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2017] B-159

Government Departments as Enterprise- An Enigma under the

Competition Act

Tanveer Verma*

Section 2 (h) of the Competition Act, 2002 (the Act) brings government
departments under the definition of enterprise and therefore under the remit of the
Act. Section 2 (h) further lays down certain conditions in the form of set of activities
in which a government department must be engaged into for rendering it to be an
enterprise with the exemption of activities relatable to sovereign functions. The
remit of the Act while dealing with government departments ultimately hinges
upon providing answers to various issues such as tracing the contours of the above
set of activities and the degree of involvement by the government department for
rendering it to be an enterprise and also defining the scope of sovereign functions
exemption. This paper captures the trends and jurisprudence emerging from decisions
of various tribunals and the courts in this regard.

Introduction 3. Section 3 and Section 4 of the

Competition Act, 2002 (the Act)
1. The state impacts competition in a
number of ways- 1) as a player, either prohibit an enterprise to enter into
anticompetitive agreements and abuse its
through its companies or through
institutions which are not companies but dominant position respectively. The
definition of enterprise is given in
are directly involved in an economic or
commercial activity (e.g. Public Welfare Section 2 (h) of the Act as-
Department or various Boards), 2) as a enterprise means a person or a
regulator- by forming such laws, rules, department of the Government, who or
regulations, by-laws, etc. which may which is, or has been, engaged in any
impact competition, and 3) as a buyer- activity, relating to the production,
when it calls for tenders. storage, supply, distribution,
acquisition or control of articles or
2. To achieve the goals of fair competition,
goods, or the provision of services, of
it is important that the markets are
any kind, or in investment, or in the
safeguarded from anti-competitive
business of acquiring, holding,
conduct not only by the private players
underwriting or dealing with shares,
but also by the state and state
debentures or other securities of any
intervention is limited to exceptional
other body corporate, either directly or

* The author is a practising advocate working in the fields of competition law and intellectual
property law. He has advised clients and handled cases in a variety of sectors such as
insurance, ports, electricity, oil and natural gas, apparels, real estate, automobiles, engineering,
media, etc. He works as an Associate with Saikrishna & Associates. The views expressed in
this article are solely of the author and not of Saikrishna & Associates. The author could be
reached at or


B-160 Competition Law Reports [Vol. 2
through one or more of its units or Section 2 (h) further excludes any activity
divisions or subsidiaries, whether of the Government relatable to the
such unit or division or subsidiary is sovereign functions from the definition
located at the same place where the of enterprise.
enterprise is located or at a different 5. This paper attempts to capture the
place or at different places, but does general trends and jurisprudence
not include any activity of the emerging from various decisions of the
Government relatable to the sovereign Competition Commission of India
functions of the Government including (CCI), the Competition Appellate
all activities carried on by the Tribunal (COMPAT) and various other
departments of the Central courts regarding the treatment of
Government dealing with atomic government departments under the Act.2
energy, currency, defence and space.
4. As is clear from its bare perusal, the Functional aspect analysis and its
definition comprises of person and scope
department of Government. The term
6. In its order in the case of Shri Surinder
person is defined in Section 2 (l) of the Act
Singh Barmi vs. BCCI3, the CCI stated, The
and includes any corporation established
[Competition] Act focuses on the functional
by or under any Central, State or Provincial
aspects of an entity rather than institutional
Act or a Government company as defined
aspects. The scope of the definition on the
in section 617 of the Companies Act, 1956
institutional front has been kept broad enough
(1 of 1956)1. Therefore, both government
to include virtually all the entities as it includes
companies and government departments
person as well as departments of the
are covered under the definition of
government. Therefore while carrying out
enterprise if they fulfill certain conditions
a Section 2 (h) analysis, it is important to
laid down in Section 2 (h). One of the
look at the functional aspects of the entity
conditions is that the institution must be
under question.
engaged in any one of the following three
classes of activities- 7. In its order under Section 26 (2) of the
i. any activity, relating to the Act in the case of Taj Pharmaceuticals Ltd.
production, storage, supply, v. The Department of Sale Tax/Professional
distribution, acquisition or control of Tax,4 while dismissing an Information of
articles or goods, or the provision of abuse of dominant position by the Sale
services, of any kind; or Tax/Professional Tax Department, the
CCI stated, the assessment whether a
ii. investment; or
department of the Government is an
iii. the business of acquiring, holding, enterprise or not is to be done based on the
underwriting or dealing with shares, activity of the entity under consideration and
debentures or other securities of any the facts of the case. Therefore, as per the
other body corporate CCIs rulings, the analysis which needs

