A STUDY BETWEEN ‘RESTRICTIVE TRADE PRACTICES AND UNFAIR TRADE PRACTICES

M.Manasvini Prasanna, Viswa Bharati College of Law

ABSTRACT:

This study investigates the implications of restrictive and unfair trade practices in various sectors in India, underscoring their detrimental effects on consumers and market integrity. The research problem identifies how these practices manipulate market conditions, impose unjust costs on consumers, and compromise product quality across industries such as pharmaceuticals, food processing, and insurance. The methodology involved a qualitative analysis of case law, industry reports, and consumer complaints, focusing on specific instances of unfair and restrictive trade practices. The findings reveal that the pharmaceutical sector is plagued by unethical practices, particularly in the influence of medical professionals on drug prescriptions. Similarly, the food processing industry is grappling with significant challenges related to product adulteration and safety. The insurance sector is witnessing a rise in misleading promises that undermine consumer trust. The implications of this research are significant, stressing the urgent need for stricter regulatory measures and the establishment of citizen consumer clubs. Robust consumer education initiatives are also crucial to enhance awareness and protection against such practices, empowering consumers to make informed decisions.

Keywords: Restrictive trade practices, unfair trade practices, consumer protection, pharmaceuticals, food safety, insurance, regulatory measures, India

Introduction:

Section 2(1)(a): Restrictive trade practice means a trade practice which tends to bring about manipulation of price or its conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers, unjustified cots or re3sterictions and shall include-

a)     Delay beyond the period agreed to by a trader in supplying such goods or providing the services that have led to or are likely to lead to a rise in the price.

b)     Any trade practice that requires a consumer to buy, hire, or avail of any goods or, as the case may be, services as a condition precedent to buying, hiring, or availing of other goods or services.

Section 2(1)(r) Unfair trade practice means a trade practice which promotes the sale, use or supply of any goods or for the provision of any service, adopts any unfair method or unfair or deceptive practice, including any of the following practices  namely:

                            i.           Falsely represent that the goods are of a particular standard, quality, quantity, grade, composition, style or model.

                          ii.           Falsely represents that the services are of a particular standard, quality or grade

                        iii.           Falsely represents any re-built, second-hand, renovated, reconditioned 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 supplier has a sponsorship, approval, or affiliation that such seller or supplier does not have.

                        vi.           It makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services.

                      vii.           Gives the public any warranty or guarantee of the performance, efficacy or length of life of a product or any goods that are not based on an adequate or proper test thereof.

Unfair Trade Practices in various sectors in India

Pharmaceutical sector:

There is ongoing competition between generic and prescription drug vendors. Such competitions tend to get unpleasant at times, resulting in several instances of unfair trade practices in the pharmaceutical industry. It is well known that the pharmaceutical business significantly impacts

 Doctors' prescribing practices when it comes to prescription drugs, where the doctor serves as the decision-maker for the patient. Other products included socks for acidity, pillow covers for spondylitis, palm guards for Parkinson's disease, eye shades for sinusitis, and T-shirts for high and low blood pressure.

Food Processing Sector:

Food safety and unfair trade practices in the quantity and quality of food products have raised concerns on a global scale. Most people have heard of instances where chemicals, such as adulterates and additives, have been purposefully added to products to mask poor products, contaminate them or make more money, or contaminate food through manufacturing, packaging, and storage stages. Such unethical and unfair trade tactics are extremely dangerous since they directly endanger consumers' health. Recently, during a raid at a Pune mango trader's store, Food and Drugs Administration (FDA) agents found 500 kg of mangoes valued at Rs. 25,000 that were artificially ripened using calcium carbide. Preventing food adulteration by employing carbide for artificial ripening is prohibited by law. When ingested in large amounts, the substance harms internal organs.

Insurance Sector:

Insurance is a significant component of the financial services industry that serves individuals, and the number of people using insurance is rising continuously. Unfair commercial practices in this industry are becoming more prevalent as consumers rise. Insurance guarantees that the insured will receive a specific payment or reimbursement for a loss or harm in the event of an unforeseen circumstance later. A lack of service would result in a delay or inability to keep that promise. As a result, it is clear that insurance companies heavily depend on the public's belief that the promises made would be kept. Businesses frequently use attractive offers to attract customers and then attempt to break their promises.

Case law:  Consumer Guidance Society Vs.Amway Enterprises:

Amway Enterprises sells various kinds of nutritional supplements and consumer goods. It was discovered that a few Amway items were adulterated and mislabeled. Products such as Nutrilite Protein and Amway Madrid Safad Musli had ingredients of a lower quality than what was claimed on the label. Based on the results, it was decided that Amway resorted to unfair business practices. As a result, they were ordered to pay compensation, stop using their counterfeited products, and update their advertising.

