Objective The Monopolies and Restrictive Trade Practices Act, 1969, was enacted to prevent the concentration of economic power to common detriment, control of monopolies, prohibition of monopolistic and restrictive trade practices and matters connected therewith.

Prevention of concentration of Economic power Under this enactment, any undertaking producing one fourth or more of any type of goods and having assets of more than Rupees One Crore, is required to obtain clearance for any scheme of expansion. Initially, for the purpose of computing the total goods produced by the undertaking, goods that were exported were also taken into account. By an amendment in 1980, those goods, which are exported, are no longer taken into account while computing the total goods produced. This was in view of the objective of the enactment to control such practices within India.

Monopolistic Trade Practices Section 2 (i) of the Act defines monopolistic trade practice while Section 31 provides for investigation into such practices by the MRTP Commission, either on reference by the Central Government or on receipt of information as to the carrying on of such activities by any such undertaking.

Monopolistic Trade Practices such as maintenance of prices and profits at unreasonable levels, arbitrary price increases, high expenditure on advertisement and high power salesmanship to maintain the undertaking in a monopoly situation, limiting technical detriment to common detriment or allowing quality of goods to deteriorate, are some of the situations which would call for investigation and action under this enactment. Under Section 32 of the Act, such monopolistic trade practices are deemed to be prejudicial to public interest.

Monopolistic trade practices that may be permitted The Central Government may permit such practice if satisfied that it is necessary for defense purposes, to ensure maintenance of supply of essential goods/services or to give effect to any terms of an agreement to which the Central Government is a party.

Restrictive trade practices Section 2 (o) defines restrictive trade practices, which may be investigated by the MRTP Commission under Section 37 of the Act.

Restrictive Trade Practices such as differential or discriminatory incentive based on quantities, stipulation in agreement as to the prices that should be charged on re-sale, territorial restrictions and restricting terms of guarantee, bumper prize contests wherein the prices of goods are increased to cover the cost of prizes, announcing loan facilities without a guarantor while charging guarantor's commission, sale of goods for a particular price and issue of cash memos for a lesser sum, display of price-lists indicating maximum recommended rates and absence of indication that a lower price could be charged thus encouraging consumers to ask for rebates, prohibiting film producers from selling/assigning video rights, fixing prices and discounts in concert, collusive tendering, predatory pricing and cutting prices below cost price, boycott of products of a particular company by traders, or for obtaining higher commission, and such other practices would call for investigation and action under this enactment.

Restrictive trade practices that may be permitted The Act provides for registration of agreements containing clauses that are indicated under Section 33 as a restrictive trade practice. Such practices may be permitted by the Commission under Section 37, on such steps taken by the undertaking to ensure that such practice is not prejudicial to public interest. This however does not apply in case of restrictive trade practices under Section 2 (o). If any clause in an agreement is a restrictive trade practice as defined in Section 2 (o) the same is void and cannot be permitted.

Advantages In cases where it is proved that any undertaking is about to carry on any monopolistic, restrictive or unfair trade practice, which is likely to prejudicially affect public interest, or the interest of any trader of consumer, the Commission may restrain such undertaking from carrying on such activity by way of Injunction, which includes the power to grant export temporary injunction also. The Commission is also empowered to hold investigation on receipt of a complaint by any trader, consumer or such affected party.

Disadvantages The Monopolies and Restrictive Trade Practices Commission established under Section 5 has its central office in Delhi which makes the remedies available under this Act, inaccessible to other parts of the country and also entails delay.