The MONOPOLISTIC AND RESTRICTIVE TRADE PRACTICES ACT has been replaced by the more
strong and stringent Competition Act, of 2002. While the old act required to be
polished and refined to bring it up to tackle the present requirement of regulating
the trade and the deceptive practices which has gathered global dimensions ut was
necessary to introduce an enactment Act to provide, keeping in view of the economic
development of the country, for the establishment of a Commission to prevent
practices having adverse effect on competition, to promote and sustain competition in
markets. The ultimate aim is to protect the interests of consumers and to ensure
freedom of trade carried on by other participants in markets, in India, and for
matters connected therewith or incidental thereto. Hopefully to bring about an even
playing field for competition amongst the manufacturers and the markets so as afford
to the consumers a fair choice which resonates with the right of the consumer to
choose from amongst the products available and at an affordable price.
It has always been a dream of a Ramrajya, but one must admit that there were laws
even then to promote as well as to regulate the way the businessman sold his wares.
Thus the Competition Act 2002, is an attempt to regulate the markets, the marketing
and also to promote fairness in the competition where the pricing would not be
deceptive as is if I may say the Chinese policy, which our government and more so
citizens needs to extremely careful about. A word of caution against such cheap,
throw away goods can only strangulate the good and sincere manufacturers of goods
which are intended to be good in quality, besides creating a lot trash of cheap and
probably un-recyclable goods which could be hazardous if allowed to remain on Indian
soil.
The enactment has attempted to give very strong teeth to the Commission appointed
to adjudicate the disputes that may be filed as also giving suo moto powers to look
into any unadventurous unfair trade practices, including takeovers of companies.
The cases under the MRTP Act, which were earlier referred to the National Consumer
Disputes Redressal Commission have been taken over by the Competition Commission. The
said enactment has been spread over nineteen chapters which cover almost every aspect
of trade and business, such as
a. PROHIBITION OF CERTAIN AGREEMENTS, ABUSE OF DOMINANT POSITION AND REGULATION
OF COMBINATIONS
Section 3. Anti competitive agreements .-
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No enterprise or association of enterprises or person or association of
persons shall enter into any agreement in respect of production, supply,
distribution, storage, acquisition or control of goods or provision of services,
which causes or is likely to cause an appreciable adverse effect on competition
within India.
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Any agreement entered into in contravention of the provisions contained in
subsection (7) shall be void.
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Any agreement entered into between enterprises or associations of enterprises
or persons or associations of persons or between any person and enterprise or
practice carried on, or decision taken by, any association of enterprises or
association of persons, including cartels, engaged in identical or similar trade of
goods or provision of services, which–
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directly or indirectly determines purchase or sale prices;
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limits or controls production, supply, markets, technical development,
investment or provision of services;
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shares the market or source of production or provision of services by way of
allocation of geographical area of market, or type of goods or services, or number of
customers in the market or any other similar way;
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directly or indirectly results in bid rigging or collusive bidding, shall be
presumed to have an appreciable adverse effect on competition:
Provided that nothing contained in this sub-section shall apply to any agreement
entered into by way of joint ventures if such agreement increases efficiency in
production, supply, distribution, storage, acquisition or control of goods or
provision of services.
b. Prohibition of abuse of dominant position of one as against the others
Section 4. Abuse of dominant position .-
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No enterprise shall abuse its dominant position.
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There shall be an abuse of dominant position under sub-section (1), if an
enterprise,—
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directly or indirectly, imposes unfair or discriminatory–
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condition in purchase or sale of goods or service; or
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price in purchase or sale (including predatory price) of goods or
service.
Explanation.-For the purposes of this clause, the unfair or discriminatory
condition in purchase or sale of goods or service referred to in sub-clause (i) and
unfair or discriminatory price in purchase or sale of goods (including predatory
price) or service referred to in sub-clause (ii) shall not include such
discriminatory condition or price which may be adopted to meet the competition;
or
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limits or restricts–
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production of goods or provision of services or market therefor; or
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technical or scientific development relating to goods or services to the
prejudice of consumers; or
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indulges in practice or practices resulting in denial of market access; or
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makes conclusion of contracts subject to acceptance by other parties of
supplementary obligations which, by their nature or according to commercial usage,
have no connection with the subject of such contracts; or
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uses its dominant position in one relevant market to enter into, or protect,
other relevant market.
c. The COMPETITION COMMISSION OF INDIA shall be functioning in the manner
stated in section 7, which reads as under:
Section 7. Establishment of Commission .-
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With effect from such date as the Central Government may, by notification,
appoint, there shall be established, for the purposes of this Act, a Commission to be
called the “Competition Commission of India”.
