Corporate affairs ministry set to repeal MRTP Act

Corporate affairs ministry set to repeal MRTP Act
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First Published: Tue, Aug 18 2009. 01 15 AM IST

Closing act: The MRTP Commission, which has limited powers, will now deal only with pending cases and totally cease to exist in two years. Rajkumar / Mint
Closing act: The MRTP Commission, which has limited powers, will now deal only with pending cases and totally cease to exist in two years. Rajkumar / Mint
Updated: Tue, Aug 18 2009. 10 57 AM IST
New Delhi: It’s the beginning of the end for the Monopolies and Restrictive Trade Practices Commission (MRTPC) with the ministry of corporate affairs (MCA) set to notify section 66 of the Competition Act.
MRTPC, which was created in 1969, is a quasi judicial body that looks into monopolistic, restrictive and unfair trade practices by companies.
Closing act: The MRTP Commission, which has limited powers, will now deal only with pending cases and totally cease to exist in two years. Rajkumar / Mint
“The ministry will soon notify section 66 of the Competition Act, which will mean repealing the Monopolies and Restrictive Trade Practices Act (MRTP Act). Now, the Competition Commission of India (CCI) will take up cases relating to monopolies, and restrictive and unfair trade practices,” said a senior official at MCA, who did not want to be identified. This person added that MRTPC will now only deal with pending cases and totally cease to exist in two years.
CCI, which was established in 2003, was given statutory powers only in 2007 by an Act of Parliament. Restricted so far to an advisory role, it has started hearing cases on cartelization and abuse of dominant position over the last couple of months.
CCI will be able to impose a penalty on companies it finds guilty of being part of a cartel or abusing their position. Such fines can be up to 10% of the average (three-year) turnover of the firm or companies involved. That is in contrast to MRTPC’s powers. MRTPC can only ask companies to refrain from such activities.
“MRTPC does not have any teeth as it only has the powers of cease-and-desist; CCI is a much powerful body. Besides, to make sure that CCI orders are not contravened, there is a designated court of chief metropolitan magistrate, Delhi, which will help expedite matters,” said a former senior official of CCI.
Dhanendra Kumar, chairman of CCI, could not be reached for comments.
CCI will also start looking at issues such as mergers and acquisitions (M&As) which MRTPC hasn’t been doing since 1991 after provisions relating to probing M&As were repealed.
O.P. Dua, senior advocate, who has been arguing cartelization cases before MRTPC, however, said not too many cases would be referred to CCI. “There is a fee of Rs50,000 to register a case in CCI, whereas there was no fee under MRTPC. This will discourage enterprises to approach CCI; they would prefer to resolve the problem among themselves,” he said.
Dua added that the only major difference was that CCI would also be able to take up cases related to mergers. All mergers of companies above a certain size will need the approval of CCI, according to a provision that is yet to be notified by MCA.
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First Published: Tue, Aug 18 2009. 01 15 AM IST