The Monopolies and Restrictive Trade Practices Commission becomes a corporate battleground
Everyone loves the Monopolies and Restrictive Trade Practices Act (MRTPA). Consumers love it because someone else can fight their case, for free. Corporates love it most of the time because they can use the law to halt competition in its tracks. Lawyers love it because the avalanche of cases battering down the doors of the Monopolies and Restrictive Trade Practices Commission (MRTPC) means business is booming like never before.
The objective of the MRTP Act of 1969, under which the MRTPC and the DG (I&R) operate, says Rajan Narain, advocate, J B Dadachanji & Company, is to ensure that there is no concentration of economic power to the common detriment, that monopolies are controlled, and monopolistic and restrictive trade practices are prevented.
Bahut case aata hai, cackles a peon at the MRTPC office, pointing to stacks of files. You cant blame him for exaggerating. At the last count, there were some 4,000 disputes before the commission. Complaints from businesses big or small, trade associations, individual consumers. Coca-Cola, Food Corporation of India, Reliance, Hindustan Lever, Whirlpool, Telco, Cadbury Schweppes and Bombay Dyeing name the corporation and it is on that list.
It includes, for instance, the case filed by consultancy firm Technopak against KB&T for non-payment of fees. The Colgate-HLL spat over the toothpaste thats 102 per cent better than the market leader. Manoj Kumar from Bangalore who wants compensation from a doctor whose Rs 11,200 prescription failed to prevent hair-loss. Scandinavian Airlines, pulled up for depicting, in an advertisement, travellers as owls and monsters. Fan manufacturers who file cases, every year and just before the peak summer season.
Its not very hard to see that, more than twenty five years after it was passed, and after many revisions and re-revisions, corporates and consumers have suddenly woken up to the potential of the MRTP Act, the MRTP Commission and its sister organisation, the Directorate General, investigations and registration, DG (I&R).
There are reasons why its happening. S S Kumar, advocate and co-editor of the Consumer Protection And Trade Practices Journal, lists some: Post-liberalisation there is greater awareness among consumers about their rights. And if you go through the DG (I&R) you dont even have to spend money on a lawyer or attend case hearings. On the other side, corporates are becoming increasingly wary about what they think could affect business.
That in turn means that anyone who feels he has been shortchanged in a business matter, from a dissatisfied customer to Colgate-Palmolive, is taking recourse to the MRTPC. Add to that the commissions and the DG (I&R)s powers of initiating investigations and you have the basic reasons for the 10-15 cases that are being filed almost daily.
And its not necessary, as in the HLL-Colgate case, to have a reference to your product before you file. Take the Proctor and Gamble (P&G) suit against Hindustan Lever over the latters Ceramides Sunsilk shampoo advertisement. P&G had alleged that the advertisements were misleading.
Observers say that the bare Act is, by necessity, open-ended and leaves open room for debate over what exactly qualifies as a contravention. This is cited as another reason for the increase in litigation. There are two broad sections under which most MRTP cases are fought: unfair trade practices (UTPs) and restrictive trade practices (RTPs). Take UTPs. One of the provisions says that anything that gives false or misleading facts disparaging the goods, services or trade of another person could qualify as an unfair trade practice. But, says a lawyer, It is difficult to pin-point whether an advertisement is indeed false or misleading.
Theres more. After an MRTPC judgment in 1996, government agencies can no longer count themselves safe. Some time ago the vice-chairman of the Delhi Development Authority was pulled up by the MRTPC for non-compliance of an earlier order and asked why he shouldnt be imprisoned for up to three years or fined up to Rs 50,000. Another case is that of the Ahmedabad Telecom Department, against which a notice of inquiry was launched for not providing an adequate standard of service to its customers.
Its not the wide scope of the law that raises blood pressure as much as the MRTPCs other potent weapon. The cases fought before the MRTPC can take as long as five years to be decided. By that time the issue is long cold or forgotten, and the participants have moved on. So whats the problem?
The answer, simply, lies in the commissions powers to make injunctions. Its more important than it sounds. For, through an injunction, the MRTPC can ask a company to bring to a halt a multi-crore advertisement, or an exchange offer, even before it properly began. All the hours of work and the money invested goes up in smoke. To get that vital injunction against a competitor when he has started a new campaign is fast becoming a corporate tactic. The case may take years to be decided. The injunction, maybe fifteen days, says a lawyer. That the commission does not, as in other civil cases, charge a court fee for hearing the appeal helps.
While the commissions role is to sit in judgment on cases, the DG (I&R) acts as an agency that can independently investigate cases. However, both commission and directorate are seriously understaffed. The commission has five members plus a chairman. The DG (I&R) has a grand total of two score employees. Their effective staff strength, says a lawyer, is around 12. And since they are concentrated in Delhi, the process becomes even more painstaking.
Manpower restraints aside, there appear to be differences of opinions on the powers of the MRTPC and the DG (I&R), as was underscored in the case of automobile giant, Telco Some time ago, the DG (I&R) had filed a criminal case against Telco for not supplying information within a stipulated time period. Named in this case were Telcos board of directors, including Ratan Tata and Nani Palkhivala. However, before the case could be heard, Telco filed a plea with the MRTPC that the office of the DG (I&R) had overstepped its jurisdiction. In turn, the DG (I&R) filed an appeal with the Supreme Court, protesting against the substance of Telcos plea. The court finally sent the case right back to the MRTPC.
Lawyers, however, cite instances where the system has worked brilliantly. Last month, on the basis of a report sent to it by the DG (I&R), the RBI plugged a loophole in the working of banks that may have resulted in the loss of hundreds of crores to creditors. And, according to a lawyer working for an MNC, Foreign companies are more or less comfortable with the Act, except in some cases, such as the ban on exclusive dealer arrangements, which they find a little conservative. Meanwhile, the only set of people completely happy are the lawyers. We get lots of cases, says one, sotto voce, And turn away only those who cant afford to pay our fees.