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The Commission shall be a body corporate by the name aforesaid having
perpetual succession and a common seal with power, subject to the provisions of this
Act, to acquire, hold and dispose of property, both movable and immovable, and to
contract and shall, by the said name, sue or be sued.
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The head office of the Commission shall be at such place as the Central
Government may decide from time to time.
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The Commission may establish offices at other places in India.
Section 8. Composition of Commission .-
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The Commission shall consist of a Chairperson and not less than two and not
more than ten other Members to be appointed by the Central Government:
d. The DUTIES, POWERS AND FUNCTIONS OF COMMISSION are covered as
follows:
Section 18. Duties of Commission .-
Subject to the provisions of this Act, it shall be the duty of the Commission to
eliminate practices having adverse effect on competition, promote and sustain
competition, protect the interests of consumers and ensure freedom of trade carried
on by other participants, in markets in India:
Provided that the Commission may, for the purpose of discharging its duties or
performing its functions under this Act, enter into any memorandum or arrangement
with the prior approval of the Central Government, with any agency of any foreign
country.
Section 19. Inquiry into certain agreements and dominant position of
enterprise .-
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The Commission may inquire into any alleged contravention of the provisions
contained in sub-section (1) of section 3 or sub-section (1) of section 4 either on
its own motion or on–
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receipt of a complaint, accompanied by such fee as may be determined by
regulations, from any person, consumer or their association or trade association;
or
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a reference made to it by the Central Government or a State Government or a
statutory authority.
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Without prejudice to the provisions contained in sub-section (1), the powers
and functions of the Commission shall include the powers and functions specified in
sub-sections (3) to (7).
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The Commission shall, while determining whether an agreement has an
appreciable adverse effect on competition under section 3, have due regard to all or
any of the following factors, namely:–
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creation of barriers to new entrants in the market;
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driving existing competitors out of the market;
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foreclosure of competition by hindering entry into the market;
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accrual of benefits to consumers;
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improvements in production or distribution of goods or provision of
services;
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promotion of technical, scientific and economic development by means of
production or distribution of goods or provision of services.
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The Commission shall, while inquiring whether an enterprise enjoys a dominant
position or not under section 4, have due regard to all or any of the following
factors, namely:–
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market share of the enterprise;
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size and resources of the enterprise;
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size and importance of the competitors;
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economic power of the enterprise including commercial advantages over
competitors;
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vertical integration of the enterprises or sale or service network of such
enterprises;
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dependence of consumers on the enterprise;
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monopoly or dominant position whether acquired as a result of any statute or
by virtue of being a Government company or a public sector undertaking or
otherwise;
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entry barriers including barriers such as regulatory barriers, financial risk,
high capital cost of entry, marketing entry barriers, technical entry barriers,
economies of scale, high cost of substitutable goods or service for consumers;
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countervailing buying power;
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market structure and size of market;
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social obligations and social costs;
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relative advantage, by way of the contribution to the economic development, by
the enterprise enjoying a dominant position having or likely to have an appreciable
adverse effect on competition;
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any other factor which the Commission may consider relevant for the
inquiry.
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For determining whether a market constitutes a “relevant market”
for the purposes of this Act, the Commission shall have due regard to the
“relevant geographic market” and “relevant product
market”.
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The Commission shall, while determining the “relevant geographic
market”, have due regard to all or any of the following factors,
namely:–
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regulatory trade barriers;
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local specification requirements;
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national procurement policies;
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adequate distribution facilities;
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transport costs;
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language;
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consumer preferences;
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need for secure or regular supplies or rapid after-sales services.
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The Commission shall, while determining the “relevant product
market”, have due regard to all or any of the following factors,
namely:–
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physical characteristics or end-use of goods;
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price of goods or service;
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consumer preferences;
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exclusion of in-house production;
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existence of specialised producers;
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classification of industrial products.
