Law of restrictive trade practice and unfair trade practices by sameer lakhani

Law Of Restrictive Trade
Practice
&
Unfair Trade Practices
Presented by: Sameer Lakhani Submitted
by: Dr.Y.l.lad
international agribusiness management institute(anand)

INTRODUCTION
 “trade” business, industry, profession or occupation relating to the
production, supply, distribution or control of goods and includes
the provision of any services;
 trade practice” means any practice relating to the carrying on of
any trade, and includes—
 (i) anything done by any person which controls or affects the price
charged by, or the method of trading of, any trader or any class of
traders,
 (ii) a single or isolated action of any person in relation to any
trade;

RESTRICTIVE TRADE
PRACTICE[sec.2(0)]
 A restrictive trade practice is a trade practice, which Prevents,
distorts or restricts competition in any manner;
 Which tends to Obstructs the flow of capital or resources into
the stream of production; or
 Which tends to bring about manipulation of prices or conditions
of delivery or effected the flow of supplies in the market of any
goods or services, imposing on the consumers unjustified cost or
restrictions.

 What is goods?
 What is service?
 What is price?

Deemed Restrictive Trade Practices
Agreement (Sec.33)
 (a) any agreement which restricts, or is likely to restrict, by any
method the persons or classes of persons to whom goods are sold
or from whom goods are bought;
 (b) any agreement requiring a purchaser of goods, as a condition
of such purchase, to purchase some other goods;
 (c) any agreement restricting in any manner the purchaser in the
course of his trade from acquiring or otherwise dealing in any
goods other than those of the seller or any other person;
 (d) any agreement to purchase or sell goods or to tender for the
sale or purchase of goods only at prices or on terms or conditions
agreed upon between the sellers or purchasers;

 (e) any agreement to grant or allow concessions or benefits,
including allowances, discount, rebates or credit in connection
with, or by reason of, dealings;
 (f) any agreement to sell goods on condition that the prices to be
charged on re-sale by the purchaser shall be the prices stipulated
by the seller unless it is clearly stated that prices lower than those
prices may be charged;
 (g) any agreement to limit, restrict or withhold the output or
supply of any goods or allocate any area or market for the
disposal of the goods;
 (h) any agreement not to employ or restrict the employment of
any method, machinery or process in the manufacture of goods;

 (i) any agreement for the exclusion from any trade association of any
person carrying on or intending to carry on, in good faith the trade in
relation to which the trade association is formed;
 (j) any agreement to sell goods at such prices as would have the effect
of eliminating competition or a competitor;
 any agreement restricting in any manner, the class or number of
wholesalers, producers or suppliers from whom any goods may be
bought;
 (j) any agreement as to the bids which any of the parties thereto may
offer at an auction for the sale of goods or any agreement where by
any party thereto agrees to abstain from bidding at any auction for the
sale of goods.

 (k) any agreement not herein before referred to in this section which
the Central Government may, by notification, specify for the time
being as being one relating to a restrictive trade practice within the
meaning of this sub-section pursuant to any recommendation made
by the Commission in this behalf;
 (l) any agreement to enforce the carrying out of any such agreement
as is referred to in this sub-section.

PROCEDURE FOR REGISTRATION OF
AGREEMENT [SEC 35] RULES 12&14
 Time Limit(60 day)
 Variation Or Determination Of Any Agreement
 Agreement Made Trade Association
 Numerous Agreement(large no)
 More Instrument (written copy)

Examination and recording of
agreements(rule 13)
The following particulars shall be endorsed on
every document registered under these rules,
namely:-
A. Date on which it is registered;
B. Serial number and page of the register of
agreements in which entered.
 Every endorsement referred to in sub-rule (3)
shall be signed by the Director General and shall
bear his official seal.

Register of agreement(sec 36,R 15,11 and 11A
 For the purposes of this Act, the Director General shall keep a
register in the prescribed form and shall enter therein the
prescribed particulars as regards agreements subject to registration.
 The Director General shall provide for the maintenance of a special
section of the register for the entry or filling in that section of such
particulars as the Commission may direct,

Inspection Of And Extracts From The
Register.(SEC.65 ,R10&16)
1. he register, other than the special section, shall be open to public
inspection during such hours and subject to the payment of such
fees, not exceeding rupees twenty-five, as may be prescribed.
2. Any person may upon the payment of such fee, not exceeding
rupee one, for every one hundred words, as may be prescribed,
require the Director General to supply to him a copy of, or extract
from, any particulars entered or filed in the register, other than the
special section, certified by the Director General to be a true copy
or extract.
3. A copy of, or extract from, any document entered or filed in the
register certified under the hand of the Director General or any
officer authorized to act in this behalf shall, in all legal
proceedings, be admissible in evidence as of equal validity with
the original.

