The Supreme Court of India has ruled that Coal India Ltd (CIL), a public-sector undertaking, will be subject to the Competition Act, rejecting CIL's argument that the act did not apply to it due to its operation under the Coal Mines (Nationalisation) Act. The court stated that CIL had the right to defend its actions under the law but would still be subject to the Competition Act. The case has been sent back to the Competition Commission of India (CCI) for further consideration.

The ruling reinforces the principle of competitive neutrality under the Competition Act, applying to both public-sector undertakings and private enterprises. CIL had contended that as a monopoly under the Nationalisation Act of 1973, it should be exempt from the provisions of the Competition Act. However, the Supreme Court disagreed, emphasizing that CIL could not evade fairness standards and the duty to avoid discriminatory practices.

CIL had appealed against a CCI order that found the company guilty of abuse of dominance in the production and supply of non-coking coal to thermal power producers. The CCI had imposed a penalty of Rs 1,773.05 crore on CIL, which was later reduced by the appellate tribunal to Rs 591.01 crore.

Senior advocate K K Venugopal, representing CIL, argued that the Nationalisation Act placed CIL's operations outside the purview of the Competition Act. On the other hand, the Additional Solicitor General N Venkataraman, representing the CCI, highlighted the need for state monopolies to operate efficiently and in line with competition, stating that there was no conflict between the Nationalisation Act and the Competition Act.

Overall, the Supreme Court's decision establishes that CIL, as a public-sector entity, is not exempt from the regulations of the Competition Act and must comply with fair competition standards.