Dec 25, 2017
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What is Unfair Trade practice?

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 Unfair Trade Practice

Monopolies and Restrictive Trade Practices Act, 1969

The Monopolistic and Restrictive Trade Practices Act, 1969,  enacted:

  1. To ensure economic system not concentrated in hands of few.
  2. Control Monopoly.
  3. Prohibition of monopolistic and restrictive trade practices.

On May 20, a six-year waiting period ended with the Central Government notifying some key provisions of the Competition Act, 2002, which is to replace the Monopolies and Restrictive Trade Practices (MRTP) Act.

The Hindu, Original Article, “Competition Act and MRTP: One ‘two’ many”, Retrieved on 25th December 2017, Article by Aditi Gopalakrishnan.

There is clear distinction between Monopolistic Trade Practices and Restrictive Trade Practices as under:

  1. Monopolistic Practices: The practices acquired by any organisation and also undertaking, on account of their control over market, which harm the public interest. It includes:
  • Charging unreasonably high prices.
  • Policy to decrease existing and also potential competition.
  • Restricting capital investment and also technical development.
  1. Restrictive Practices:  Restrictive practices means act which restrict or distort or also prevent competition in market. Few dominant firm adopt these to harm the competition. It includes:
  • Restricting the sale and also purchase of goods from specified person.
  • Tie-in-sale, i.e. forcing the customer to purchase a particular product
  • Restricting areas of sale.
  • Boycott
  • Formation of cartels
  • Predatory pricing

What is Unfair Trade practice?

An unfair trade practice means a trade practice which is performed for promoting any sale, use or supply of any goods or also services,  adopts unfair method, or unfair or also deceptive practice.

Following are some of the ways of Unfair Trade Practice:

1. FALSE REPRESENTATION:

Falsely making any oral or written statement or representation which:

  1. Represent that goods are of particular quality, quantity, grade composition etc.;
  2. Represent that service is of particular quality,standard or grade;
  3. Shows that any re-built, second-hand renovated, reconditioned or also old goods as new goods;
  4. Represent that goods or services have sponsorship, approval, performance, characteristics, accessories, uses or also benefits which they do not have;
  5. Represent that the seller or the supplier has a sponsorship or approval or also affiliation;
  6. Making a false representation of usefulness of goods.
  7. Gives any warranty or guarantee of the performance, efficacy or length of life of the goods, that not based on an adequate or also proper test;
  8. Materially mislead in prices of goods;
  9. Gives false or misleading facts disparaging the goods, services or also trade of another person.

  2. FALSE OFFER OF BARGAIN PRICE: 

When an advertisement is published in a newspaper that goods or services are offered at a bargain price, there is no intention that the same may be offered at that price, for a reasonable period or also reasonable quantity, it shall amount to an unfair trade practice.

The ‘bargain price’, means-

  • the price stated in the advertisement which represents that it is lesser than the ordinary price, or
  • the price, any person would believe to be better than the ordinary price.

3. FREE GIFTS OFFER AND PRIZE SCHEMES:

  • Offering Gifts or prizes with the goods or services with different intention
  • Representing as if something is being offered with the goods, in fact price of the goods are recovered from the sold article
  • Offering some prizes to the buyers by the conduct of any contest, lottery or game of chance or skill, with real intention to promote sales or business.

4. NON-COMPLIANCE OF PRESCRIBED STANDARDS:

Any sale or supply of goods, for use by consumers, does not comply with the prescribed standards, in relation to their performance, composition, contents, design, construction, finishing or packing, to prevent or decrease the risk of injury to the person using such goods, shall amount also to an unfair trade practice.

5.  HOARDING, DESTRUCTION, ETC.:

Firms which sells or supplies goods and also services by means of misleading hoardings or destruction of goods, refusal to sell the goods or provide any services, with an intention to raise the cost of those or other similar goods or services, shall also be an unfair trade practice.

INQUIRY INTO UNFAIR TRADE PRACTICES AND RELIEF :

The Commission may inquire into

Any unfair trade practice upon :

  • Receiving a complaint from any trade association, consumer or a registered consumer association, or
  • Reference made by Central Government or also State Government
  • Application by the Director General or
  • Its own knowledge or information.

RELIEF AVAILABLE

After making an inquiry into the unfair trade practice if the Commission thinks that the practice is harming pubic interest and also the interest of any consumer it may direct that-

  • The practice discontinued;
  • The agreement shall be declared void or may be modified;
  • Any information, statement or advertisement relating to unfair trade practice shall be disclosed, issued or published as may be specified
  • The Commission may permit the party to carry on any trade practice and ensure that it is not harming the interest of public at large and also interest of consumer.

However no order shall be made in respect a trade practice which is expressly authorised by any law in force.

 

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The Companies Act, 2013

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