Presumption as to the public interest
A. that the restriction is reasonably necessary having regard to the
character of the goods to which it applies, to protect the public
against injury whether to persons or to premises in connection with
the consumption, installation or use of those goods;
B. that the removal of the restriction would deny to the public as
purchasers, consumers or users of any goods, other specific and
substantial benefits or advantages enjoyed or likely to be enjoyed
by them as such, whether by virtue of the restriction itself or of any
arrangements or operations resulting therefrom;
C. that the restriction is reasonably necessary to counteract measures
taken by any one person not party to the agreement with a view to
preventing or restricting competition in or in relation to the trade or
business in which the persons party thereto are engaged;

(c)that the restriction does not directly or
indirectly restrict or discourage competition to any
material degree in may relevant trade or industry
and is not likely to do so; that such restriction has
been expressly authorized and approved by the
Central Government;
(d) that such restriction is necessary to meet the
requirements of the defense of India or any part
thereof, or for the security of the State;

Act not to apply in certain cases
 (a) any undertaking owned or controlled by a government company,
 (b) any undertaking owned or controlled by the government,
 (c) any undertaking owned or controlled by a corporation (not being a
company) established by or under any Central, Provincial or State Act,
 (d) any trade union or other association of workmen or employees formed
for their own reasonable protection as such workmen or employees,
 (e) any undertaking engaged in an industry, the management of which has
been taken over by any person or body of persons in pursuance of any
authorization made by the Central Government under any law for the time
being in force,
 (f) any undertaking owned by a co-operative society formed and registered
under any Central, Provincial or State Act relating to co-operative
societies,
 (g) any financial institution.

Definition Of Unfair Trade Practice.
 A trade practice which, for the purpose of
promoting the sale, use or supply of any good or
for the provision of any services, adopts any
unfair method or unfair or deceptive practice.

 (i) falsely represents that the goods are of a particular standard,
quality, quantity, grade, composition, style or mode;
 (ii) falsely represents that the services are of a particular standard,
quality or grade;
 (iii) falsely represents any re-built, second-hand, renovated, re-
conditioned or old goods as new goods;
 (iv) represents that the goods or services have sponsorship,
approval, performance, characteristics, accessories, uses or benefits
which such goods or services do not have;
 (v) represents that the seller or the supplier has a sponsorship or
approval or affiliation which such seller or supplier does not have;
 (vi) makes a false or misleading representation concerning the need
for, or the usefulness of, any goods or services;

 (VII) gives to the public any warranty or guarantee of the
performance, efficacy or length of life of a product or of any goods
that is not based on an adequate or proper test thereof: Provided that
where a defence is raised to the effect that such warranty or
guarantee is based on adequate or proper test, the burden of proof of
such defence shall lie on the person raising such defence;

Unfair practices may be categorised as
under:
 False Representation
 Bargain Price
 Offering Of Gifts And Prizes
 Sale Of Sub Standards Goods
 Hoarding Or Destruction Of Goods

FALSE REPRESENTATION
 Falsely suggests that the goods are of a particular
standard quality, quantity, grade, composition, style or
model.
 Falsely suggests any re-built, second-hand renovated,
reconditioned or old goods as new goods.
 Makes a false or misleading representation concerning
the need for, or the usefulness of, any goods or services.
 Materially misleads about the prices at which such goods
or services are available in the market.

BARGAIN PRICE
 The price stated in the advertisement in such manner as
suggests that it is lesser than the ordinary price.
 The price which any person coming across the advertisement
would believe to be better than the price at which such goods
are ordinarily sold.

OFFERING OF GIFTS AND
PRIZES
 Creating impression that something is being offered free along
with the goods, when in fact the price is wholly or partly covered
by the price of the article sold.
 Offering some prizes to the buyers by the conduct of any contest,
lottery or game of chance or skill, with real intention to promote
sales or business.

SALE OF SUB STANDARDS
GOODS
Any sale or supply of goods, for use by consumers, knowing or
having reason to believe that the goods do not comply with the
standards prescribed by some competent authority, in relation to
their performance, composition, contents, design, construction,
finishing or packing, as are necessary to prevent or reduce the risk
of injury to the person using such goods, shall amount to an unfair
trade practice.

HOARDING OR DESTRUCTION OF GOODS
Any practice that permits the hoarding or destruction of goods, or refusal
to sell the goods or provide any services, with an intention to raise the
cost of those or other similar goods or services, shall be an unfair trade
practice.

WHEN COMMISION
INQUIRE
 Reference By Central Government
 Director General Application
 Own Knowledge or information

ORDER OF COMMISSION
 (a) the practice shall be discontinued or shall not be repeated.
 (b)any agreement relating to such unfair trade practice shall be void
or shall stand modified in respect thereof in such manner as may be
specified in the order.
 (c) any information, statement or advertisement relating to such
unfair trade practice shall be disclosed, issued or published, as the
case may be, in such manner as may be specified in the order.]

Reference
K.R.BULCHANDANI:BUSINESS LAW FOR MANAGEMENT .p,54S3 to 572

Law of restrictive trade practice and unfair trade practices by sameer lakhani

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