Dutt Committee: (Submitted Report 1969)

The government of India had the reports of the Monopolies Inquiry Commission and Hazari Committee in hand by 1967. Subsequently, one more expert committee "Industrial Licensing Policy Inquiry Committee" was set up under the chairmanship of Mr. Subimal Dutt and it was famous as Dutt Committee. The major recommendation of the Dutt Committee was that larger industrial houses should be given licenses only for setting up industry in core and heavy investment sectors. This recommendation gave rise to necessity of reorientation of industrial licensing policy. Some more points on Dutt Committee:

• Dutt Committee recommended setting up of a monopolies commission with necessary teeth to deal with the problems of concentration of economic power or product monopolies.
• It also recommended the classification of industries into sectors such as Core sector, Non Core sector, reserved sector etc. The large industrial houses should be entered to the core sectors.
• The committee observed that due to the license raj, a very strong nexus has developed between the Industrial houses, politicians and bureaucrats and there was a need to harmonize the social interest with private interest.

Please note that Dutt Committee had defined large business houses as those with assets of more than ` 350 million (` 35 Crore).

On the basis of recommendation of Dutt Committee , MRTP Act was enacted in 1969.

The Monopolies and Restrictive Trade Practices bill was introduced in the Rajya Sabha in 1967 and drastic changes were made by the Joint parliamentary committee. It was finally passed in the house in on 18 December 1969 and got president's assent on December 27, 1969, but was brought in force from June 1, 1970.

This act was later amended in 1984. It extends all of India except Jammu & Kashmir. The aims of this act were:

• To ensure that the operation of the economic system does not result in the concentration of economic power in hands of few rich.
• To provide for the control of monopolies, and
• To prohibit monopolistic and restrictive trade practices.

Please note that MRTP act is not applicable to :

• Government Company and undertaking owned by Government.
• Company established by a Central or State Act.
• Trade Unions
• Companies which have been taken over by the central Government.
• Companies owned by registered Cooperative Societies.
• Any financial institution.

Monopolistic Trade Practice: The act defines the Monopolistic Trade Practice as "Such practice indicates misuse of one's power to abuse the market in terms of production and sales of goods and services.

• Firms involved in monopolistic trade practice tries to eliminate competition from the market.
• Then they take advantage of their monopoly and charge unreasonably high prices.
• They also deteriorate the product quality, limit technical development, prevent competition and adopt unfair trade practices"

Unfair Trade Practice: The act defines Unfair Trade Practice as

• False representation and misleading advertisement of goods and services.
• Falsely representing second-hand goods as new.
• Misleading representation regarding usefulness, need, quality, standard, style etc of goods and services.
• False claims or representation regarding price of goods and services.
• Giving false facts regarding sponsorship, affiliation etc. of goods and services.
• Giving false guarantee or warranty on goods and services without adequate tests.

Restrictive Trade Practice: The act defines Restrictive Trade Practice as "The traders, in order to maximize their profits and to gain power in the market, often indulge in activities that tend to block the flow of capital into production. Such traders also bring in conditions of delivery to affect the flow of supplies leading to unjustified costs."

What is MRTP Company?

The firms with assets of ` 25 Crore or more were put under the obligation of taking permission from the government of India and they were called MRTP companies. This upper limit of ` 25 Crore was known as MRTP limit. It was later relaxed to ` 50 crore in 1980, ` 100 Crore in 1985 and in 1991 this limit was removed. Now only companies having more than 25% market share were called Monopolies.

Monopolies and Restrictive Trade Practices Commission

Monopolies and Restrictive Trade Practices Commission (MRTPC) was set up under section 5 of the Monopolies and Restrictive Trade Practices Act, 1969. The MRTPC is an organ of Department of Company Affairs, Ministry of Company Affairs, Government of India.

• MRTPC is a quasi-judicial body.
• Major function of the MRTP Commission is to enquire into and take appropriate action in respect of unfair trade practices and restrictive trade practices.
• In regard to monopolistic trade practices the Commission is empowered to inquire into such practices
  • Upon a reference made to it by the Central Government
  • Upon its own knowledge or information and submit its findings to Central Government for further action.