1 Section 617 of the Companies Act, 1956 defines a Government Company as any company
in which not less than fifty-one per cent of the paid-up share capital is held by the Central
Government, or by any State Government or Governments, or partly by the Central Government
and partly by one or more State Governments and includes a company which is a subsidiary
of a Government company as thus defined.
2 Since the scope of this paper is limited to government companies and government
departments, discussion of case laws involving private players will either not be covered or
will be limited.
3 Case No. 61 of 2010, order dated 08.02.2013
4 Case No. 69 of 2015, order dated 29.09.2015


2017] Government Departments as Enterprise- An Enigma under the Competition Act B-161

to be carried out is that whether the [DGHS] is not just a facilitator for its target
impugned activity which has been alleged group to seek healthcare in empanelled
to be anticompetitive belongs to any of hospitals but itself provides healthcare
the three categories of activities [services] CGHS is clearly an enterprise
mentioned in Section 2 (h) or not and which provides healthcare services to the
even if other activities being carried out target group and in order to do so, in view of
by the organization would squarely fall the constraints on its capacity, it laterally
into the above mentioned trappings of complements its resources by empanelling
Section 2 (h), the government department hospitals which include private hospitals as
would not be deemed to be an enterprise well. Therefore, the process of empanelment
unless the impugned activity falls into is essentially an expansion of CGHS
such trappings. activities of providing healthcare to the target
8. The decisions by the COMPAT point in group. It is not facilitation but a clear
a diametrically opposite direction. In the provision of service.6
case of Wing Cdr. (Retd.) Dr. Biswanath 10. It has to be noted that the activity which
Prasad Singh v. Director General of Health was impugned to be anticompetitive was
and Services & Ors.5, the Informant had authorization of extra payment of 15% to
alleged that by authorizing an extra NABH accredited hospitals and not
payment of 15% to hospitals accredited provision of health services by DGHS.
by NABH in lieu of providing services to However, rather than narrowing down the
the beneficiaries of Central Government analysis to the impugned activity alone,
Health Scheme (CGHS), the Director the COMPAT gave a holistic consideration
General of Health and Services (DGHS) to all the functions being carried out by
had created an unfair practice. The DGHS and CGHS. Therefore, the
Information was rejected by the CCI upon methodology adopted by the COMPAT is
a prima facie consideration on the grounds significantly different from that of the CCI,
that The activities being performed by DGHS which narrows down the analysis to the
cannot be covered in the definition of impugned activity.
enterprise because it is not directly engaged 11. At this juncture, it is pertinent to extract
in any economic and commercial activities. a passing observation by the Supreme
Its role is limited to control and regulate the Court in the case of CCI v. Coordination
health care system in the country. Committee7, The notion of enterprise is a
9. However, the COMPAT held that since relative one. The functional approach and the
DGHS was involved in the provision of corresponding focus on the activity, rather than
healthcare services, it would be deemed the form of the entity may result in an entity
to be an enterprise and therefore being considered an enterprise when it engages
amenable to CCIs jurisdiction. COMPAT in some activities, but not when it engages in
observed, It can be clearly seen that CGHS others. The relativity of the concept is most
is not just a facilitative mechanism but it also evident when considering activities carried out
provides healthcare facilities by itself in the by non-profit-making organisations or public
out-patient departments. In cases which bodies. These entities may at times operate in
require hospitalization or further specialized their charitable or public capacity but may be
care, references are made to hospitals which considered as undertakings when they engage
are empanelled for the purpose. It is thus in commercial activities. The economic nature
amply clear by its own admission that of an activity is often apparent when the entities

