The term "Unfair Trade Practice" does not have a universal standard definition. However, the term Unfair Trade Practice broadly refers to any fraudulent, deceptive or dishonest trade practice; or business misrepresentation of the products or services that are being sold; which is prohibited by a statute or has been recognised as actionable under law by a judgement of the court. However, the Indian statute dealing with the term is Consumer Protection Act, 1986.
General unfair trade practices may include unfairly refusing a transaction, discriminating against a transacting party, unfairly excluding competitors, unfairly soliciting customers, unfairly coercing customers, trading with a transacting party by unfairly taking advantage of one's bargaining position, trading under terms and conditions which unfairly restrict business activities of a transacting party, disrupting business activities of another enterprise, and unfair provision of capital, assets, manpower, etc (Unfair assistance).
In India, till 2002, the Monopolies and Restrictive Trade Practices Act (MRTP), which was enacted to prevent monopolies and restrictive trade practices, was the foremost legislation to deal with unfair trade practices in the country. The MRTP Act was repealed giving way to the Competition Act, 2002, thus transferring all the pending cases in the MRTPC to Competition Commission of India (CCI) for adjudication from the stages they were in. However, no provision to deal with unfair trade practice was incorporated in the Competition Act and thus this was, instead, given effect under Consumer Protection Act, 1986 (COPRA) which was already dealing with unfair trade practices. Section 2(1)(r) of COPRA defines unfair trade practice as: "a trade practice which, for the purpose of promoting 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:—
- making any statement, whether orally or in writing or by
visible representation which:
- falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model;
- falsely represents that the services are of a particular standard, quality or grade;
- falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods;
- represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have;
- represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have;
- makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services;
- gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof
In the recent past, the prevalence of Unfair Trade Practice has been on a rise and various instances have come to light bringing the issue at hand in discussion. In a recent case where Big Bazar, a departmental store declared Republic Day as Mega Savings Day, which led to an unmanageable consumer rush. To restrict entry to legitimate purchasers, the store came up with a scheme of issuing an entry coupon of Rs 50. The government of Gujarat filed a complaint before the district forum alleging that Big Bazar had adopted unfair and restrictive trade practices by collecting Rs 1, 95,000 from the sale of the 3,900 coupons. The issue to be decided was whether the imposition of an entry fee amounts to an unfair or restrictive trade practice? Upholding the Government's contention, the Forum held that if the crowd was uncontrollable, the store should have called the police, but had no right to refuse entry or impose an entry fee. The Forum directed Big Bazar to pay the amount collected along with the interest. Big Bazar appealed the order in State Consumer Disputes Redressal Commission, which rejected the appeal. Big Bazar then approached the National Consumer Redressal Commission in revision. The store contended that it had the right to restrict customer entry to the store. It also argued that the purpose of the coupons was to regulate the crowd of customers, and no unfair trade practice had been adopted. The National Commission concluded that Big Bazar had not indulged in unfair or restrictive trade practice. It held that an entry fee does not bring about a manipulation in the price of a product or service, but merely regulates customer crowd. The practice is prevalent worldwide, and is permissible.
In another case, leading real estate firm Unitech Ltd. has been held guilty of resorting to "unfair trade practice" by a consumer forum and directed to pay a customer Six Hundred Sixty Thousand Indian Rupees for making "illegal demands" from him after he booked a flat with it and paid the booking amount. The District Consumer Disputes Redressal Forum, in its order, observed that the firm and its agent made "unjustified" demands from the customer and also threatened to forefeit his deposited money.
Another case dealt with SpiceJet being directed by a consumer forum to pay One Hundred Thousand Indian Rupees to a passenger for not allowing all members of his family to board the plane despite having confirmed tickets and making them travel on two different flights while returning to Delhi from Goa. The East District Consumer Disputes Redressal Forum noted that it was "cruelty" on the part of SpiceJet to split the family into two groups especially when they had children with them and held it guilty of unfair trade practice.
The awareness among consumers in today's modernized world is giving way to consumers ascertaining the rights provided to them under Consumer Protection Act and seeking redressal against the unfair trade practice. The prospect of the consumer justice system in our country appears to be bright in view of the provisions available in the Indian statutes and legislation and various proactive policies, schemes/programmes being adopted by the Government. Involvement of trade and industry, civil society organizations and above all consumer themselves is vital to keep a check on the practice of unfair trade in the years to come.
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