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Economic Power : Condition of having

sufficient productive resources at command that give


the capacity to make and enforce economic decisions,
such as allocation of resources and apportioning
of goods and services.
Concentration of Economic Powers : It is the
condition when most of the economic powers reside
in the hands of a few firms or a single firm having
monopoly in the market.
MRTP Firms : Firms having assets above Rs.100
crore.
Dominant Undertaking : It is that which controls at
least one fourth production or market of a product
and has assets of at least Rs.3 crore.

MEANING
During 1960s and 1970s concentration of
power was at the top. Largest business in
terms of assets was Tata followed by Birla.
The third largest business house was Martin
Burn, which was only one fourth of the top
two business houses

During 1980s and 1990s there was


extreme concentration at the top. As in Dec
1991, the largest business house in terms of
assets was Tata, followed by Birla and
Reliance

GROWTH
In post liberalization period 1991-2009, the
private sector corporate giants flourished. The
largest private sector company in terms of
assets and net sales was Reliance Industries
followed by Tata Steel and Hidalgo.
Government of India undertook some
measures to curb and restrict the growth of
monopoly power in country. Government
passed the MRTP Act in 1969 and amended it in
1980 and 1984.
Since 1991, with increasing trends of
liberalization in the economy , controlling
concentration of economic power is no longer
on the agenda of the government
Industrial policy resolution of 1956-1991-:
It gave big scope to large houses in the private
sector to enter into various industries, these
industries were heavy electrical plants, machine tools,
basic chemicals and drugs etc. Most of these were
highly capital intensive and only large business
houses can arrange money for them
Loopholes in administration proceedings-:
Administrative factors have enabled the large houses
to grow despite of the national objective of curbing
monopolies. The faulty tax system, loopholes in
control mechanism in respect of foreign exchanges,
imports etc has helped concentration of economic
power.

CAUSES
Concentration of economic power in licensing
policies and procedure
Licensing procedures were responsible in leading to
a situation wherein large monopoly houses could
grow fast. The Dutt Committee(1969) blamed
licensing policy for concentration of economic power.
Erodes competitive attributes
Monopolies obstructs the free play of market
forces of demand and supply, free exchange etc
Harms social welfare
The unfair trade practices like hoarding, black
marketing, discrimination in discounts, dictating
dealer to sell product at a fixed price etc have
harmed the social welfare
Strains social and political life
The growth of monopolies and concentration of
economic power makes its impossible to achieve
the aim of decentralization

CONSEQUENCES
MonopoliesAnd Restrictive Trade Practices
Act (MRTP Act) and Amendments in 1980
and 1984
Competition Act 2002

GOVERNMENT MEASURES
TO REGULATE
CONCENTRATION OF
ECONOMIC POWER
Inthe pre-1991 period the declared policy of the
government was to curb and restrict the growth of
monopoly power in the country for this purpose, the
government imposed restrictions on the entry of large
business houses in a number of industries, set up
a large number of industries in the public sector, and
undertook various measures to encourage small and
medium industries. The most important in this phase
was passing of the MRTP Act (Monopolies and
Restrictive Trade Practices Act) in 1969 and
the setting up of the MRTP Commission in 1970.Since
1991, the focus has shifted from controlling
monopolies to promoting competition.

MRTP Act
Large and dominant undertaking had to take
prior approval of the central government for
the establishment of new undertaking
mergers amalgamations takeovers act
The act provided for regulation and
prevention of monopolistic trade practices.
Monopolistic trade practices are those
practices which have or are likely to have the
affect of preventing or distorting competition
or maintaining prices at unreasonably high
levels.

MAIN PROVISION OF MRTP


ACT 1969
The act empowers the MRTP commission to
enquire into any restrictive practice and to
issue suitable orders thereof to curb it
Restrictive trade practice is a trade practice
which has or may have the effect of
preventing competition in any manner
The MRTP act empowers the commission to
enquire into unfair trade practices an unfair
trade practice may be defined to a mean a
trade practice indulged in by a producer of a
good or service the MRTP act retarted the
growth of both domestic and foreign
competition.
AMENDMENTS IN THE
MRTP ACT
ACCORDING TO NIP
1991
Definition of good enlarged - definition of the word
good was enlarged to include insertions of misleading
statements in the company proportion while proposing a
new issue of share of debentures.
Definition of service enlarged- the definition of
services was enlarged to include chit funds and the real
estate transactions.
More strict penalty provisions- penalty provisions
with regard to unfair trade practices were more strict.
Amended definition of unfair trade practices-
amended definition of unfair trade practices meant trade
practices which, for the purpose of permitting the sale,
use, supply, or provision of any goods/services, adopts
any unfair method or deceptive practice.
Scrapping the asset limit- The New Industrial Policy
1991 scrapped the asset units for MRTP companies. It
meant that the company no longer needed prior
permission of the commission for investment decision.
1st October 1999, The Government Of India
appointed a high level committee on competition
policy and competition law to advice a modern
competition law for the country in the international
developments and to suggest a legislative
framework, which may entail a new law or
appropriate amendments to MRTP act. The company
presented its competition policy to the government in
may 2000. The draft competition law was drafted and
presented to the government in December 2000.
After some refinements, following extensive
consultations and discussions with all interested
parties, the parliament passed in December 2002, the
new law, namely The Competition Act 2002.