In Consumer Unity and Trust Society Vs. Bal Krishna Khurana (1985) (MRTPC), the respondent –Bal Krishna Khurana, had a Hosiery shop. He advertised in the newspapers that he had hosiery goods of export quality, offered them to sell out at 50%, and announced that the discount would be allowed for only three days. The complainant – a consumer society complained. The MRTPC  held that it was an unfair trade practice that lured the public. However, several garment shop manufacturers in Hyderabad announced they would give a shirt for just one rupee. They were offered for one day only. The people rushed to the shops. Due to heavy rush, some people are injured, and even deaths also may occur.

Restrictive trade Practices in various Sectors:

Pharmaceutical Sector:

It is to be noted that several anti-competitive practices pervade the pharmaceutical industry worldwide, including India. However, an issue of vital importance is that consumers of formulations are often not the decision-makers. They are, for the most part, guided by instructions from doctors and pharmacists. The significant role assumed by doctors and pharmacists in influencing drug sales leads to manipulation of the system, with drug companies seeking to exploit this influence, more often than not. Such practices result in patients being misled into purchasing more expensive medicines or the prescribing of irrational (or combinations of) drugs, which may lead to medical complications, sometimes even causing death. This distorted guidance on the doctor's part deprives patients of the best possible healthcare.

Food Sector:

Late Payments for Perishable goods. Last minute cancelling orders. They are unfairly changing contracts without the other party’s consent and unfairly refusing to enter into a contract. Unfairly returning unsold or wasted products and unfairly paying the buyer for marketing. Restrictive trade Practices can harm consumers by limiting choices, creating higher prices, and stifling fair competition.

Hence, it tends to obstruct the flow of capital or resources into the production stream; ii when it tends to manipulate prices, conditions of delivery, or the flow of supplies in the market relating to goods or services in such a manner as to impose unjustified costs or restrictions on the consumer.

Case law: Bengal Chemists of Druggists Association [(1997)27 CLA182 (MRTPC)]: Scheme under the enquiry imposed restrictions on the appointment of authorised stockiest distributors, appointment after the termination of the existing stockiest services or on the introduction of new products by existing manufacturers of medicines was held to restrictive trade practice prejudicial to the public interest.

In Re.Chiranji Lal Chander Bhan (1985): the respondent was a stockiest of Lifebuoy and Sunlight soaps of Hindustan Liver Ltd. Lifebuoy was a less famous and single-purchase shop in those days, and Sunlight was a fast-moving double-purpose soap. The respondent compelled the dealers to take both the soaps at the required quantities fixed by them. If any dealer did not like Life Bouy soaps, the respondent used to refuse to give sunlight soaps. The commission continued this practice, held that it was a restrictive trade practice, and passed the cease and desist order.

Remedies for Unfair Trade Practices  and  Restrictive Trade Practices in India:

·        To provide adequate cots for parties

·        To withdraw the hazardous goods from being offered for sale

·        To remove the defects or deficiencies in the services in question

·        To discontinue the unfair or restrictive trade practice or not to repeat.

·        To remove the defect pointed out by the appropriate laboratory from the goods.

·        To replace the goods with new goods or similar descriptions accessible from defects.

·        To return the price or charges paid by the complainant.

·        To pay such compensation to the consumer for any loss or injury suffered by the consumer due to the opposition party.

Suggestions on Unfair Trade Practices and Restrictive Trade Practices :

Ø  Establishment of Citizen Consumer Clubs in every educational institution.

Ø  Publication and distribution of the magazine.

Ø  Generating awareness through workshops and Seminars.

Ø  Propogating consumer awareness messages through Television, media, Radio and short films.

Ø  Providing consumer education to rural masses through women's self-help groups/ Panchayat level federations and Resident Welfare Associations or Apartment owners in Urban areas.

Conclusion:

 The findings of this study serve as a clarion call for policymakers, regulators, and consumers alike to confront the pervasive issue of restrictive and unfair trade practices in India. The negative repercussions of such practices not only stifle competition but also erode consumer trust and undermine the market's integrity. We must prioritise the establishment of robust consumer protection frameworks and regulatory measures that promote fairness and transparency. Furthermore, raising awareness among consumers about their rights and the available remedies is crucial in empowering them to challenge unethical practices. By fostering an environment that champions fair competition, we can pave the way for sustainable economic growth and a market landscape that genuinely serves the interests of all stakeholders. Let us strive collectively towards a future where ethical business practices prevail, ensuring a thriving economy and a just society.

Bibliography:

1.     https://www.ijlra.com/paper-details.php?isuur=3250

2.     https://lawtimesjournal.in/unfair-trade-practices-and-restrictive-trade-practices/

3.     https://www.advocatekhoj.com/library/lawareas/mono/tradepractice.php