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Unfair Trade Practice
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Unfair Trade Practice
Unfair Trade Practice

The trade practice to promote the sale or use or supply of any goods or services by adopting an unfair method of deception is known as unfair trade practices. Until 2002, the Monopolies and Restrictive Trade Practice Act (MRTP) dealt with unfair trade practices in India. The Competition Act, 2002, repealed the MRTP Act. No provision was incorporated in the Competition Act to deal with unfair trade practice. But the effects to deal with unfair trade practices are given under the Consumer Protection Act, 1986.

The categorization of unfair practices goes as follows:

1. False Representation

The method of making a written or oral statement/representation of any product or services:

  • When the unfair trade practitioner falsely suggested that the goods are of a particular quality, standard quantity, grade, style, model or composition;
  • When it wrongly suggests that the services offered are of specific standard or quality;
  • When any re-built, second - hand, reconditioned old goods are falsely suggested as new goods;
  • When one falsely represents that the goods or services have approval, sponsorship, performance, characteristics, accessories, benefits or uses which the trader does not have;
  • When one represents that the seller or the supplier has approval or affiliation or sponsorship which they do not have;
  • When one makes a misleading or false representation concerning the need or the usefulness of goods or services;
  • When one gives any warranty or guarantee of the efficiency, performance, or life of the goods, not based on a proper or adequate test;
  • When the trader represents makes to the public, a representation in the form that indicates to be- 
  1. A Guarantee or warranty of the goods or services,
  2. A promise to maintain, repair or replace the goods until it achieves a specific result,
  3. Misleading the prices at which the goods and services are available in the market;
  4. Misleading the facts disparaging the goods and services of another person.

2. False Offer of Bargain Price

When an advertisement is published in a newspaper, offering the goods or services at the bargain price, and the service provider does not offer the product in the same price then it shall amount to unfair trade practice.

3. Schemes of Free Gifts Offer and Prize

Offering any gifts or prizes along with the goods when the real intention of the trader is different. They create the impression that something is offered free along with the goods when the price of the sold article partly or wholly covers the price of the product. For Example: Offering prizes by conducting the game, contest, lottery. It amounts to unfair trade practice.

4. Non-Compliance

If the goods do not comply with the standard of goods and services as prescribed by the competent authority, then it shall amount to the unfair trade practices. The standards prescribed include the performance, designs, contents, construction, composition, packaging, etc. of goods and services. It is necessary to prevent the risk of injury to the person using goods.

5. Hoarding, Destruction, Etc.

The practice of raising the cost of the products that are similar to other goods and services, which may result in the destruction of the services of the competitor, it will contribute to the unfair trade practices.

Unfair Trade Practices In Various Sectors:

In India, unfair trade practices have penetrated through the Food Processing Industry, Pharmaceutical Industry, Insurance, Education etc.

When welfare legislation like the Consumer Protection Act did not exist, the maxim ‘caveat emptor’ (let the buyer beware) was governed for the relations between consumers and traders. However, due to the opening of global markets, economies and progressive removal of restrictions on international trade, the maxim ‘caveat emptor’ is to be replaced by ‘let the seller beware’.

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