5 Case No. 20 of 2014, order dated 23.06.2014

6 Appeal No. 63 of 2014, judgment dated 01.03.2016
7 Civil Appeal No. 6691 of 2014, judgment dated 07.03.2017


B-162 Competition Law Reports [Vol. 2
offer goods and services in the marketplace and engaged in- regularity and continuity
when the activity could, potentially, yield of activities
profits. Thus, any entity, regardless of its form,
14. In the case of Shri Uday Sakharam Yadav
constitutes an enterprise within the meaning
v. Excise, Entertainment & Luxury Tax
of Section 3 of the Act when it engages in
Department9, while interpreting the words
economic activity. An economic activity
engaged in appearing in Section 2 (h),
includes any activity, whether or not profit
the CCI has stated, words engaged in
making, which involves economic trade.
preceding the words any activity reflect
Though the issue in this case relates neither
both regularity and continuity of the
with government departments nor with the
activities mentioned in [section 2(h)].
definition of the term enterprise, it appears
Therefore, for rendering a government
that the Supreme Court is tilting towards
department to be an enterprise, it would
the interpretation advanced by the CCI in
be necessary to show that the government
the cases referred above.
department has carried out the activity
12. It is pertinent to note that such a for a considerable period of time.
distinction can have immense impact on
the final outcome of the case. In the case The three classes of activities
of Prem Prakash v. The Principal Secretary8, mentioned in Section 2 (h)
the CCI rejected an Information filed
against Public Works Department on the The first class of activities and its contours
grounds that it was not directly engaged 15. The first class of activities mentioned
in any commercial or economic activity, in Section 2 (h) is any activity, relating to
therefore it could not be considered as the production, storage, supply,
an enterprise. The COMPAT reversed distribution, acquisition or control of
the CCIs order and remitted the matter articles or goods, or the provision of
back to the CCI with directions for fresh services, of any kind. Various phrases in
considerations while considering the statute, such as, any activity, relating
Public Works Department to be an to, of any kind, etc. are too broad and
enterprise. In the second round of raise a number of questions, especially
consideration, the CCI observed, the when dealing with government
condition imposed by the [various Public departments. The two most significant
Works Departments] that private questions in this regard are- first, what
laboratories be approved/ accredited by should be the degree of involvement in
NABL seems to be anti-competitive as it such acts by a government department to
appears to be favouring a single render it an enterprise and would
accreditation body restricting the number indirect involvement suffice; and second,
of eligible private laboratories whose what should be the nature of activities and
services can be procured indirectly by OPs. whether those activities of the government
Accordingly, the Commission is of the departments are carried in pursuance of
considered opinion that imposition of such statutory mandate without any profit
a condition by MPPWD and CPWD is in earning motif would fall under the
contravention of the provisions of Section definition of enterprise.
4(2)(a)(i) of the Act.
16. With regards to the first question, i.e.,
13. Therefore, as the issue has far the degree of involvement, the initial
reaching implications, it requires final rulings by the CCI are rather hazy. In the
adjudication by the Supreme Court. case of Shri Debapriyo Bhattacharya v. The

8 Case No. 50 of 2014, order dated 17.03.2017

9 Case No. 67 of 2014, order dated 05.12.2014


2017] Government Departments as Enterprise- An Enigma under the Competition Act B-163

