From Relevant to Global Turnover. How India’s New Penalty Regime Works

Introduction

Recently, Apple Inc. has challenged certain provisions of the Competition (Amendment) Act, 2023 (‘2023 Amendment Act’) and the Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024 (‘2024 Penalty Guidelines’), which in certain cases allows the CCI to impose penalties based upon a firm’s global turnover.

The constitutional challenge before the Delhi High Court has brought forth discussion around the regulatory shift in calculating penalties by the CCI post the 2023 Amendment Act. In this piece, we shall chart CCI’s regulatory approach to calculating penalties (i) prior to the 2023 Amendment and (ii) post the 2023 Amendment Act, read with the  2024 Penalty Guidelines. There is a marked shift in regulatory approach as a result of these developments.

This regulatory recalibration has consequences that extend beyond enforcement mechanics to the broader investment and innovation ecosystem. A monetary penalty framework that permits calculation of penalties on the basis of global turnover alters the risk calculus for global players operating in India, particularly digital and technology firms whose revenues are often globally integrated. While stronger deterrence may enhance compliance, increased penalty risks may also introduce uncertainty around liability, which will affect investment decisions, product launches, and market entry strategies. For innovation-driven sectors like emerging technologies, where experimentation is central, the prospect of globally linked penalties may encourage conservative behaviour that hampers innovation in the long run.

Calculation of Penalties prior to the 2023 Amendment Act

Under section 27 of the Competition Act, 2002 (‘Competition Act’), the CCI is empowered to pass orders against firms which are found to be in contravention of section 3 (anti-competitive agreements) or section 4 (abuse of dominant position) of the Competition Act. Further, specifically under section 27(b), the Commission is empowered to impose certain monetary penalties “... … which shall be not more than ten per cent of the average of the turnover or income, as the case may be, for the last three preceding financial years, upon each of such person or enterprise which is a party to such agreement or has abused its dominant position … …”.

In case of cartelisation, pursuant to the proviso to section 27(b), the CCI is empowered to impose “... …  a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent of its turnover or income, as the case may be, for each year of the continuance of such agreement, whichever is higher.”

In 2017, a 2-judge bench of the Supreme Court in Excel Crop Care Ltd. vs Competition Commission of India & Anr. interpreted the term ‘turnover’ and held that the penalties imposed by the CCI ought to be on ‘relevant turnover’, which essentially means that turnover from the product(s) or service(s) that formed part or whole of the contravention of the Competition Act. Therefore the implication is that the Commission could not impose penalties to other business streams or based on global revenue.

The principles laid down in Excel Crop Care Ltd. have been re-affirmed by the Delhi High Court in Mahindra Electric Mobility Ltd. & Anr. vs. CCI & Anr. and connected matters, wherein the court emphasised the need for monetary penalties to have a nexus with the harm identified.

The 2023 Amendment Act and 2024 Penalty Guidelines

The 2023 Amendment Act brought a groundbreaking change to the penalty framework. Clause 20 of the Amendment Act introduces explanation 2 to section 27(b) within the legislative fold of the parent Act. In effect, the amendment partially overrides the interpretation of ‘turnover’ given by the Excel Crop Care Ltd. ruling and expands the understanding for ‘turnover’ to also mean ‘global turnover’ derived from all the products and services by a person or an enterprise in certain cases.

On March 6, 2024, the CCI under section 64-B(1) read with section 64-B(3) of the Competition Act notified the 2024 Penalty Guidelines to clarify how the CCI would impose monetary penalties in furtherance of the 2023 Amendment Act.

Briefly, as given under Chapter II of the 2024 Penalty Guidelines, the process of calculation of penalties under section 27(b) is initiated by the CCI by determining a base penalty that can go up to 30% of a firm’s average relevant turnover or income. While determining the base penalty,  the CCI considers the nature and gravity of the contravention, nature of the industry or sector affected and its implications on the economy, and any other factor which the Commission deems appropriate.

Under paragraph 3(2) of the Guidelines, the CCI is empowered to adjust the penalty imposed based on a number of factors which include duration of the contravention, duration of involvement of the firm, repeated contravention, extent of cooperation during investigation, voluntary termination of alleged anti-competitive conduct, and implementation of a competition compliance programme within the firm.