Section 20. Inquiry into combination by Commission .-
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The Commission may, upon its own knowledge or information relating to
acquisition referred to in clause (a) of section 5 or acquiring of control referred
to in clause (b) of section 5 or merger or amalgamation referred to in clause (c) of
that section, inquire into whether such a combination has caused or is likely to
cause an appreciable adverse effect on competition in India:
Provided that the Commission shall not initiate any inquiry under this sub-section
after the expiry of one year from the date on which such combination has taken
effect.
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The Commission shall, on receipt of a notice under sub-section (2) of section
6 or upon receipt of a reference under sub-section (1) of section 21, inquire whether
a combination referred to in that notice or reference has caused or is likely to
cause an appreciable adverse effect on competition in India.
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Notwithstanding anything contained in section 5, the Central Government shall,
on the expiry of a period of two years from the date of commencement of this Act and
thereafter every two years, in consultation with the Commission, by notification,
enhance or reduce, on the basis of the wholesale price index or fluctuations in
exchange rate of rupee or foreign currencies, the value of assets or the value of
turnover, for the purposes of that section.
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For the purposes of determining whether a combination would have the effect of
or is likely to have an appreciable adverse effect on competition in the relevant
market, the Commission shall have due regard to all or any of the following factors,
namely:–
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actual and potential level of competition through imports in the market;
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extent of barriers to entry into the market;
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level of combination in the market;
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degree of countervailing power in the market;
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likelihood that the combination would result in the parties to the combination
being able to significantly and sustainably increase prices or profit margins;
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extent of effective competition likely to sustain in a market;
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extent to which substitutes are available or are likely to be available in the
market;
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market share, in the relevant market, of the persons or enterprise in a
combination, individually and as a combination;
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likelihood that the combination would result in the removal of a vigorous and
effective competitor or competitors in the market;
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nature and extent of vertical integration in
the market;
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possibility of a failing business;
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nature and extent of innovation;
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relative advantage, by way of the contribution to the economic development, by
any Combination having or likely to have appreciable adverse effect on
competition;
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whether the benefits of the combination outweigh the adverse impact of the
combination, if any.
Section 27. Orders by Commission after inquiry into agreements or abuse
of dominant position .-
Where after inquiry the Commission finds that any agreement referred to in section
3 or action of an enterprise in a dominant position, is in contravention of section 3
or section 4, as the case may be, it may pass all or any of the following orders,
namely:–
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direct any enterprise or association of enterprises or person or association
of persons, as the case may be, involved in such agreement, or abuse of dominant
position, to discontinue and not to re-enter such agreement or discontinue such abuse
of dominant position, as the case may be;
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impose such penalty, as it may deem fit which shall be not more than ten per
cent. of the average of the turnover for the last three preceding financial years,
upon each of such person or enterprises which are parties to such agreements or
abuse:
Provided that in case any agreement referred to in section 3 has been entered into
by any cartel, the Commission shall impose upon each producer, seller, distributor,
trader or service provider included in that cartel, a penalty equivalent to three
times of the amount of profits made out of such agreement by the cartel or ten per
cent, of the average of the turnover of the cartel for the last preceding three
financial years, whichever is higher;
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award compensation to parties in accordance with the provisions contained in
section 34;
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direct that the agreements shall stand modified to the extent and in the
manner as may be specified in the order by the Commission;
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direct the enterprises concerned to abide by such other orders as the
Commission may pass and comply with the directions, including payment of costs, if
any;
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recommend to the Central Government for the division of an enterprise enjoying
dominant position;
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pass such other order as it may deem fit.
Section 29. Procedure for investigation of combinations .-
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Where the Commission is of the opinion that a combination is likely to cause,
or has caused an appreciable adverse effect on competition within the relevant market
in India, it shall issue a notice to show cause to the parties to combination calling
upon them to respond within thirty days of the receipt of the notice, as to why
investigation in respect of such combination should not be conducted.
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The Commission, if it is prima facie of the opinion that the combination has,
or is likely to have, an appreciable adverse effect on competition, it shall, within
seven working days from the date of receipt of the response of the parties to the
combination, direct the parties to the said combination to publish details of the
combination within ten working days of such direction, in such manner, as it thinks
appropriate, for bringing the combination to the knowledge or information of the
public and persons affected or likely to be affected by such combination.
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The Commission may invite any person or member of the public, affected or
likely to be affected by the said combination, to file his written objections, if
any, before the Commission within fifteen working days from the date on which the
details of the combination were published under sub-section (2).