COMPETITION ACT 2002


THE INDUSTRIES(DEVELOPMENT AND
REGULATION) ACT 1951- may no longer
be necessary except for location, for
environmental protection and for and for
monuments and national heritage protection
consideration etc.
The industrial dispute act 1947- and the
connected statues need to be amended to
provide for an easy exit to the non-viable, ill
managed and inefficient units subject to their
legal obligations in the respect of their
liabilities.

SALIENT FEATURES OF NEW


COMPITITION ACT 2002
The board of industrial finance &
restructuring (BIFR)- formulated under the
provisions of sick Industrial Companies Act 1983
should be abolished.
World trade organization(WTO)- there
should be necessary provision to examine and
adjudicate upon anti- competition practices that
may accompany or follow developments arising
out of the implementation of WTO agreements.
MRTP act suggested that
The MRTP act 1969 may be repealed and the
MRTP commission wound up.
The pending UTP cases in the MRTP commission
may be transferred to the concerned consumer
courts under the consumer protection act 1986.
Anti-competition Agreement
Abuse Of Dominance
Combinations Regulations
Competition Advocacy

COMPONENTS OF
NEW COMPETETION
ACT 2002
Dominant positions has been appropriately
defined in the act in terms of the position of
strength enjoyed by an enterprise in the
relevant market.
It is worth mentioning that the act does not
prohibit or restrict enterprises from coming
into dominance. All that the Act prohibits is
the abuse of that dominant position.
The act therefore targets the abuse of
dominance and not dominance per se, This is
indeed a welcome step, a step towards a
truly global and liberal economy.

ABUSE OF DOMINANCE
Firms enter into agreement, which may have the
potential of restricting competition.
There are two types of agreements
Horizontal agreements- They are among
competitors and are more likely to reduce
competition. It includes membership of cartel,
are presumed to lead to unreasonable
restrictions of competitions and are therefore
presumed to have a significant adverse effect
on competition.
Vertical agreements- They are those relating to
an actual or potential relationship of purchasing
or selling to each other.

ANTI-COMPETITION
AGREEMENT
The Competition Act is designed to regulate the
operation and activities of combinations, a term which
contemplates acquisition, mergers , or amalgamations.
The act has made the pre-notification of combinations
voluntary for the parties concerned.
If the parties to the combination choose not to notify
the CCI, as it is not mandatory to notify , they run the
risk of a post-combination act by the CCI, if it is
discovered subsequently , that the combination has a
significant adverse effect on competition.
There is a rider that the CCI shall not initiate an inquiry
into a combination after the expiry of one year from the
date on which the combination has taken effect.

COMBINATIONS
REGULATIONS
Competition advocacy creates a culture of competition.
The regulatory authority under the act namely,
Competition Commission of India (CCI), in terms of the
advocacy provisions in the act , is enabled to participate
in the formulation of the countrys economic policies and
to participate in the reviewing of laws related to
competition at the instance of the Central Government.
The Commission will therefore be assuming the role of
competition advocate , acting pre-actively to bring about
Government policies that lowers barriers to entry , that
promote deregulation and trade liberalization and that
promote competition in the market place.

COMPETITION ADVOCACY
COMPETITION ACT 2002
MRTP ACT 1969
1. Its focus was on controlling 1.Its focus is on ensuring free
the concentration of economic and fair competition in the
power. market.
2. It considered dominance as 2.It considered abuse of
bad. dominance as bad.
3. In this, registration of 3. In this, registration of
agreement was compulsory. agreement is optional.
4. It did not define competition 4. It defines competition
offences offences.
5.. It has no penalty for 5. . It has provisions for
offences. penalties for offences.
6. It was rigid and reactive. 6. It is flexible and proactive.
7. It covered unfair trade 7. It does not cover unfair
practices. trade practices.

DIFFERENCE