Monopoly Vs Monopoly

963 Words4 Pages
We are living in a free market economy age where business entities are engaged in competitive practices. This sometimes (if not always) leads to the monopolisation of the market by way of anti-competitive agreements, abuse of dominance, mergers and takeovers between business entities which result in distortion of the market. Most countries in the world have enacted competition laws to protect their free market economies and have thereby developed an economic system in which the allocation of resources is determined solely by demand and supply. Although the antitrust laws are very much new to the Indian regulatory framework but the western countries likes US and Canada has this kind of regulatory framework since last decade of the 19th century.…show more content…
It is a conspiracy against the public to raise prices. It hates competition because competition lowers prices to a level which is fair, honest and earned under competitive environment. Adam Smith spoke of ‘the wretched spirit of monopoly’, the ‘mean rapacity, the monopolising spirit’ in which ‘the oppression of the poor must establish the monopoly of rich.’ Monopoly is exercised through market shares gained by buying up or bullying the present competitors out of, and the potential from, the market. The purpose is to earn maximum profit at the cost of consumers and rival competitors, more than the natural profit which the fair and free competition endures. It also destroys efficiency and discourages innovation. On the other hand, competition enhances consumer choice and promotes competitive prices, with the result society as a whole benefits from the best possible allocation of resources. That’s why most countries in the world have enacted competition laws to protect there free market economies-an economic system in which the allocation of resources is determined solely by supply and demand. The competition law of India was previously contained in the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act). This Act was formed as a result of ‘command and control’ policies adopted by Indian government after independence. The government intervention and control pervaded almost all areas of economic activity in the country as India followed the strategy of planned economic development. The 3 companies needed license for everything from setting up an industrial understanding, to its expansion or layoff of workers and closing it down. The era was also known as ‘License-Raj.’ The outcome of the ‘License-Raj’ system was restriction of freedom to entry into industry which ultimately resulted in concentration of power into few individuals or groups. Thus, MRTP Act came into existence in 1969 to control such monopolies.
Open Document