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CCI embraces government monopolies and PSUs

Published: Jan 22, 2026

By Suja Ananthakrishnan

THE Competition Act, 2002 was enacted primarily to promote and sustain competition in a free market.

The Competition Act as we know it today can be traced back to the Monopolies and Restrictive Trade Practices Act, 1969 (MRTP Act).

However, in the 2000s, the focus of the Indian economy shifted from curbing monopolies to promoting competition.

The MRTP Act was not sufficient to accommodate the shift in India's economic policy and, therefore, the MRTP Act, 1969, was repealed and replaced by the Competition Act, 2002.

The Competition Act provided the necessary checks and balances in the free economy. Further, one of the primary objectives of the Competition Act was to achieve economic efficiency and protect consumer interest. For this purpose, this Act also provided for the establishment of the Competition Commission of India (the CCI), and the CCI became fully operational in May 2009.

Thereafter, with the onset of the digital economy, the Competition Act, 2002, was significantly amended by the Competition (Amendment) Act, 2023.

As the primary focus of the Competition Act was to provide a free economy, the most important purpose of the CCI was to identify and penalise abuse of the dominant position of any enterprise.

Section 2(h) of the Competition Act defines an 'enterprise' and this definition brings within its scope a person or department of the Government, who or which is or had been engaged in any activity, relating to the production, storage, supply, distribution, acquisition or control of articles or goods, or the provision of services, of any kind, or in investment, or in the business of acquiring, holding, underwriting or dealing with shares, debentures or other securities of any other body corporate, either directly or through one or more of 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.

Further, Section 2(h) also excludes any activity of the government that qualifies as a sovereign function and also lists activities carried out by government departments in connection with atomic energy, currency, defence, and space as outside the scope of the definition of 'enterprise' under the Competition Act.

The term 'Dominant position' has been defined in the second explanation of section 4 of the Competition Act as follows:

(a) "dominant position" means a position of strength, enjoyed by an enterprise, in the relevant market, in India, which enables it to- (i) operate independently of competitive forces prevailing in the relevant market; or (ii) affect its competitors or consumers or the relevant market in its favour.

It is important to mention that the Competition Act does not prohibit any enterprise from having a dominant position in the market.

Section 4 of the Competition Act prevents abuse of the dominant position by any enterprise.

A very important question arose about whether the State would be subject to the provisions of the Competition Act like the private entities.

In this context, Section 19(4)(g) of the Competition Act is also relevant.

(4) The Commission shall, while inquiring whether an enterprise enjoys a dominant position or not under section 4, have due regard to all or any of the following fact:

(g) monopoly or dominant position whether acquired as a result of any statute or by virtue of being a Government company or a public sector undertaking or otherwise;

The above definitions under the Competition Act clarify that if a government body comes within the scope of the definition of 'enterprise,' the provisions of the Competition Act would be applicable to it.

Recent judicial interpretations have broadened the legal scope of both 'enterprise' and 'dominant position,' thereby curtailing government monopolies engaged in commercial activities.

The Supreme Court's 2023 ruling in Coal India Ltd. v. Competition Commission of India (Civil Appeal No. 2845 of 2017) = 2023-TIOLCORP-02-SC-CL-LB is a landmark precedent with respect to Government monopolies under the Competition Act.

In this case, Coal India Limited (CIL) contended that CIL was a government entity established under the Nationalisation Act to manage vital resources for the common good and that it was their constitutional duty to distribute coal under Article 39(b) of the Indian Constitution, and for this reason, CIL contended that it was above market regulations and was exempted from the Competition Act, 2002.

The Hon'ble Supreme Court held that CIL was an 'enterprise' under the Competition Act because the definition of 'enterprise' specifically included government companies engaged in economic activity and that the activity of mining that CIL engaged in was not a sovereign function. Further, the judgement also referred to Section 19(4)(g) of the Competition Act, where State monopolies and public sector undertakings were held to be relevant factors for determining the dominant position. Further, the Hon'ble Supreme Court also held that CIL, being the arm of the State and acting for "common good," could not be used as an immunity under the Competition Act, but it could be used as a defense during an inquiry under the Competition Act to determine whether a specific conduct of the enterprise constituted an abuse of dominant position. Therefore, the Hon'ble Supreme Court affirmed the CCI's jurisdiction in this case and held that State monopolies could not operate in a state of inefficiency and contravene the provisions of the Competition Act under the guise of common good.

