India adopted its competition law in 1969 in the form of “Monopolies and Restrictive Trade Practices Act (MRTP). The decade of the 80s and 90s has been a very crucial one, due to the introduction of the economic policy and introducing the Indian market to the world. It came into force on June 1, 1970. Based on the recommendation of Dutt Committee, MRTP was enacted to prohibit monopolistic and restrictive trade practices and also of few to ensure that concentration of economic power in hands of few Enterprises. Monopolies and Restrictive Trade Commission (MRTPC) was introduced under section 5 of the MRTP Act. MRTPC was a quasi-judicial body and its main function is to enquire and take action in respect of unfair trade practices. Major amendments were made to the MRTP Act. 1984 Amendment, 1991 Amendment. MRTP Act, 1969 was failed in fulfilling its main objective for which it was created.
The Monopoly and Restrictive Trade Practice Act became superseded in the present world of throat-cutting races.
Therefore there was a need to change our focus from the monopoly to the competition. Hence the latest law has been legislated and issued in the Gazette of India on 14th Jan 2003 for bringing competition in the Indian market. India’s official anti-monopoly body; the Competition Commission of India (CCI) had finally become active from May 20, 2009. CCI had replaced the Monopolies and Restrictive Trade Practices Commission, 1969.
The MRTP Act, 1969
The MRTP Act came into force on 1st June 1970. Before Independence, there was no competition act in India. Policies and rules were made by the government which only ensures just and equitable distribution of resources. However, the industrialization of the Indian economy took place because of the World Wars. India was the main supplier of ammunition to the British army because of this business houses were formed- Tata’s, Birla’s, etc. Post-Independence. India acquired a centralized planning system – A five-year plan that put down how the resources of the country were to be utilized in the coming five years. During the preliminary 5 year plans, the principal focus was on succeeding in Industrial and Economic Development. In 1956, Industrial Policy was passed wherein all the industries of the nation were distinguished into 3 categories – Schedule A; Schedule B, and Schedule C industries. Most of the laws and policies that were passed during that time were based on the Principle of Command-and-Control Government interfere in private sectors more as compare to public sectors. Most of the developments were taking place only in the public sector. The private sector of the country required prior approval of the licenses from the government. Big houses got the full support of the government and they had no requirement of approval of license from the government. This caused the concentration of the economic power and these business houses started anti-competitive activities. So, finally the Monopolies and Restrictive Trade Practices Act, 1969 was formed.
Directive Principles of State Policy (Part IV) inspired the introduction of Competition law in India. Article 38 and 39 of the constitution state that the state must ensure and promote the welfare of the people and protect economic and political justice.
Monopolies and Restrictive Trade Practices Commission:
The Monopolies and Restrictive Trade Practices Commission is a quasi-judicial body. MRTPC is covered under Section 5 of the MRTP Act. Its main function is to enquire and take action against Unfair Trade Practices and Restrictive Trade Practices. MRTPC is also empowered to enquire and take action against Monopolies Trade Practices under section 10(b) of the MRTP Act.
Failure of MRTP Act:
- Both the big houses and small firms have to take prior approval of the government before doing any reconstruction or take over. This causes a delay in the market which affects the consumers in the market.
- MRTP Act covers the Restrictive Trade Practices but does not include various kinds of anti-competitive activities. It does not include any activity like cartels, bid-rigging, price-fixing, predatory pricing, etc.
- There is no independence of the functioning of the members in the MRTP Commission. As the members are appointed by the Government itself. Unnecessary delay in taking decisions and government was also delaying in replacing or appointing new members in the Commission.
- Under Section 38 of the MRTP Act, if any project enterprise had a high potential for exports in the future, it would cause the authority to simply blindly pass all its applications under the Act and not considering any of the anti-competitive or monopolistic shadows that it might have.
Competition Act, 2002
- Introduction of Competition Act, 2002:
In Oct 1999, the Administration of India constituted a High-Level Committee under the Chairmanship of Mr. SVS Raghavan [‘Raghavan Committee’] to advise a modern competition law for the country in line with international developments. On the basis of the recommendations of the Raghavan Committee.
Section 3: Anticompetitive practices.
Section 4: Abuse of Dominance.
Section 5 and 6: Mergers and Acquisitions.
Section 49: Competition Advocacy
- Competition Commission of India:
The economic growth of the country depends upon freedom of trade, fair competition, and companies should be able to enter the market easily. The Competition Commission of India ensures fair competition in the market and protects the market from any unfair or anti-competitive activities.
CCI was formed as a statutory body on 14th October 2003.
Comparison between MRTP Act and Competition Act 2002
MRTP Act, 1969
- The first competition law in India was the MRTP act which covers unfair trade practices.
- In the MRTP act, there is no provision of penalty if any individual or entity commits an offense under the act.
- The main objective of the MRTP act is to restrict monopolies.
- The chairman of the MRTP Commission is appointed by the central government.
- MRTP act is corrective. Nothing is penalized.
- MRTP commission has no power to deal with foreign-origin cartels in a straight way.
- MRTP act does not give a view on the definition of consumer.
- MRTP act restricts UTP and RTP.
Competition Act, 2002
- Competition Act was enacted to promote healthy competition in the market and check upon freedom of trade.
- Competition Act penalizes the individual or entity who commits an offense under the Act.
- Competition Act is enacted to support and promote competition.
- The chairman of the competition commission is appointed by the committee.
- Competition Act is punishable.
- Competition law has the power to control them. Cartels are well defined in the act.
- Competition Act defined consumer.
- Competition Act restricts abuse of dominance, anti-competitive agreements, and control combinations.
Analysis of Competition Law in India is necessary to know the importance of the law in the country and any further improvements that are required to be done. India came up with the first law in the name of the MRTP Act, 1969 but in many aspects, it is failed to implement its objectives as it only focuses on the monopolies in the market. India as a developing country requires a strong competition law because India opened its economy across international boundaries. This paper reviews the history of competition law in India as well as the current Competition act prevailing in the country.
The Competition Act, 2002 is a success in the present scenario. Some improvements are required that are discussed in the paper. CCI must be cautious while exercising their advocacy. No law is perfect as it develops with time. On a whole, we can say that our Competition Law has correct and defined goals which are helping our economy to develop.