UNFAIR TRADE

PRACTICES
AND
COMPETITION POLICY
 Background

 “Competition” (L – “compete”) is an age-

old phenomenon
 In olden days, competition
 existed amongst cave-men
 is also reflected in the Mahabharat
 In modern times, competition
 has become a global phenomenon
 starts right from Kindergarten & Nursery
classes

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Benefits of Competition….
 Companies : Efficiency, cost-saving
operations, better utilization of
resources, etc.

 The Consumer : Wider choice of goods

at competitive prices

 The Government : Generates revenue

BUT…………………………

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….Benefits of Competition

………all these benefits are lost if

Competition is UNFAIR or NON-
EXISTANT
 Choice of CARS in the olden days
 MTNL Monopoly : The position today
 Airlines : INDIAN AIRLINES : JET :
SAHARA
 Mobiles : Price Wars
 Indian Railways : The monopoly
continues….

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Evolution of Competition Law
 Before MRTP Act came into force (1970),
limited provisions existed under :
 The Indian Contract Act
 The Law of Torts
 Directive Principles of State Policy (Non-
enforceable)
 The MRTP Act brought in a four-pronged
thrust :
 Concentration of economic power ( - Repealed
in 1991 - )
 Restrictive Trade Practices
 Monopolistic Trade Practices ( - Almost a dead
letter - )
 Unfair Trade Practices ( - Added in 1984 - )

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 Unfair Trade Practices
 Many competition regimes do NOT consider
this as part of Competition Law
 BUT, it does affect competition – directly or
indirectly
 Consumer protection provisions made for the
first time in India by 1984 Amendments in the
MRTP Act
 The Consumer Protection Act came only 2
years later
 How Consumer Courts were hurriedly
constituted
 After 1986, MRTP Commission and Consumer
Courts had parallel jurisdiction
 Consumer Courts v MRTP Commission : Pros
& Cons

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 Unfair Trade Practices
 HOW UTPs affect competition :
 Warranties not based on lab tests
 After sales guarantees not honoured
 Contests & Competitions
 View of the MRTP Commission
 View of the Supreme Court
 Disparagement of competing products
 Godrej v Kelvinator
 Colgate v Pepsodent
 Rulings in RIDAKE (India) & XENICAL (USA)
 Misleading sales ads
 “ 60% OFF”
UPTO

 Guptaji’s Sales
 Ads of CURRYS (U.K.’s biggest electrical chain)

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 UTPs vis-à-vis Competition Act

Under the Competition Act :

 No provision for Unfair Trade Practices
 Only Consumer Courts will have
jurisdiction
 Pending cases will be continued by
MRTPC for 2 years
 After 2 years :
 All cases (except Disparagement Cases) will
be transferred to National Commission under
CPA
 All Disparagement Cases will be transferred
to Competition Commission

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Powers of Competition Commission as
Regards Agreements

 After the inquiry into the Agreement,

Competition Commission can:
 direct parties to discontinue the
agreement
 prohibit parties from re-entering such
agreement
 direct modification of the agreement

 impose penalty upto 10% of average

turnover of the enterprise

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 Abuse of Dominance

 Mandate of the Act : “No enterprise

shall abuse its dominant position.”
 5 categories of “abuse” are listed in
the Act, as for instance, -
 Imposing discriminatory conditions in
purchase or sale of goods
 Predatory pricing
 Limiting production or scientific or
technical development
 Using dominant position in one market
to enter another market, etc.
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 Abuse of Dominance

 Power of the Competition

Commission
 Afterinquiry into abuse of
dominant position, the
Competition Commission can
order:
 discontinuance of abuse of dominant
position
 impose a penalty upto 10% of the
average turnover of the enterprise
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Thank
You!
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