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Unfair Trade Practices
- 1. BUSINESS ENVIRONMENT • UTKARSH BATRA •VINAYAK GUPTA • VARSHA KHUSHWA • VISHAL P. JAUDAN • YASH KHANDELWAL • YASH BAJAJ
- 2. UNFAIR TRADE PRACTICES (Section2(1)(r) ofthe Consumer Protection Act, 1986)
- 3. DEFINATION UTP broadly refersto any fraudulent, deceptive or dishonest trade practice; or business misrepresentation of the products or services that are being sold; which is prohibited by a statute or has been recognised as actionable under law by a judgment of the court
- 4. In India Section2(1)(r) of the Consumer Protection Act, 1986 defines UTP to mean a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice, and includes, inter alia, the following: • making any statement, whether orally or in writing or by visible representation which: • falsely represents about goods or services relating to its standard, quality, price, value, nature, etc.; • gives false or misleading facts disparaging the goods, services or trade of another person;
- 5. • permitting thepublication of any advertisement for the sale or supply at a bargain price of goods or services not intended to be so offered; • permitting the offering of gifts, prizes or other items with the intention of not providing them as offered; • withholding from the participants of any scheme offering gifts, prizes or other items free of charge, on its closure the information about final results of the scheme; • permitting the hoarding or destruction of goods; and • manufacturing spurious goods or offering such goods for sale or adoption of deceptive practices in the provision of services.
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- 7. 7 MRTP Act, 1969 •Till 1984 no provisions for protection against UTPs • Amendment in the MRTP Act in 1984, pursuant to Sachar Committee, to include UTP provisions • 1984 amendment also introduced the position of DGIR which worked along with MRTPC, with power to take suo motu actions • Repealed upon introduction of Competition Act, 2002 Consumer Protection Act, 1986 • Upon introduction of the Competition Act, the UTP provisions transferred from the MRTP Act into the COPRA • Victims of UTP entitled to take recourse of the three-tier quasi-judicial bodies under COPRA Competition Act, 2002 • Introduced pursuant to Raghavan Committee’s recommendations • Competition Commission of India established with effect from October 14, 2003, including Director General for Investigation
- 8. WHY ARE UTPsBAD….. Frequent and widespread incidences of UTPs in India due to: • Introduction of globalisation; • Technological innovations; • Lack of consumer awareness UTPs found in almost all the sectors, including: • Pharmaceutical sector • Education sector • Food sector Misleading advertisements most common form of UTP practiced across all the sectors (study by CUTS CART) UTPs in a market may have the following effects • Impact on price and quality of goods and services • Impact on micro, small and medium enterprises • Impact on Consumer Confidence and trust 8
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- 11. ABOUT THE CASE •On June 5, the Food Safety and Standards Authority of India (FSSAI) ordered Nestle India to withdraw all nine variants of Maggi instant noodles from the market terming them “unsafe and hazardous” for human consumption. • Maggi ban started with the first phase of inspection in Barabanki, Uttar Pradesh, from where the food inspector allocated a batch of 12 Maggi packets to the research lab in Gorakhpur. After detection of some harmful chemicals, the batch was then transferred to the Kolkata. • where the presence of excess lead and MSG (monosodium glutamate) was confirmed. 11
- 12. • It wasconfirmed that 17.2 ppi of lead was contained in the Februrary 2014 manufactured batch of Maggi packets which was 8 times higher than the permissible limit range of 0.01-2.50 ppi. Where in Delhi, the samples of Maggi were detected with a lead level of 3.6. • MSG increases the body MSG level by 20% which is harmful for humans especially children. • Nestle India has its own argument regarding the MSG content in Maggi. They claim that the MSG found in Maggi is not added by them which they clearly mention in the Maggi packets as “NO ADDED MSG“. • It is also challenged by Nestle India that out of the 1000 samples inspected of the 12.5 crore Maggi packets, the found lead content on an average does not exceed the prescribed level of lead content. 12
- 13. DATA STUDY Most ofthe customers consume Maggi because of its taste, so the company should maintain the previous and should also follow strict safety measures by taking consumers health into consideration. 13 12% 57% 19% 6% 6% imp.factor to choose maggi brand name 12% taste56% price18% health6% other8%
- 14. DATA STUDY So Mostof the consumers are against the ban on Maggi noodles and its other products, and because of this It will be easier for the Maggi to re-launce and retain its brand value in market again. 14 yes 64% no 36% perception about ban
- 15. DATA STUDY Consumers wantMaggi to be re-launched with improved safety standards and monitoring system, that ensures health safety and nutrition . 15 88% 12% re-launch yes no
- 16. GENERAL OBSERVATIONS • Nestlerecalled it’s Maggi inventory, so that this issue doesn’t hamper the sales of other Nestle products. • Nestle’s share went down by upto 17%. • The recall exercise of Maggi noodles has cost Nestle Rs.320 crores and another Rs.1270 crores in brand loss. • Ban on Maggi incurred standalone loss of 64.40 crore rupees. 16
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Editor's Notes
- #8 Prior to 1984, the MRTP Act contained no provisions for protection of consumers against UTPs and a need was felt to protect the consumers from practices resorted to by the trade and industry, to mislead or dupe them. The GoI thus appointed a high power expert committee on the MTRP Act, under the chairmanship of Justice Rajindar Sachar (“Sachar Committee”), to review and suggest changes required to be made in MRTP Act in light of the experience gained in administration and operation thereof. The recommendations of which led to introduction of provisions relating to Unfair Trade Practices in the MRTP Act in the year 1984. The Director General of Investigation and Registration (“DGIR”) which was supposed to work closely with MRTP Commission (MRTPC), was entitled to investigate into a claim of a restrictive or an unfair trade practice, on the basis of a complaint or suo motu, and bring the matter before the MRTPC to assess the need for MRTPC to initiate an enquiry. The Government of India appointed a committee on Competition Policy and Law under the chairmanship of Mr. S. V. S. Raghavan in October 1999 (“Raghavan Committee”) to meet the growing needs of liberalisation and globalisation and to arrive at a better mechanism for regulating business practices and settling disputes, with an aim to shift the focus of the law from curbing monopolies to promoting competition in line with the international environment. The Raghavan Committee concluded that the MRTP Act is limited in its sweep, and was deficient in many ways either to allow reaping of full benefits from the new economic opportunities or to meet the challenges thrown up by the policies of liberalisation, privatisation and globalisation.