Repeal of the MRTP Act, 1969: Reducing the Twilight Period

Repeal of the MRTP Act, 1969: Reducing

the Twilight Period

T. Ramappa, ACS, Advocate, Chennai.

THE BACKGROUND

The MRTP Act has been the subject of repeal twice. Section 66 of the Competition Act, 2002

declared that the Monopolies and Restrictive Trade Practices Act, 1969 [“MRTP Act”] be repealed

and the Monopolies and Restrictive Trade Practices Commission [“MRTPC”] be dissolved. In

addition to providing for the settlement of the status of the employment of those working in

the MRTPC, consequent on such dissolution, it also laid down the principle on which cases

and investigations pending under the MRTP Act were to be transferred to the Competition

Commission of India or the National Commission constituted under the Consumer Protection

Act, 1986, as indicated in the section. This section was not brought into force and as the

Competition Commission was not duly constituted, the MRTPC was receiving complaints

and deciding them under the MRTP Act.

THE AMENDED SECTION 66

Along with a number of other amendments to the Act made by the Competition

(Amendment) Act, 2007, the date of commencement of which was October 12, 2007, a new

section 66 was substituted in the place of the original section 66. Under section 66, as

amended, which has not yet been notified as having been brought into force, the basic

position is that the Monopolies and Restrictive Trade Practices Act, 1969 (54 of 1969) has

been repealed and the Monopolies and Restrictive Trade Practices Commission established

under section 5(1) of the said Act (hereinafter referred to as the repealed Act) shall stand

dissolved. However, under section 66, the MRTP Commission is permitted to continue to

exercise jurisdiction and power under the MRTP Act for a period of two years from the date

of the commencement of the Competition [Amendment] Act of 2007, which in effect

means two years from the notification of section 66 as being brought into force. But the

MRTP Commission cannot decide or adjudicate any case or proceeding arising under the

MRTP Act on or after the said commencement. The present section 66 also provides for the

vacation of the offices of the Chairman and Members of the Commission and the officers

of the Commission on its dissolution and for settlement of conditions of service of those

working in the MRTP Commission. The section also provides for saving any right that

may have accrued and for continuance of any liability that may have been incurred under

the repealed Act.

PENDING CASES

All cases pertaining to monopolistic trade practices or restrictive trade practices pending

(including such cases, in which any unfair trade practice has also been alleged), before the

Monopolies and Restrictive Trade Practices Commission shall, after the expiry of the said two

years, stand transferred to the Competition Appellate Tribunal and shall be adjudicated by

that Appellate Tribunal in accordance with the provisions of the MRTP Act, as if that Act had

not been repealed.

As far as cases relating to unfair trade practices pending at the relevant time , the amendment

provides that all cases under section 36A[1] of the MRTP Act, excepting those falling under

The starting point of the twoyear

period for the repeal of

the MRTP Act and the

dissolution of the MRTPC has

not yet been determined. In

the nature of things the

Central Government will be

in a position to notify section

66 as having been brought

into force only on its

appointing members and

other officers of the

Competition Commission and

the Competition Appellate

Tribunal.

e-mail :

ramappat92@gmail.com

Articles Articles

clause [x] of that section* shall stand transferred to the National

Commission established under the Consumer Protection Act,

1986, and that those falling under section 36A[1][x] shall stand

transferred to the Competition Appellate Tribunal. In both cases,

they shall be disposed of as if they were cases filed under the

Consumer Protection Act, 1986.

PENDING INVESTIGATIONS OR

PROCEEDINGS

Investigations or proceedings, other than those relating to unfair

trade practices, pending before the Director General of

Investigation and Registration on or before the commencement

of the operation of section 66 shall, on such commencement,

stand transferred to the Competition Commission of India, and

the Competition Commission of India may conduct or order for

conduct of such investigation or proceedings in the manner as it

deems fit.

All investigations or proceedings, relating to unfair trade

practices, other than those referred to in section 36A[1][x] of the

MRTP Act pending before the Director General of Investigation

and Registration on or before the said commencement shall, on

such commencement, stand transferred to the National

Commission constituted under the Consumer Protection Act,

1986 (68 of 1986) and the National Commission may conduct or

order for conduct of such investigation or proceedings in the

manner as it deems fit.

Investigations or proceedings relating to cases falling under

section 36A[1][x] of the MRTP Act pending before the Director

General of Investigation and Registration on or before the said

commencement shall, on such commencement, stand transferred

to the Competition Commission and the Competition

Commission of India may conduct or order for conduct of such

investigation in the manner as it deems fit.

AVOIDABLE TWILIGHT PERIOD

The new section 66 has so far not been notified as having brought

into force. It means that the starting point of the two-year period

for the repeal of the MRTP Act and the dissolution of the MRTPC

has not yet commenced. In the nature of things the Central

Government will be in a position to notify section 66 as having

been brought into force only on its appointing members to the

Competition Commission and the Competition Appellate

Tribunal and the other officers.

