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What do you mean by MRTP Act 1969

What is MRTP?


Many people ask what is MRTP act full form? So, MRTP stands for The Monopolistic and Restrictive Trade Practices. It is the full form of MRTP Act. It was an Indian legislation introduced in 1970 with the aim of preventing the concentration of economic power in the hands of a few. 



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And ensuring that the operation of the economic system does not result in monopolistic or restrictive trade practices.



What do you mean by MRTP act difference between MRTP act 1969 and competition act 2002


Definitions of Monopoly by Different Authors



Prof. A.J. Braff ‘Under pure monopoly, there is a single seller in the market. The monopolist’s demand is the market demand. The monopolist is a price maker. Pure monopoly suggests a no substitute situation.’


Mankiw said that a monopoly is a market structure in which there is only one seller of a good or service.


Pindyck and Rubinfeld “A monopoly is a market structure in which there is a single seller of a good or service and no close substitutes exist.”


Foss said that a monopoly is a market structure in which there is only one seller of a good or service and there are significant barriers to entry.


In the words of Scherer and Ross “A monopoly is a market structure in which there is only one seller of a good or service and the seller has market power.”


According to Baumol “A monopoly is a market structure in which there is only one seller of a good or service and the seller faces a downward-sloping demand curve.”


Hall and Lieberman said that “A monopoly is a market structure in which there is only one seller of a good or service and the seller is able to earn positive profits in the long run.”




Main Concepts Addressed

The main concepts addressed under the MRTP Act were:

  • Monopolistic Trade Practices (MTPs): Activities undertaken by big business houses that abused their market position to hamper or eliminate healthy competition in the market.
  • Restrictive Trade Practices (RTPs): Activities that block the flow of capital or profits in the market by controlling the supply of goods or products, production, or controlling delivery.
  • Unfair Trade Practices (UTPs): False, deceptive, misleading, or distorted representation of facts related to goods and services by firms.



Shortcoming of MRTP Act


The MRTP Act had several shortcomings, which led to its eventual failure and replacement by the Competition Act in 2002. Some of the reasons for its failure include:

  1. Excessive government control: Both small and big businesses were subjected to excessive government control, making it difficult for many firms to survive.
  2. Vague and ambiguous law: The Act did not specifically define various kinds of anti-competitive activities, leading to multiple interpretations by courts and weakening the core essence of the law.
  3. Dominance per se bad: The MRTP Act considered dominance itself as bad, regardless of whether the party abused it or not.




Competition Act


The Competition Act, which replaced the MRTP Act, aimed to shift the focus from controlling monopolies to promoting competition in the economy. Some of the key differences between the two acts include:

  • The Competition Act is punitive, whereas the MRTP Act was reformatory in nature.
  • The Competition Act determines the dominance of a firm based on its market structure, while the MRTP Act based it on the firm’s size.
  • The Competition Act focuses on the interest of the public at large, as opposed to the MRTP Act’s focus on consumer interest.
  • The Competition Act specifies penalties for offenses, unlike the MRTP Act.



My Personal View

MRTP Act was an important legislation in India to regulate monopolistic and restrictive trade practices, but it had several weaknesses that led to its replacement by the Competition Act in 2002. 

The Competition Act addressed many of the shortcomings of the MRTP Act, promoting competition and better serving the interests of the public and the economy.



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