CIL vs CCI Issue

Subject : Polity

Section: National Organisation

Context : Supreme Court ruled that Competition Act, 2022 applies to statutory monopolies like Coal India Limited (CIL)

Context:

CIL had approached the Apex Court arguing against applicability of the Competition Act 2002 to its operations citing that the PSU operates under the Coal Nationalisation Act, 1973.
- It is an appeal against a 2014 decision of the Competition Appellate Tribunal (COMPAT), where CIL was directed to stop its abuse of dominant position.
The government could have decided to exempt Coal India’s conduct from the ambit of the CCI review, under Section 54 of the Act (as has been done for mergers among oil and gas PSUs)
The government had chosen not to exempt CIL despite having the power to do so.

Verdict and its implications:

SC rejected CIL’s argument of exemption and affirmed that the Competition Act applies to CIL.
The mandate of public interest given to PSU’s does not mean that their commercial conduct is beyond review by the CCI if they are abusing their position of dominance.
The judgment is landmark in an India that has embraced free market economy after 1991.
CIL reasoned on two points to seek exemption:
- Firstly, the mines operated by CIL had been nationalised pursuant to the Coal Nationalisation Act, 1973 and thus as a PSU it should be exempt from CCI
- Secondly, the Nationalisation Act envisaged that the mines would be operated as a monopoly in the national interest.
CCI argument was:
- It is not dominance that is prohibited under the Competition Act but only abuse of such dominant position.
- How is not abusing dominance power impeding CII in objectives of national interest.
- CCI has jurisdiction to examine a dominant company notwithstanding if such dominant position was acquired as a result of statute or by virtue of being a Government company.
Delhi High Court had previously held that the Indian Railways too will not be exempt from the applicability of the Competition Act.