Sovereign Policy vs. Competition Law

In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) affirmed that policy decisions of the Government relating to strategic resources, particularly those linked to atomic energy, are sovereign functions and cannot be tested under Section 4 of the Competition Act, 2002. 

The Tribunal upheld the CCI’s decision to close proceedings against the Directorate General of Foreign Trade (DGFT) and Indian Rare Earths Ltd., holding that canalisation of exports through a State Trading Enterprise is a matter of policy, not competition law. 

The judgment clarifies that challenges to such notifications must be pursued in appropriate constitutional or administrative forums, not before competition authorities.