NEW DELHI: The government has notified the amendment that empowers the country’s anti-trust regulator -- Competition Commission of India (CCI) -- to impose a penalty of up to 30% on the global turnover of a company found involved in anti-competitive practices. For computing the penalty, the turnover could be derived from all the products and services and not just on turnover derived from the product under investigation.
The amendment would have a significant implication on multi-product companies and those with global operations. However, the amendment also has a provision to encourage companies under investigation, especially Big Tech companies, to opt for settlements or commitments mechanism to avoid steep penalties.
On Wednesday, the government issued detailed guidelines for computing the penalties. The guidelines provide for a comprehensive methodology to be considered or adopted by the CCI while imposing penalties on contravening enterprises, individuals for violating provisions of the Competition Act including enforcement and combinations.
As per the guidelines, the CCI can impose a penalty of up to 30% of average relevant turnover/income of enterprises, which are found involved in anti-competitive practices like cartelisation, misuse of dominant market position, etc. The penalty amount will be adjusted on the basis of listed aggravating and mitigating factors.
The CCI will have the discretion to consider global turnover for determination of penalty amount. The guidelines also provide for a maximum penalty of 10% of the average income for the last three preceding financial years for persons found indulged in anti-competitive practices. Vaibhav Choukse, Partner and Head of Competition Law, JSA Advocates and Solicitors, says that the guidelines will aid the CCI in having consistency in determining penalties and bring transparency and certainty to its decision-making process. “This will also bring a lot of certainty to the stakeholders as it will ensure multiple checks on the penalty from being disproportionate,” he added.