The Supreme Court on Thursday held that the Coal India Ltd and its subsidiaries would be bound by the Competition Act, 2002 passed to check abuse of dominant position or differential pricing.
A bench of Justices K M Joseph, B V Nagarathna and Ahsanuddin Amanullah declared that even if the public sector companies operated under the provisions of the Coal Mines (Nationalization) Act, 1973 on the principles of ‘common good’ secured by the ‘distribution of scarce resources’, they would still be subject to the anti monopoly law.
"Can it be said that free competition as envisaged under the Act which involves avoidance of anti-competitive agreements, abuse of dominant position and regulation of combinations are against the common good," the bench asked.
The court found no merit in the contention of the public sector behemoth that the 2002 Act will not apply to then for the reason that they are governed by the Nationalisation Act which cannot be reconciled with the 2002 law.
It said that government departments are also expressly covered within the expression ‘enterprise’ under the Act.
In its judgement, the top court said the appellants cannot resist the imposition of standards of fairness and the duty to avoid discriminatory practices when a specialised forum has been created by Parliament under the Act.
"Section 54 of the 2002 Act gives power to the central government to exempt (any enterprise) on ground of security of the State or even public interest. It is not that the government would be powerless," the bench said.
The Competition Commission of India had in 2013 found that Coal India and its three subsidiaries Mahanadi Coalfields Ltd, Western Coalfields Ltd, and South Eastern Coal fields Ltd, were guilty of abusing their dominant position.
The regulator imposed a penalty of Rs 1,733.05 crore, which was reduced to Rs 591.01 crore after the Competition Appellate Tribunal sent the case back for fresh consideration.
Emphasising upon the benefit of the 2002 Act, the bench said the role which was envisaged for the public sector company could not permit them to outlive their utility or abuse their unique position.