Principal Secretary (Home) General A Cooperative Society Ltd. v. Competition

Department and Galaxy Entertainers Pvt. Commission of India & Ors.12. While over-
Ltd.10, the CCI held, Licensing amounts to ruling the decision of the CCI by which
control over the provision of service and, the CCI had held that the Registrar of
therefore, any act of the Secretary or the State Cooperative Societies was not an
Government which relates to control of services enterprise, the COMPAT stated, Though
was covered under the purview of the the Commission briefly analyzed the
Competition Commission. Undoubtedly, definition of the term enterprise, it failed to
issuing the licences for providing cinema give due weightage to the words relating to
tickets to a party is a function being the production, storage, supply, distribution,
exercised in control of services thereby acquisition or control of any articles or goods
bringing the activity of regulation by a appearing in Section 2(h) and was swayed by
government department under the ambit the fact that the Registrar had issued the
of Section 2 (h). Whereas, in the case of disputed circulars in exercise of its statutory
XYZ vs. Principal Secretary, Public Works powers. In my view, even though the Registrar,
Department, Government of Madhya Pradesh Cooperative Societies, Punjab had issued
and Director General, Central Public Works circulars in the purported exercise of his
Department, New Delhi11, in which it was [statutory] powers, the fact remains that the
alleged that the condition imposed by same were definitely relating to the goods
Public Welfare Department (PWD) of which could be purchased by Primarily
testing of certain samples to be carried out Agricultural Societies from [Punjab State Co-
only by labs which have been accredited operative Supply and Marketing Federation]
by National Accreditation Board for only. Therefore, the Registrar would fall with
Testing and Calibration Laboratories the ambit of term enterprise as defined in
amounted to an abuse of dominant Section 2(h) for the purpose of the Act and
position by PWD, the CCI held The will be amenable to the jurisdiction of the
activities being performed by the Opposite Commission.
Parties do not come under the definition of 18. Similar views had also been taken by
enterprise in terms of Section 2(h) of the Act the Delhi High Court in the case of Hemant
as they are not directly engaged in any economic Sharma & Ors. v. Union of India & Ors.13
and commercial activities. The Opposite Parties where the Delhi High Court considered the
have no existence in the relevant market, except activities of organizing chess tournaments
for laying down norms as to the authorization and providing the required technical
of accreditation bodies for specific purposes. support being carried out by the All India
Their role is limited to planning, designing, Chess Federation (AICF) sufficient to
construction and maintenance of Government render it an enterprise under Section 2
assets, as such provisions of Section 4 of the (h). The Court held, Admittedly, respondent
Act are not attracted against them. The no.2 [AICF] organises chess tournaments and
Opposite Parties have issued circulars only and provides technical support and expertise for
they are not operating in the relevant market. conduct of such chess tournaments. That, in
Therefore, the conduct of the Opposite Parties my prima facie view, would constitute service
does not give rise to any competition concern. rendered by respondent no.2 to the players who
17. Similar issue has been dealt by the are registered with it. Such service is being
COMPAT in the case of The Malwa rendered for a consideration received from the
Industrial and Marketing Ferti-Chem players, as is evident from the registration form,

10 Case No. 54 of 2011, Section 26 (2) order dated 21.12.2011

11 Case No. 50 of 2014, Section 26 (2) order dated 29.10.2014
12 Appeal No. 25 of 2015, judgment dated 30.04.2015
13 W.P. (C) No. 5770/2011, judgment dated 04.11.2011