Generally, average relevant turnover or income is calculated based on the relevant turnover or income of three years of the firm preceding the year in which the Director General’s investigation report is received by the CCI. These financials are based on the audited financial statements of the firm. However, under paragraph 3(6), the Commission is empowered to consider the global turnover, derived from all products and services, when relevant turnover is not feasibly determined by the aforementioned method. Furthermore, in exceptional cases, under para 3(7), the Commission is further empowered to increase the amount of penalty if they feel that the amount of penalty is not sufficient deterrence.

Application of the 2024 Penalty Guidelines & Understanding the shift in regulatory approach

Since the notification of the 2024 Penalty Guidelines, on March 6, 2024, the Commission has applied the guidelines in 3 instances which are discussed as follows:

Kshitiz Arya & Anr. vs. Google LLC & Ors., Case No. 19 of 2020: While the Google order delivered by the CCI is a settlement order under section 48-A(3), in paragraph 44 of the order, the CCI has specifically referred to the methodology in the 2024 Penalty Guidelines in determining the settlement amount that the respondents in the instant case were to pay.

Pranav Gupta vs. Federation of Publishers’ and Booksellers’ Association in India, Case No. 38 of 2021: In paragraph 81 of CCI’s order in the instant case, the Commission makes reference to many criteria in line with the 2024 Penalty Guidelines to calculate the monetary penalty. Interestingly, in the same paragraph, the CCI also makes reference to the principles laid down by the Excel Crop Care Ltd. judgment in determining the penalty. This effectively means that the decision in Excel Crop Care Ltd. is overturned only to the extent that it interprets the term ‘turnover’ in a strict sense to only mean ‘relevant turnover’, and the remaining principles laid down by the Supreme Court still form valid law.

Nagrik Chetna Manch vs. Fortified Security Solutions & Ors, Case No. of 2015: Lastly, this is the  most recent order passed under section 27 which relies upon the 2024 Penalty Guidelines to determine the monetary penalty. In paragraph 17 and 18 of the order, the CCI discusses the deliberate move away from Excel Crop Care Ltd.’s interpretation of ‘turnover’ and reliance upon the ‘global turnover’ of the respondents to calculate the monetary penalty in the instant case. The rationale given by the Commission is that calculation of penalty on the basis of ‘relevant turnover’ would lead to “… … an inequitable result creating an anomalous situation that would render the objectives of the Act infructuous … …”. Accordingly, the CCI held that - “... … As such, the Commission, in terms of the Penalty Guidelines, decided to consider the ‘global turnover’ of the erring entities, for the purpose of determination of the amount of penalty to be imposed upon them, in the present matters.”

These cases show a clear shift in regulatory approach by the CCI while calculating monetary penalties under section 27, going from the principles laid down by the Supreme Court in Excel Crop Care Ltd. to a new approach in line with the Government’s policy for competition law enforcement.

Apple Inc.’s Challenge

Apple Inc.'s challenge comes at a pivotal time for competition law and policy in India as the CCI looks to move to a new enforcement framework with the objective to buttress deterrence in digital markets. The outcome of the case would also directly affect ongoing investigations including CCI’s investigation over Apple Inc.’s App Store, especially since the law is applicable retrospectively.

At present, a Division Bench of the Delhi High Court has issued notice on Apple Inc.’s petition and asked the Union of India and CCI to file counter-affidavits and Apple to file rejoinder(s) thereto. The case is next listed before the court on July 15, 2026.

Conclusion

The 2023 Amendment Act and 2024 Penalty Guidelines mark a significant shift in India’s competition enforcement landscape with the Government and the CCI aiming to strengthen deterrence strategies within digital markets. Beyond regulatory approach and ideology, Apple Inc.’s civil writ petition require the Delhi High Court to balance Supreme Court’s emphasis on relevance, proportionality and nexus in Excel Crop Care Ltd., the legislative objects of the 2023 Amendment Act and the Competition Act as well larger issues of constitutional importance involving legal limits on civil penalties imposed by regulators like the Competition Commission of India.