MRTP vs Competition Act: Difference and Comparison

Key Takeaways

1. MRTP Act was an essential piece of legislation in India aimed at regulating trade and preventing anti-competitive practices.
2. The Competition Act 2002 is a vital legislation in India designed to promote and sustain competition in the market.

What is MRTP?

The Monopolistic and Restrictive Trade Practices (MRTP) Act was an essential piece of legislation in India aimed at regulating trade and preventing anti-competitive practices. This act was enacted in 1969 to curb monopolies and monopolistic trade practices that hindered competition and harmed consumers.

The MRTP Act defined several key terms, including monopoly, Monopolistic trade practices and restrictive trade practices. It sought to regulate and control these practices in the interest of consumers and small competitors. The act’s primary objective was to promote fair competition, prevent the concentration of economic power and protect the interests of consumers.

Under the MRTP Act, any business entity with substantial control over the production, supply or distribution of goods or services was subject to regulation.

What is the Competition Act?

The Competition Act 2002 is a vital legislation in India designed to promote and sustain competition in the market, protect consumer interests, and prevent anti-competitive practices. This act replaced the outdated MRTP Act and established the Competitive Commission of India to enforce its provisions.

The Competition Act has a broader scope and covers various forms of anti-competitive behaviour, including anti-competitive agreements, abuse of dominant position and combinations. The act ensures that businesses do not engage in activities stifling competition or harming consumer interests.

This act provides for the approval of combinations that may substantially lower competition. It aims to create a level playing field for businesses, promote innovation and efficiency, and safeguard consumer interests by preventing and penalizing anti-competitive behaviour.

Difference Between MRTP and Competition Act

1. The MRTP Act enacted in 1969 primarily aimed at controlled monopolies and restrictive trade policies, while the Competition Act introduced in 2002 has a broader objective of promoting and sustaining competition in the market,
2. The MRTP Act was enforced by the Monopolies and Restrictive Trade Practices Commission (MRTPC). At the same time, the Competition Act established the Competition Commission of India (CCI) as the regulatory authority responsible for enforcing its provisions.
3. The MRTP had relatively milder penalties for violations, and the MRTPC handled enforcement. The Competition Act introduced stricter penalties and a more robust enforcement mechanism through the CCI, making it a more effective deterrent against anti-competitive behaviour.
4. The MRTP Act did not fully account for the modernization of the Indian economy or globalization trends. At the same time, the Competition Act considers the changing economic landscape and the need for India to integrate with global markets.
5. While the MRTP act aimed to protect consumers, it focused primarily on controlling monopolistic practices. At the same time, the Competition Act places a more significant emphasis on consumer welfare by ensuring a competitive market environment.

Comparison Between MRTP and Competition Act

Parameters	MRTP	Competition Act
Objective and Scope	Primarily aimed at controlled monopolies and restrictive trade policies	Has a broader objective of promoting and sustaining competition in the market
Enforcement Authority	Enforced by MRTPC	Established by CCI
Penalties and Enforcement	Relatively milder penalties	Stricter penalties and robust enforcement
Modernization and Globalization	It did not fully account for the modernization of the Indian economy	Takes into consideration the changing economic landscapes
Consumer welfare focus	Focus primarily on controlling monopolistic practices	emphasis on consumer welfare by ensuring a competitive market environment

References

1. https://heinonline.org/hol-cgi-bin/get_pdf.cgi?handle=hein.journals/lwesj2&section=133
2. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2429261