B-164 Competition Law Reports [Vol. 2
mandate without any profit-earning
A government department motive, in an earlier case of All India
need not be directly Genset Manufacturers Association v. Chief
Secretary, Govt. of Haryana & Ors.,14 the
carrying out production, CCI held the purchase of Gensets obviously
storage, supply, is a commercial activity of the department
and [Director, Supplies and Disposals]
distribution, acquisition or would satisfy the definition of an enterprise
control of articles or goods, as given in section 2(h) of the Act.
or the provision of services 21. However, in the case of Builders Association
of India (Kerala Chapter) v. The State of Kerala
(the first class of activities (OP-1), Kerala Public Works Department (OP-
mentioned in Section 2 (h)) 2), The Kerala State Construction Corporation
Ltd. (OP-3) and Finance Department,
and even if it carries out Government of Kerala (OP-4)15, in which it was
any activity relating to the alleged that Kerala Public Works Department
in collusion with The Kerala State
above activities in any Construction Corporation Ltd. (a state owned
manner, it would be deemed company) was ousting other private
contractors from government bids for public
to be an enterprise works, pursuant to the DGs investigation,
the CCI held that since Public Works
a copy whereof has been filed on record by Department was responsible for design,
respondent no.2. It is also borne by respondent implementation and maintenance of all
No.1 for the benefit of all chess players who public works undertaken by the Government
provides grants to respondent No.2. of Kerala and facilitate the economic
Respondent no.2, prima facie, would also fall development of the State by providing
within the expression `enterprise as used in the required road infrastructure, development of
Act which is very widely worded to even include inter-state road infrastructure facilities, road
a person or a department of the government safety and enhancing the mobility of the
rendering services of any kind. people as well as goods and services, it
19. Hence it is clear from the above judicial cannot be considered as an enterprise
pronouncements that a government because these functions were its primary
department need not be directly carrying out functions. CCI further held that for carrying
production, storage, supply, distribution, out the above mentioned functions, since it
acquisition or control of articles or goods, or used to consume the services of The Kerala
the provision of services (the first class of State Construction Corporation Ltd. and
activities mentioned in Section 2 (h)) and even other private players, it was a consumer and
if it carries out any activity relating to the for this reason too, it could not be considered
above activities in any manner, it would be as an enterprise.
deemed to be an enterprise. 22. Various decisions by the COMPAT and
20. Regarding the second question other courts have shed some light on the
relating to those activities of the issue. In the case of Rajat Verma v. Haryana
government departments which are Public Works (B&R) Department & Ors.16, the
carried in pursuance of statutory COMPAT overruled the order of the CCI

14 Case No. 38/2012, Section 26 (2) order dated 18.10.2012

15 Case No. 42 of 2013, order under Section 26 (6) dated 12.05.2015
16 Appeal No. 45/2015, dated 16.02.2016


2017] Government Departments as Enterprise- An Enigma under the Competition Act B-165

passed under Section 26(2) where the CCI construction, repair, conveying of news or
held that Haryana Public Works (B&R) information and advertising. This shows that
Department could not be regarded as an every possible type of activities is
enterprise on the grounds that the activity encompassed in the inclusive part of the
carried by the Public Works Department, definition of the term service. The width
i.e. of tendering for construction of bridges of the definition of enterprise becomes clear
was done for the welfare of the public and by the definition of the term service.
did not fall in the category of economic or a [Emphasis appears in the original text]
commercial activities as given in Section 2 24. Pertinently, both these rulings by the
(h), and closed the case. The COMPAT COMPAT (Rajat Verma (supra) and Indian
while drawing a distinction between Trade Promotion Organization (supra)) have
economic and commercial activity held been relied extensively upon by the CCI
that though the activity of tendering for in the case of Sudarshan Kumar Kapur v.
construction of an over-bridge by the Public Delhi Development Authority18 to hold that
Works Department is not done with a the service of developing of apartments
profit earning motif, it could not be regarded by the Delhi Development Authority was
as a commercial activity but it still is an within the purview of Section 2 (h) despite
economic activity as it strengthens the this being the statutory mandate of the
economic condition of the society. While Delhi Development Authority.
considering the Haryana Public Works
department to be an enterprise, the 25. Hence, through various rulings of the
COMPAT held, If the term enterprise, as COMPAT, the scope of the first class of
defined in Section 2(h) is read in conjunction activities mentioned in Section 2 (h) i.e.
with the definitions of the terms person and any activity, relating to the production,
service, it becomes clear that the legislature storage, supply, distribution, acquisition
has designedly included government or control of articles or goods, or the
departments in relation to any activity relating provision of services, of any kind has
to storage, supply, distribution, acquisition or become very wide.
control of articles or goods, or the provision of 26. However, it should be noted that
services of any kind. . when the statute itself demands that the
23. Similar views were taken by the government body should act in a
COMPAT in the case of Indian Trade particular manner, CCI cannot interfere.
Promotion Organization v. Competition In the case of Sharad Kumar Jhunjhunwala
Commission of India & Ors.17 where it was v. Union of India, Indian Railways & Ors.19,
held, The word service, which finds place the COMPAT held, It may be noted that
in Section 2(h) has been defined in Section 2(u). the relevant charges are imposed as per the
It means service of any description which Railway Passenger (Cancellation of ticket and
is made available to potential users and also Refund of fare) Rules 1998 framed under the
includes the provision of services in Railways Act, 1989. As the levy is statutory
connection with business of any industrial in nature and even otherwise no irrationality
or commercial matters such as banking, can be found therein, the entire challenge of
communication, education, financing, the Informant on this count falls flat.
insurance, chit funds, real estate, transport, Therefore, when the statute mandates a
storage, material treatment, processing, supply government department to act in an
of electrical or other energy, boarding, anticompetitive manner, it may not be
lodging, entertainment, amusement, considered to be an enterprise.

