Tech giant Apple has approached the Delhi High Court (HC) to challenge provisions of India’s competition law that allow the Competition Commission of India (CCI) to impose penalties based on a company’s global turnover, as reported by Bar & Bench.
The petition will be heard by Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela on December 3.
Importantly, Apple argues that the 2023 amendment to Section 27(b) of the Competition Act, 2002, and the 2024 Monetary Penalty Guidelines unlawfully expand the CCI’s authority by allowing penalties to be calculated on a company’s global turnover rather than revenue connected to the Indian market. Notably, the company has named the Union Government and the CCI as respondents in the case.
Notably, this petition marks one of the first major judicial reviews of the amended penalty regime since the changes came into effect. Therefore, the outcome will significantly influence how penalties are calculated in future investigations involving multinational enterprises.
Furthermore, the case will determine how far the CCI can go when using global revenue as the basis for fines arising from conduct within India.
What Section 27(b) of the Competition Act Says
Section 27 empowers the CCI to pass orders if it finds that an enterprise has entered into an anti-competitive agreement under Section 3 or abused its dominant position under Section 4.
And under Section 27(b), the competition regulator may impose a monetary penalty of up to 10% of the average turnover of the last three financial years on each enterprise involved in the violation.
Additionally, a proviso within Section 27(b) creates a stricter penalty rule for cartel cases. It authorises the CCI to impose a penalty of up to three times the profit for each year of the cartel or 10% of the turnover for each year of the cartel’s duration, whichever is higher.
Importantly, courts have previously interpreted the term “turnover” through the Supreme Court’s (SC) Excel Crop Care judgment. In that ruling, the Court held that penalties must be based on relevant turnover, meaning turnover linked directly to the product or service that formed part of the anti-competitive conduct. As a result, the CCI could not extend penalties to unrelated business lines or global revenue streams.
What the 2023 Amendment Changed
The 2023 amendment significantly altered this penalty framework. Parliament added Explanation 2 to Section 27(b), defining turnover as “global turnover derived from all products and services”. As a result, the penalty base now includes worldwide revenue and not just domestic or ‘relevant’ turnover.
This marks a clear departure from the Excel Crop Care principle, as it gives the CCI wider authority to take into account revenue across all markets and business categories, even if only a subset of those activities relates to the conduct under investigation.
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