A five-decade-old issue — concentration of economic power, dominance in the hands of the few and the resultant inequalities — remains alive even today, not only in India but across the world.
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It is surprising that a five-decade-old issue — concentration of economic power, dominance in the hands of the few and the resultant inequalities — remains alive even today, not only in India but across the world. Following the February 1964 P.C. Mahalanobis report on the subject, <1> the government appointed Justice K.C. Das Gupta as chairman of the Monopolies Inquiry Commission, three months later. In its 28 October 1965 report, the commission placed the issue upfront: <2> “Concentration of economic power is the central problem; monopolistic and restrictive practices may be appropriately considered to be ‘functions’ of such concentration.” The commission took the top industrialists of the day into confidence. These included Tata Group Chairman J.R.D. Tata, who said that unless these orders were made mandatory by law, the permanent body would become emasculated purely on political grounds or without ground at all. <3> In other words, he insisted on the primacy of the rule of law over good intentions. A ‘Draft Bill’ accompanied the recommendations — a practice that has been given the go-by since and was resurrected only by the 2013 Financial Sector Legislative Reforms Commission, which, apart from the recommendations, <4> has also written the draft of the Indian Financial Code <5> — based on which the Monopolies and Restrictive Trade Practices Act Commission was set up. Accordingly, on 18 December 1969, Parliament enacted the Monopolies and Restrictive Trade Practices Act <6> with five objectives: prevention of concentration of economic power to the common detriment, control of monopolies, prohibition of monopolistic practices, prohibition of restrictive trade practices, and prohibition of unfair trade practices. While the law has been successful in keeping its mandate of preventing concentration of economic power, its fallout is that today, India has only a handful of companies that are of global scale. Following the economic shift towards an open and liberalised economy, the Act was amended in 1984 and in 1991. Finally, on the recommendations of the S.V.S. Raghavan Committee <7> — which said that the MRTP Act lacked the provisions to deal with anticompetitive practices that may accompany the implementation of WTO agreements — the law was repealed and the commission wound up <8> to give way to the Competition Act in 2002. <9>
<1> Virendra Kumar, Committee on Distribution of Income and Levels of Living, 1960: Report, Committees and Commissions in India, 1960–61, Volume 4 (Concept Publishing Company, 1977), reprinted 2005, 154–189.
<2> Report of the Monopolies Inquiry Commission 1965, Volumes 1 and 2, Ministry of Corporate Affairs, Government of India, 28 October 1965, 1, accessed 4 January 2018.
<3> Virendra Kumar, Committees and Commissions in India 1964–65, Volume 6, (Concept Publishing Company, 1977), 89.
<4> Report of the Financial Sector Legislative Reforms Commission, Volume 1: Analysis and Recommendations, Ministry of Finance, Government of India, 22 March 2013, accessed 8 January 2018.
<5> Report of the Financial Sector Legislative Reforms Commission, Volume 2: Draft Law, Government of India, 22 March 2013, accessed 8 January 2018.
<6> Monopolies and Restrictive Trade Practices Act, 1969, accessed 8 January 2018.
<7> Report of the High-Level Committee on Competition Policy Law, Competition Commission of India, Centre for Competition and Regulation, accessed 8 January 2018.
<8> Ibid., Paras 7.4.0 and 7.4.2 (2).
<9> Chapter 53: Competition Commission of India.
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Gautam Chikermane is a Vice President at ORF. His areas of research are economics, politics and foreign policy. A Jefferson Fellow (Fall 2001) at the East-West ...
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