17 Appeal No. 36 of 2014, judgment dated 01.07.2016

18 Case No. 78 of 2016, order dated 12.01.2017
19 Appeal No. 01 of 2016, judgment dated 11.01.2016


B-166 Competition Law Reports [Vol. 2

The second and third classes of an adverse impact on competition, it is

activities and their contours imperative that the Act be interpreted in
such a manner which could curb these
27. Pertinently, the Government of India
practices by the state too. And second, as
and the State Governments through
discussed above, while interpreting the
various ministries hold the shares of a
first class of activities, the COMPAT has
number of government companies. The
clarified that even those activities of the
second and the third classes of activities
government departments which are
referred in Section 2 (h) are investment
carried out without any profit earning
and the business of acquiring, holding,
motive would be amenable to scrutiny
underwriting or dealing with shares,
under Section 2 (h) of the Act (see Rajat
debentures or other securities of any other
Verma (supra) and Wing Cdr. (Retd.) Dr.
body corporate respectively. There is a
Biswanath Pratap Singh (supra)).
vacuum of judicial pronouncements in
competition law which could help in 30. On the other hand, if the term
tracing the contours of these activities. investment is given a very liberal
interpretation, almost every Ministry of
28. Regarding the term investment, the
the Central government or the State
Supreme Court has quoted the following
governments, as the case may be, would
interpretation of the term investment
be subjected to scrutiny under competition
given by the House of Lords in the case
law since these hold shares of various
of IRC v. Total Broad Hurst Lee Co. Ltd.20 in
government companies. Would this not
a plethora of cases related to taxation:
be an absurd situation?
The meaning of investment is not its
meaning in the vernacular of the man in 31. Hence, the issue that whether the term
the street but in the vernacular of the investment as mentioned in Section 2 (h)
businessman. It is a form of income- should be given a narrow interpretation
yielding property which the businessman or a liberal interpretation qua government
looking at the total assets of the company departments needs final adjudication by
would single out as an investment..... The the apex court.
businessman would not limit income from 32. Fortunately, there is no such
investments to income from the kinds of ambiguity regarding the third class of
securities which are quoted on the stock activities mentioned in Section 2 (h) of
exchange, and he. would, I think, regard as the Act which is, the business of
income from investment a profitable rent acquiring, holding, underwriting or
from a sublease of office premises, or the dealing with shares, debentures or other
like... securities of any other body corporate.
29. It is doubtful whether the above It is opined that the use of the term
definition of the term investment which business makes it amply clear that it
applies to taxation can also be applied should be a commercial activity carried
to competition law because of a number out with the purpose of earning profit. It
of reasons- first of all, the objective of is therefore opined that if a government
competition law is very different from department acquires, holds, underwrites
that of taxation. As the Act seeks to curb or deals with shares, debentures or other
the mischief of practices having an securities of any other body corporate, it
adverse on competition, it demands a should be deemed to be an enterprise
very liberal interpretation which could only if it has carried out these activities
curb this mischief and since the state can with a motif to earn profit.
also carry out practices which could have