Further, in the case of Competition Commission of India v. State of Mizoram (Civil Appeal No. 10820-10822 of 2014 = 2022-TIOLCORP-01-SC-CL, Commonly known as the Mizoram Lottery case), the Hon'ble Supreme Court held that even in cases like lotteries that are state-regulated activities and do not come within the scope of commercial activity, certain aspects of these businesses, like bid rigging in the tendering process, would come within the jurisdiction of the CCI.

In this particular case, a complainant alleged that private distributors colluded to submit identical minimum bids for lottery contracts, and the complainant also alleged that the State had abused its dominant position. Initially, the High Court had halted the investigation by the CCI, holding that lotteries were res extra commercium (outside the scope of ordinary commerce) and, therefore, exempted from the Competition Act.

However, this decision of the Hon'ble High Court was overturned by the Hon'ble Supreme Court. The Hon'ble Supreme Court held that with the expansive definition of 'service' under the Competition Act, the distribution of lottery tickets came within the scope of the definition of service under this Act, and, therefore, the CCI had jurisdiction to ensure transparency and fairness in the bid tendering process. The Apex court finally held that even highly regulated or 'sin' industries were subject to anti-competition scrutiny to prevent collusive practices that harmed public interest.

Further, in another matter, public procurement by government departments was also held to be within the jurisdiction of the CCI. In the case of Dushyant v. National Accreditation Board for Testing and Calibration Laboratories (Case No. 48 of 2021 dated 24.2.2022) = 2022-TIOLCORP-10-CCI, it was alleged that the government departments had created an entry barrier by mandating that the suppliers had to be accredited by NABL. The informant further alleged that the NABL and 36 other government-related entities had formed an exclusive supply agreement because the government procurement process required that all testing services could be performed only by NABL-accredited laboratories. Therefore, the informant alleged that this created a monopoly and blocked market access for competing accreditation bodies.

After investigation, the CCI held that the government department could stipulate procurement standards and that there was no violation under the Competition Act on this accord. Thus, the CCI held that the Competition Act had not been contravened in this case.

However, the fact that this inquiry was conducted showed that government procurement policies also came under the jurisdiction of Sections 3 and 4 of the Competition Act.

However, it is important to remember that the CCI's jurisdiction is limited to economic activities and does not extend to an entity's regulatory or statutory duties

This has been brought out in the case of Thupili Raveendra Babu v. Competition Commission of India, where the complainant challenged the age bar imposed by the Bar Council of India (BCI) on candidates from pursuing a legal education. The allegation of the complainant was that the BCI had abused its dominant position by imposing these restrictive age limits.

The CCI vide Case No. 50 of 2020 dated 20.1.2021 = 2021-TIOLCORP-03-CCI noted that the BCI was a statutory body established under the Advocates Act, 1961, to promote legal education, and the CCI further held that the BCI laid down standards of legal education, and it was a regulator, and it was not an entity engaged in economic or commercial activity. For this reason, the CCI held that BCI could not be classified as an 'enterprise' under the Competition Act.

The National Law Appellate Tribunal (NCLAT) in Competition Appeal (AT) No.09/2021 upheld the CCI's order.

When the complainant filed a review petition before the Hon'ble Supreme Court, the Apex Court vide Civil Appeal No. 2036/2022 dated 4th April 2022, dismissed the petition and upheld the view that the Bar Council of India cannot be said to be an enterprise under the Competition Act.

Thus, to establish a level playing field in India's economic ground under the framework of the Competition Act, the judiciary has removed the defence of 'State immunity' to Government Monopolies and PSUs. The judicial precedents have categorically held that when the government engages in commerce, it cannot claim sovereign immunity, and the activities of such government monopolies and PSUs come within the scope of the Competition Commission of India.

[The views expressed are strictly personal.]