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The Commission may, within fifteen working days from the expiry of the period
specified in sub-section (3), call for such additional or other information as it may
deem fit from the parties to the said combination.
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The additional or other information called for by the Commission shall be
furnished by the parties referred to in sub-section (4) within fifteen days from the
expiry of the period specified in sub-section (4).
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After receipt of all information and within a period of forty-five working
days from the expiry of the period specified in sub-section (5), the Commission shall
proceed to deal with the case in accordance with the provisions contained in section
31.
e. There also a provision for filing appeal under Section 40. Appeal .-
Any person aggrieved by any decision or order of the Commission may file an appeal
to the Supreme Court within sixty days from the date of communication of the decision
or order of the Commission to him on one or more of the grounds specified in section
100 of the Code of Civil Procedure, 1908 (5 of 1908):
Provided that the Supreme Court may, if it is satisfied that the appellant was
prevented by sufficient cause from filing the appeal within the said period, allow it
to be filed within a further period not exceeding sixty days:
Provided further that no appeal shall lie against any decision or order of the
Commission made with the consent of the parties.
f. The said Commission shall be assisted by a DIRECTOR GENERAL, whose duties
are as per section 41. Director-General to investigate contraventions .-
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The Director General shall, when so directed by the Commission, assist the
Commission in investigating into any contravention of the provisions of this Act or
any rules or regulations made thereunder.
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The Director General shall have all the powers as are conferred upon the
Commission under sub-section (2) of section 36.
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Without prejudice to the provisions of sub-section (2), sections 240 and 240A
of the Companies Act, 1956 (1 of 1956), so far as may be, shall apply to an
investigation made by the Director General or any other person investigating under
his authority, as they apply to an inspector appointed under that Act.
The teeth to the Commission is provided under section 42 for the
PENALTIES
42. Contravention of orders of Commission .-
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Without prejudice to the provisions of this Act, if any person contravenes,
without any reasonable ground, any order of the Commission, or any condition or
restriction subject to which any approval, sanction, direction or exemption in
relation to any matter has been accorded, given, made or granted under this Act or
fails to pay the penalty imposed under this Act, he shall be liable to be detained in
civil prison for a term which may extend to one year, unless in the meantime the
Commission directs his release and he shall also be liable to a penalty not exceeding
rupees ten lakhs.
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The Commission may, while making an order under this Act, issue such
directions to any person or authority, not inconsistent with this Act, as it thinks
necessary or desirable, for the proper implementation or execution of the order, and
any person who commits breach of, or fails to comply with, any obligation imposed on
him under such direction, may be ordered by the Commission to be detained in civil
prison for a term not exceeding one year unless in the meantime the Commission
directs his release and he shall also be liable to a penalty not exceeding rupees ten lakhs.
43. Penalty for failure to comply with directions of Commission and Director
General .-
If any person fails to comply with a direction given by–
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the Commission under sub-section (5) of section 36; or
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the Director General while exercising powers referred to in sub-section (2) of
section 41, the Commission shall impose on such person a penalty of rupees one lakh
for each day during which such failure continues.
44. Penalty for making false statement or omission to furnish material
information .-
If any person, being a party to a combination,–
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makes a statement which is false in any material particular, or knowing it to
be false; or
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omits to state any material particular knowing it to be material, such person
shall be liable to a penalty which shall not be less than rupees fifty lakhs but
which may extend to rupees one crore, as may be determined by the Commission.
45. Penalty for offences in relation to furnishing of information .-
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Without prejudice to the provisions of section 44, if any person, who
furnishes or is required to furnish under this Act any particulars, documents or any
information,–
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makes any statement or furnishes any document which he knows or has reason to
believe to be false in any material particular; or
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omits to state any material fact knowing it to be material; or
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wilfully alters, suppresses or destroys any document which is required to be
furnished as aforesaid, the Commission shall impose on such person a penalty which
may extend to rupees ten lakhs.
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Without prejudice to the provisions of sub-section (1), the Commission may
also pass such other order as it deems fit.
It is hoped that the new enactment serves the purpose of being ultimately in the
interest of consumer and fairness in the market place for the consumer and the
manufacturers and does not land in the hands of person so as to be reduced into the
state the Consumer Protection Act, 1986, has come to, if I may say grossly misused,
misunderstood and failing to serve the purpose of consumers vis-vis fairness
of justice.
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