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Restrictive and Unfair Trade Practice - Section 2(c) and Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969

Business is with competition and to sustain in the market people adopt different strategies. Sometimes the strategies may work well or may be successful. But in some circumstances the strategies without proper planning may make harm to the business. Monopolies and Restrictive Trade Practices Act was passed with intention to prevent all kinds of Restrictive Trade Practice and to restrict development of monopoly in business.

Monopoly will definitely disadvantages to the customers and fair completion is necessary to get quality service at reasonable rate to the customers. E.g. before the introduction of Private Banks in the banking sector, the monopoly was with Nationalized banks and the attitude Bank officers entirely different from the current situation and it was very difficult to get service from banks. Now the situation is changed due to the introduction of Private bank with quality services. Nationalized banks are also maintaining quality to attract customer. Health competition is necessary in every filed. Monopolies and restrictive trade practices will only make the quality down.
Legal provisions in the Monopolies and Restrictive Trade Practices Act, 196 are as under:

Restrictive Trade Practice - Section 2(c) of the Monopolies and Restrictive Trade Practices Act, 1969

Section 2(c) defines restrictive trade practice as " restrictive trade practice" means a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular-

(i) which tends to obstruct the flow of capital or resources into the stream of production or

(ii) Which tends to bring about manipulation of prices, or conditions of delivery or to effect the flow of supplier in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions.

Unfair Trade Practice- Section 36A of Monopolies and Restrictive Trade Practices Act, 1969

In this part unless he context otherwise requires, "unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of the following practices and thereby causes loss or injury to the consumers of such goods or services, whether by eliminating or restricting competition or otherwise, namely:


Practice of making any statement, whether orally or in writing or by visible representation which:

(i) Which falsely represents that the goods are of a particular standard, quality, grade, composition, style or model;

(ii) Falsely represents that the services are of a particular standard, quality or grade

(iii) Falsely represents any re-built, second hand, renovated reconditioned or old goods as new goods;

(iv) Represents that the goods or services have sponsorship approval, performance, characteristics, accessories, uses or benefits which such goods do not have;

(v) Represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or suppler does not have;

(vi) Makes false or misleading representation concerning the need for or the usefulness of any goods or services;

(vii) Gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof;

Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence

(viii) Makes the public representation in a form that purports to be-

(i) A warranty or guarantee of a product or of any goods or services; or

(ii) A promise to replace, maintain or repair article or any part thereof or repeat or continue a service until it has achieved a specified result.

If such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;


(ix) Materially misleads the public concerning the price at which a product or like products or goods or services, have been or are ordinarily sold or provided, and, for this purpose, a representation as to price shall be deemed to refer to the price at which the product or goods or services has or have been sold by the seller or provided by supplier generally in the relevant market unless it is clearly specified to be the price at which the product has been sold or services have been provided by the person by whom or on whose behalf the representation is made

(x) Gives false or misleading facts disparaging the goods, services or trade of another person.

Investigation by Director General before issue of process -Section 11 of Monopolies and Restrictive Trade Practices Act 1969
Where any complaint is received by the Commission from any association (Trade Association or Consumer's association) under section 10 as stated above, it may before issuing any process requiring the attendance of the person complained against by an order, require the Director General to make or cause to be made a preliminary investigation in such manner as it may direct and submit a report to the Commission. Such a preliminary investigation and report shall enable the Commission to satisfy itself as to whether or not the complaint requires to be inquired into.

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