Restrictive and Unfair Trade Practices in India: Current Law and Legal Remedies

Fair competition protects consumers, promotes innovation and encourages better prices and services. Indian law addresses anti-competitive business conduct and misleading or unfair dealings through distinct legal frameworks. The Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act), discussed in older materials, has been repealed.

1. MRTP Act, 1969: Historical Background

The Monopolies and Restrictive Trade Practices Act, 1969 sought to curb concentration of economic power and monopolistic, restrictive and unfair trade practices. It was repealed by section 66 of the Competition Act, 2002, subject to the statutory transitional and savings arrangements. Accordingly, the earlier MRTP Commission and its complaint procedures should not be described as the present route for new cases.

Restrictive trade practice under the former section 2(o)

The original article attributed the definition to section 2(c). The relevant historical definition was in section 2(o) of the MRTP Act. Broadly, it covered trade practices having the effect, or potential effect, of preventing, distorting or restricting competition, including practices obstructing the flow of capital or resources or manipulating prices, delivery conditions or supplies so as to impose unjustified costs or restrictions on consumers.

Unfair trade practice under former section 36A

Section 36A of the repealed MRTP Act dealt with unfair trade practices, including false or misleading representations about goods, services, sponsorship, quality, prices, warranties and competitors. Those historical descriptions remain useful for understanding the evolution of Indian consumer law, but current complaints must be assessed under the legislation now in force.

Former section 11: Preliminary investigation

Under the former MRTP framework, section 11 provided for preliminary investigation by the Director General in specified proceedings before the MRTP Commission. This is a repealed procedure; it is not the mechanism for initiating a fresh complaint today.

2. Restrictive Practices under the Competition Act, 2002

The Competition Act aims to prevent practices having an adverse effect on competition, promote and sustain competition, protect consumer interests and ensure freedom of trade in Indian markets. A business does not violate competition law merely by being large or successful; the conduct and applicable statutory tests matter.

Section 3: Anti-competitive agreements

Section 3 prohibits agreements that cause or are likely to cause an appreciable adverse effect on competition in India. Examples include certain price-fixing, output-limiting, market-sharing and bid-rigging arrangements between competitors. Vertical arrangements, such as exclusive supply or distribution arrangements and resale price maintenance, are assessed under the applicable statutory standards and circumstances.

Section 4: Abuse of dominant position

Section 4 prohibits abuse of a dominant position, not dominance by itself. Prohibited conduct may include unfair or discriminatory conditions or prices, limiting production or technical development, denying market access, leveraging dominance in one relevant market to enter or protect another, and making contracts conditional on unrelated supplementary obligations, as provided by the section.

Sections 5 and 6: Combinations

Qualifying mergers, acquisitions and amalgamations are regulated under sections 5 and 6, including applicable notification thresholds, exemptions and procedural requirements. The Competition (Amendment) Act, 2023 introduced important changes, including a deal-value threshold framework. Businesses should verify current thresholds and implementing regulations before a transaction.

The Competition Commission of India (CCI) administers competition-law enforcement. Its powers and processes include inquiry and orders under the Act, subject to applicable procedural and appellate provisions.

3. Unfair Trade Practices under the Consumer Protection Act, 2019

Section 2(47) defines an unfair trade practice broadly as a trade practice that, for promoting sale, use or supply of goods or services, adopts an unfair method or unfair or deceptive practice. The definition includes specified misleading representations and other prohibited practices. Section 2(28) defines misleading advertisement; section 2(46) concerns unfair contracts.

Consumer law and competition law are complementary but different. An advertisement may be misleading without establishing a section 3 competition-law violation, and a cartel may violate competition law even without a particular misleading advertisement.

4. Examples of Unfair or Misleading Trade Practices

Many of the examples listed under the former MRTP Act remain relevant when assessed under current consumer-protection law:

1. False quality claims: falsely describing goods as meeting a particular standard, quality, grade, composition, style or model.
2. False service claims: misrepresenting the standard, quality or grade of services.
3. Used goods sold as new: falsely presenting rebuilt, second-hand, renovated or reconditioned goods as new.
4. Unfounded approvals or benefits: claiming sponsorship, approval, performance, characteristics, accessories, uses or benefits that goods or services do not possess.
5. False affiliation: claiming a seller or supplier has an approval, sponsorship or affiliation that does not exist.
6. Misleading necessity or usefulness: making deceptive claims about whether a product or service is needed or useful.
7. Unsupported guarantees: issuing performance, efficacy or durability warranties without an adequate basis or proper testing, where the statutory conditions apply.
8. Misleading repair or replacement promises: making materially misleading warranty, maintenance, repair, replacement or service-result promises.
9. Misleading prices: creating a false impression about ordinary selling prices, discounts or comparable prices.
10. False disparagement: communicating false or misleading facts that disparage another person's goods, services or trade.

Section 2(47) also addresses other specified conduct, including certain bargain-price advertisements, promotional schemes, withholding information, refusal to take back defective goods or withdraw deficient services and refund consideration within applicable periods, and disclosure of confidential personal information in specified circumstances. The precise elements and exceptions must be checked against the statutory text.

Misleading advertisements and the CCPA

Under the Consumer Protection Act, 2019, the Central Consumer Protection Authority (CCPA) has powers concerning violations of consumer rights, unfair trade practices and false or misleading advertisements. Sections 18, 20 and 21 are particularly relevant to its functions and directions, including action concerning misleading advertisements. The CCPA has also issued guidelines on misleading advertisements and endorsements.

5. How to Report or Challenge Unlawful Conduct

• Anti-competitive conduct: Review the procedure for information and proceedings before the CCI under the Competition Act and its current regulations.
• Defective goods, deficient services or unfair trade practices: Eligible consumers may approach the appropriate consumer commission under the Consumer Protection Act, 2019. The e-Daakhil portal provides electronic filing facilities, subject to its current operational arrangements.
• Consumer grievance assistance: The National Consumer Helpline provides grievance registration and assistance; it does not replace adjudication by a competent forum.
• Misleading advertisements affecting consumers: Relevant complaints or information may be directed through channels provided by the Department of Consumer Affairs and CCPA.

Preserve invoices, advertisements, screenshots, messages, warranty terms, transaction records and correspondence. The appropriate remedy depends on the nature of the conduct, the parties involved, jurisdiction and statutory limitation periods.

6. Why Fair Competition Matters

Competition can encourage innovation, improve service quality and give consumers more choice. The original article illustrated this with competition between public-sector and private-sector banks. That example shows how competitive pressure may influence customer service, but it does not mean that every market with a small number of suppliers is unlawful or that every low price is anti-competitive. Indian law examines the relevant facts and statutory requirements.

Official Acts and Regulatory Resources

• India Code: Competition Act, 2002 and Consumer Protection Act, 2019 (search by Act title)
• Competition Commission of India: regulations, orders and guidance
• Department of Consumer Affairs: Consumer Protection legislation and rules
• National Consumer Helpline
• Consumer commission e-filing portal

This article provides general legal information and does not substitute for advice on a specific dispute. Legislative amendments, notifications and court decisions should be checked when acting.