Competition Law - Designation of a State Trading Enterprise for export of beach sand minerals is not amenable to Competition Act.
NCLAT Upholds Government's Policy on Beach Sand Mineral Exports, Tribunal Dismisses Appeal by Beach Mineral Producers Association, Cites Sovereign Functions
In a significant decision, the National Company Law Appellate Tribunal (NCLAT) at its Principal Bench in New Delhi has upheld the Government of India's policy on the export of beach sand minerals (BSMs), dismissing the appeal filed by the Beach Mineral Producers Association and other appellants. The judgment, delivered on September 23, 2025, by Justice Yogesh Khanna and Mr. Ajai Das Mehrotra, addressed allegations of abuse of dominant position under Section 4 of the Competition Act, 2002.
The appellants challenged the Competition Commission of India's (CCI) earlier order which closed the case under Section 26(2) of the Competition Act. The appellants argued that the Government's decision to designate Indian Rare Earths Limited (IREL) as the State Trading Enterprise (STE) for BSM exports placed it in a dominant position, undermining the level playing field for private players.
However, the Tribunal observed that activities relating to atomic energy and other sovereign functions do not fall under the definition of "enterprise" as per Section 2(h) of the Competition Act. BSMs have strategic importance in sectors such as space, defense, and atomic applications. Consequently, the Tribunal agreed with the CCI that policy changes regarding the export of BSMs are not amenable for examination under the Competition Act.
The Tribunal further noted that the notification issued on August 21, 2018, requiring BSM exports to be channeled through IREL, was a policy matter. It emphasized that challenging such a policy decision should be pursued through appropriate forums, not the Competition Commission.
The judgment reiterates the legal principle that the government’s sovereign functions, especially those related to atomic energy, are excluded from scrutiny under competition law. This decision underscores the separation of policy formulation from regulatory examination under the Competition Act.
The dismissal of the appeal maintains the status quo, allowing the government's policy on BSM exports to continue. The Tribunal's decision is a reinforcement of the government's autonomy in policy matters related to strategic resources.
Bottom Line:
Competition Law - Allegation of abuse of dominant position under Section 4 of the Competition Act, 2002 - Activities related to atomic energy and sovereign functions of the Government are not within the ambit of "enterprise" as per Section 2(h) of the Act - Change in export policy and its implementation by Government agencies are policy matters not amenable for examination under the Competition Act.
Statutory provision(s): Section 2(h), Section 4, Section 26(2) of the Competition Act, 2002
