Inter-Connections under MRTP Act in the Context of Asset Limit Hike

• Published in: Economic and political weekly 1985-07, Vol.20 (27), p.1132-1146
• Main Author: K. S. Chalapati Rao
• Format: Article
• Language: English
• Subjects: Business structures; Cements; Economic power; Investment companies; Monopoly; Paper mills; Special Articles; Steel mills; Steels; Subsidiary companies; Textile mills
• ISSN: 0012-9976; 2349-8846

Since size of assets, which was expected to reflect the economic strength of individual units and of groups of undertakings, has been chosen as a criterion for registering under the MRTP Act's provisions relating to concentration of economic power, growth in the assets of industrial Houses has generally been seen as proof of the failure of the Act in curbing the growth of concentration of economic power in private hands. While the phenomenon of non-registration of many of the recognised House-companies and the reasons for this have been discussed widely, the basis of inclusion of companies in different Houses for the purpose of arriving at House-wide asset figures is not widely known. This assumes importance because of another relatively little known fact that a number of companies which are included in different Houses do not admit inter-connection among themselves. This paper attempts to examine the phenomenon through case studies of the two largest Houses, the Birlas and the Tatas, and by citing important cases belonging to some other Houses. This is done mainly on the basis of studying year-wise registrations, supported by the limited information available in the MRTP Commission's reports and orders issued under the Act. An examination of de-registration under the Act has also been taken up at the end of the paper. This exercise is expected to help in a better understanding of the administration of the MRTP Act as also of the implications of the hike in the asset limit from Rs 20 crore to Rs 100 crore for registration under the Act.