview of the MRTP Act has been done including the
salient features, the important provisions, the amendments which have been made
over the years It was later repealed and replaced by the Competition Act, 2002
but it still was the first legislation in India regulating the market.
The Monopolistic and Restrictive Trade Practices Act, 1969, was enacted:
- To ensure that the operation of the economic system does not result in
the concentration of economic power in hands of a few,
- To provide for the control of monopolies, and
- To prohibit monopolistic and restrictive trade practices.
The MRTP Act extends to the whole of India except Jammu and Kashmir.
Unless the Central Government otherwise directs, this act shall not apply
- Any undertaking owned or controlled by the Government Company,
- Any undertaking owned or controlled by the Government,
- Any undertaking owned or controlled by a corporation (not being a
company established by or under any Central, Provincial or State Act,
- Any trade union or other association of workmen or employees formed for
their reasonable protection as such workmen or employees,
- Any undertaking engaged in an industry, the management of which has been
taken over by any person or body of persons under powers by the Central
- Any undertaking owned by a co-operative society formed and registered
under any Central, Provincial, or State Act,
- Any financial institution.
Scope & features of MRTP, Act, 1969The salient features of the MRTP Act of 1969 are as follows:
Aim of the Act
MRTP Act came into existence on 1 June 1970. The law was enacted with the sole
aim of achieving the largest possible production with the least damage to people
at large whilst securing maximum benefit.
Scope of the MRTP Act, 1969
To first understand the salient features that govern the MRTP Act, 1969, it is
important to truly understand the scope of its applicability.
Following are the
concepts tackled by the Act:
- It followed a Command and Control Approach The Act made it compulsory for
enterprises having assets more than INR 20 crores to take approval from the
Central Government before underdoing any kind of corporate restructuring or a
proposed takeover. A criterion was fixed to identify the dominant undertaking.
Enterprises with assets of more than INR 1 crore were automatically deemed to be
- Trade Practices which are monopolistic Monopolistic Trade Practices are covered
under Chapter IV of the MRTP Act, 1969. These are the activities that are
undertaken by Big Corporate Houses by exploiting their position in the market.
This meant that activities that hamper or eliminate competition of healthy
nature in the economic market were prohibited as these trade practices were
- Restrictive Trade Practices Restrictive Trade Practices are activities that stop
the flow of capital or profits back into the market. Some businesses often tend
to control the supply of goods or products in the market by either restricting
production or taking control of the delivery. The Act disallows and ensures
firms do not indulge in these practices.
- Unfair Trade Practices Unfair Trade Practices are acts of false & misleading
nature related to goods and services by the firms. Section 36-A of the MRTP Act,
1969 explicitly prohibits firms from indulging in Unfair Trade Practices (UTPs).
The provision against Unfair Trade Practices was inserted by the 1984 Amendment
to the MRTP Act.
MRTP Act also allows for the establishment of the Commission of MRTP which is to
be a regulatory authority to deal with the offences under the MRTP Act. During
its enactment, the MRTP Act is the first legislation that addressed competition
law problems in India seemed to be perfect legislation to catch the defaulting
However, with the wave of globalization that came to post the 1991
reforms the whole scenario in the country changed. A need for modification in
the existing MRTP Act to keep pace with the rapidly changing economic scenario
Loopholes in the MRTP Act and Subsequent Amendments:
Up until 1984, MRTP Act was successful in regulating the competition in the
Indian market. However, by 1984, amendments were needed to update the act as per
the needs of the economy. Following are the two major amendments made to the
- 1984 Amendment This amendment was brought on the recommendations of the Sachar
Committee. The amendment ensured that Section 36A was added to the Act to
protect the consumers against unfair trade practices so that effective action
can be taken against them. Claims against fake and misleading advertisements,
wrong representation of goods, false guarantees came under this Act.
- 1991 Amendment This amendment permitted the MRTP Act to be extended to the
public sector and government-owned companies. Post this amendment, private
players who function in the market were no longer needed to take special
permissions from the government before undergoing any reconstruction of the
corporate nature. This amendment to the MRTP Act came to effect in the light of
the New Economic Policy which led to the opening of the Indian economy. The
License Raj which restricted the growth of the Indian economy was thus