20 [I949] 29 TC 352


2017] Government Departments as Enterprise- An Enigma under the Competition Act B-167

Sovereign Function Exemption and equitable distribution. Interestingly

Section 54 Article 38 and 39 of the Constitution cast
a duty on the state to ensure that the
33. The latter part of Section 2 (h) states
resources are distributed in such a
that the term enterprise does not
manner so as to sub-serve the common
include any activity of the Government
relatable to the sovereign functions of the
Government including all activities 36. Also, Section 54 (c) empowers the
carried on by the departments of the Central Government to exempt any
Central Government dealing with atomic enterprise from the reach of the Act which
energy, currency, defense and space. performs a sovereign function on behalf
of the Central Government or the State
34. It is pertinent to note that the term
Government. While clarifying the
sovereign functions has been given a
purport of this provision, in the case of
very narrow interpretation by the courts.
Union of India vs, CCI22, the Delhi High
In the case of Wing Cdr. (Retd.) Dr.
Court held, an enterprise may perform
Biswanath Prasad Singh (supra), while
some sovereign functions, while other
relying upon the landmark judgment of
functions performed by it, and the activities
the Supreme Court in the case of
undertaken by it, may not refer to sovereign
Bangalore Water Supply and Sewage Board
functions. The exemption under Section 54
v. A. Rajappa21, the COMPAT held that
could be granted in relation to the activities
only those functions of the Government
relatable to sovereign functions of the
which are inalienable and non-delegable
Government, and not in relation to all the
shall be regarded as its sovereign
activities of such an enterprise.
functions. These would include
functions like maintenance of law and
order, acquisition and retention of Conclusion
territories, taxation, etc. Therefore, the 37. Section 2 (h) of the Act brings not only
sovereign function exemption does not the government companies but also
have a wide amplitude and a plethora of departments of the Government within
activities being carried out by the the ambit of the Act. Though Section 2
Government would fall within the ambit (h) further lay down certain conditions,
of Section 2 (h) of the Act. the interpretations given by the COMPAT
35. It is important to note that Section 54 and various courts have made the ambit
(a) of the Act empowers the Central of Section 2 (h) very wide while dealing
Government to exempt by notification with government departments. It is not
any enterprise (including private necessary that the department of the
enterprise) from the application of the Government has to be directly involved
Act if such exemption is necessary in in the activities mentioned in Section 2
public interest. It is opined that by the (h) and even an indirect involvement
insertion of Section 54 (a) in the Act, there would render the department an
is a presumption by the legislature that enterprise. Moreover, if a government
there may be certain cases where department acts in an anticompetitive
promotion of competition may not be in manner in pursuance of its statutory
public interest. This may be true mandate, it shall be amenable to the
especially in the cases of essential jurisdiction of the CCI. The sovereign
commodities where it is important for the functions exemption and Section 54 play
Government to intervene to promote a balancing role.

21 (1978) 2 SCC 213

22 W.P. (c) No. 993/2012, judgment dated 23.02.2012


B-168 Competition Law Reports [Vol. 2
38. With a reduction of the Governments achievement of the goals of fair
control of the economy, the role of the CCI competition. It may therefore be desirable
would increase as on one hand it would that Section 2 (h) be given a liberal
have to ensure that private parties do not interpretation to enable the CCI to
abuse the freedom and on the other achieve its mandate of preventing
Government does not carry out such practices having an adverse effect on
activities which would obstruct the competition.