The ground on which the Government decided to repeal the

MRTP Act was that it considered that the Act was enacted to

contain concentration of economic power and that it was not the

right mechanism suited to deal with issues relating to the

preservation and protection of competition and that too in the

new industrial scene. Today, seven years after the first section 66

repealed the MRTP Act, in 2002, the question whether the repeal

was justified and on the grounds stated by the Government, is no

longer relevant. But what should be a matter of concern is the

loss of time in changing over to the full operation of the

Competition Act, 2002. The delay in bringing into force of the

pre-amendment Competition Act, 2002 was forced on the

Government by its having to await the decision of the Supreme

Court in Brahm Dutt v. Union of India, where the validity of the

Competition Act, 2002 and Rule 3 of the Competition

Commission of India (Selection of Chairperson and Other

Members of the Commission) Rules, 2003 were challenged. But

there is no justification now for the present delay after the

Competition [Amendment] Act, 2007, after the proceedings

before the Supreme Court, has been notified as having been

brought into force.

Section 66 repealing the MRTP Act and providing for the

dissolution of the MRTPC and disposal of pending cases and

investigations could be brought into force only after the

positions in the Competition Commission and the Competition

Appellate Tribunal are filled up. But the Government chose a

very inappropriate method to select persons to be members of

the Competition Commission. Having agreed to arrange a

structure in which the Competition Commission would only

function as a market regulator, an expert body performing

advisory and regulatory functions, the Government resorted to

the procedure of inviting applications for filling up the posts of

Chairperson and other Members of the Competition and lost

much time. This is done in no country and it is only here that

the impression is sought to be given that in the process of

appointing members to the Competition Commission, India is

inventing the wheel. It is now reported in a newspaper, which

has been reproduced on the website of the Competition

Commission of India, that the Central Government has

appointed five members, including the Chairperson of the

Competition Commission. The Chairman and members of the

Competition Appellate Tribunal will have to be appointed and

the offices of the Director General and others will have to be

filled up and then only the system will be fully operational.

This should be done as expeditiously as possible so that the

transition from the MRTP Act regime to the mechanism under

the Competition Act is completed well in time even before the

prescribed period of two years.

The delay also breeds other undesirable consequences. The first

is the uncertainty as to which agency will ultimately decide the

case and this is no inducement for anyone to quicken the process.

Added to this, handing over to newly constituted bodies, viz. the

Competition Commission and the Appellate Tribunal, unfinished

part-heard cases is certainly of no advantage to anybody, since

the process will, in actual practice, have to be virtually started de

novo. In the matter of investigations, with two successive

* This is an unfair trade practice which gives false or misleading facts disparaging investigators, with different outlooks, it is certain that there will

the goods, services or trade of another person.

Repeal of the MRTP Act, 1969 : Reducing the Twilight Period

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be little co-operation and coordination.

What is the pace at which this vital legislation has progressed,

if there is progress in any sense? The record is highly

disenchanting. The High level committee on competition policy

and law submitted its report to the Government of India in 2000

and the Competition Act, 2002, excepting the key sections, were

notified in 2003 on different dates as having been brought into

force. The challenge to the validity of the Act and the mode of

selection of the Chairman and Members of the Competition

Commission left it in a state of dormancy till the 2007

amendments were made. The Central Government notified

12th day of October, 2007 as the date on which section 1 of the

Competition (Amendment) Act, 2007 (39 of 2007), shall come

into force. By a separate notification on the same day, certain

other sections of the 2007 Amendment Act were brought into

force with effect from 12th day of October, 2007. The key sections

including the new section 66 have not yet been brought into

force.

By a notification dated February 27, 2008 the Competition

Commission of India (Term of the Selection Committee and the

Manner of Selection of Panel of Names) Rules, 2008 were issued.

The Competition Appellate Tribunal [Term of the Selection

Committee and the Manner of Selection of Panel of Names] Rules,

2008 were published on May 16, 2008. The appointments to the

Competition Commission have been made one year after the

Rules for the selection of members of the Commission were

issued.

It is a sad commentary on the spirit in which the mechanism for

preserving competition in the market is taking shape. The

number of countries that have established legal regimes for the

preservation of competition in the market is very large and

they are at different stages of industrial growth and India

should not be seen as dragging its feet in establishing such a

regime.

Recognizing that in a growing economy such as ours, which

seeks participation of enterprises from across the globe, the

establishment of a machinery for the preservation of effective

competition is crucial and urgent. Credibility will be established

only when it is seen as staffed with the best that the country can

obtain. Therefore, all the other positions should be filled

quickly, thus reducing the twilight area of as short a duration

as possible. 􀂉

Repeal of the MRTP Act, 1969 : Reducing the Twilight Period

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