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Restrictive Trade Practices Acts

The Restrictive Trade Practices Act of 1956 was based on the recommendations of the monopolies commission’s 1955 report on Collective Discrimination – A Report on Exclusive Dealing, Aggregated Rebates and other Discriminatory Trade Practices. This Act required the registration of all agreements between two or more firms, whether buyers or seilers, which contain restrictions on prices, quantities or quality of goods traded or on channels of distribution. It set up a Restrictive Practices Court, serviced by five judges and up to ten laymen and a Registrar of Restrictive Trading Agreements. The court was required by the Act to assume that each agreement is against the public interest unless it could be shown to have advantages on reference to seven explicit factors: (a) that the restriction is necessary for public safety; (b) that it confers specific and substantial benefits or advantages on consumers; (c) that it neutralizes monopolistic or restrictive activities of others; (d) that it is necessary in order to be able to negotiate fair terms with strong buyers or seilers; (e) that rem oval of the agreement would lead to significant regional unemployment; (f) that removal would reduce export earnings; and (g) that it is necessary to support other restrictive practices which are in the public interest. Under the 1956 Act, only agreements of ‘No substantial economic significance’ could be exempted from appearing befare the court, and even this could be achieved only by their removal from the Register. In 1968, a second Restrictive Trade Practices Act was passed by which agreements could be exempted from court pro­ceedings as a result of a Board of Trade directive. The Act also gave the Board of Trade (now the Department of Trade and lndustry) powers to call certain information agreements for registration which were excluded from the previous Act. The functions of the Register of Restrictive Trading Agreements were taken over by the Director General of Fair Trading under the Fair Trading Act, 1973, which also extended the scope of the legislation to include commercial services.

Reference: The Penguin Dictionary of Economics, 3rd edt.