The CCI will now be able to impose penalties on offending parties based on their “global turnover derived from all the products and services” as opposed to “relevant turnover”. Following a Supreme Court ruling in 2017, the principle of “relevant turnover” was read into the law for determining penalties for competition law violations.
This change may have a massive impact on multinational firms which have a global presence. While the provision is not exclusively applicable to tech companies, they are likely to be the most affected due to their global reach. Levy of penalty on the global turnover can lead to unfair outcomes and discrimination between domestic enterprises and enterprises with global operations.
However, in an important and welcome change, the CCI will now be required to publish guidelines on the manner of calculation of penalties for contravention of the Competition Act and provide reasons for any divergence.
Quote
Aman Singh Sethi, Partner
“The Bill will empower the CCI to impose penalties on infringing enterprises on the basis of their ‘global turnover’, as opposed to the ‘relevant turnover’. This may result in enterprises with global operations being exposed to higher level of penalties. However, in an important and welcome change, the CCI will now be required to publish guidelines on the appropriate amount of penalties for contravention of the Competition Act.”
