Restrictive Trade Practice - Definition - Law Dictionary Home Dictionary Definition restrictive-trade-practice

Definition :

Restrictive trade practice, means a trade practice which tends to bring about manipulation of price or its conditions of delivery or to affect flow of supplies in the market relating to goods or services in such a manner as to impose on the consumers unjustified costs or restrictions and shall include--

(a) delay beyond the period agreed to by a trader in supply of such goods or in providing the services which has led or is likely to lead to rise in the price.

(b) Any trade practice which requires a consumer to buy, hire or avail of any goods or, as the case maybe, services as condition precedent to buying, hiring or availing of other goods or services. [The Consumer Protection Act, 1986 (68 of 1986), s. 2 (1) (nnn)]

The definition of restrictive trade practice is an exhaustive and not an inclusive one. The decision whether trade practice is restrictive or not has to be arrived at by applying the rule of reason and not on the doctrine that any restriction as to area or price will per se be a restrictive trade practice. Every trade agreement restrains or binds persons or places or prices. The question is whether the restraint is such as regulates and thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine this question three matters are to be considered. First, what facts are peculiar to the business to which the restraint is applied. Second, what was the condition before and after the restraint is imposed. Third, what is the nature of the restraint and what is its actual and probable effect, Tata Engineering & Locomotive Co. Ltd. v. Registrar of the Restrictive Trade Agreement, AIR 1977 SC 973 (978): (1977) 2 SCC 55: (1977) 2 SCR 685. [Monopolies and Restricted Trade Practices Act, 1969, s. 2(o)]

'Restrictive trade practice' is defined in s. 2, clause (o) to mean a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular, (i) which tends to obstruct the flow of capital or resources into the stream of production, or (ii) which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions. Mahindra and Mahindra Ltd. v. Union of India, AIR 1979 SC 798 (806): (1979) 2SCC 529: (1979) 2 SCR 1038. [Monopolies and Restricted Trade Practices Act, 1969, s. 2(o)]

--See, Peico Electronics and Electricals v. Union of India, (2004) 3 SCC 658.