applicability of competition law principles on public sector ...

acquiring, holding, underwriting or dealing with shares, debentures or other securities <strong>of</strong> any
other body corporate, either directly or through one or more <strong>of</strong> its units or divisions or
subsidiaries, whether such unit or division or subsidiary is located at the same place where the
enterprise is located or at a different place or at different places, but does not include any
activity <strong>of</strong> the Government relatable to the sovereign functions <strong>of</strong> the Government including
all activities carried on by the departments <strong>of</strong> the Central Government dealing with atomic
energy, currency, defense and space”.
Thus, we see that the Act does not make any distinction with regard to its application to private
players or the Government owned entities. This definition makes it clear that no <strong>competition</strong>
exemption is available to Government entities performing non sovereign commercial functions.
However, the definition explicitly excludes any function <strong>of</strong> the government that is relatable to
sovereign functions that includes activity relating to energy, currency, defense and space. The
Competition Act has enacted a <strong>law</strong> to ensure that a level playing field is created to all market players
irrespective <strong>of</strong> their size, resources, market position, economic strength etc. The intention 33 <strong>of</strong> the
statute is very clear that there should not be any discrimination between a private player and a
government player and all players should be treated equally so that they can operate independently
and freely in a given market. This definition clause including government shows that Competitive
Neutrality is enshrined under the Act.
This interpretation is supported by a the High Court <strong>of</strong> Delhi in Union <strong>of</strong> India v. Competition
Commission <strong>of</strong> India 34 where the Government <strong>of</strong> India filed a case against Competition
Commission through Railway Board <strong>of</strong> India. The Court recognized ‘Railway’ as an enterprise
covered within the ambit <strong>of</strong> Competition Act, 2002. The Court highlighted the clear distinction
between sovereign and non-sovereign functions holding,
“…that the Primary, inalienable and non-delegable functions <strong>of</strong> the Government are to
be considered as sovereign functions <strong>of</strong> the Government under Section 2(h) <strong>of</strong> the Competition
Act, 2002. Any Welfare, commercial and economic functions are not sovereign functions and
state while discharging such functions is as much amenable to the jurisdiction <strong>of</strong> CCI as any
other private entity discharging such functions. Running <strong>of</strong> Railways is a business activity that
comes within the purview <strong>of</strong> Section 2(h) <strong>of</strong> the Competition Act, 2002 and hence it is an
enterprise.”
33 Preamble <strong>of</strong> the Act states, “An Act to provide, keeping in view <strong>of</strong> the economic development <strong>of</strong> the country, for
the establishment <strong>of</strong> a Commission to prevent practices having adverse effect on <strong>competition</strong>, to promote and sustain
<strong>competition</strong> in markets, to protect the interests <strong>of</strong> consumers and to ensure freedom <strong>of</strong> trade carried on by other
participants in markets, in India, and for matters connected therewith or incidental thereto.”
34 W. P. (C) No. 5770 <strong>of</strong> 2011
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