Views expressed here are personal.
Section 27 of the Competition Act, 2002 (Competition Act) empowers the Competition Commission of India (CCI) to levy a penalty on enterprises involved in any anti-competitive agreement or found to be abusing their dominant position. The CCI can penalize an offending enterprise up to 10% of its average turnover for the last three years.1
During its first eight years, the CCI levied penalties based on the total turnover of an enterprise. The term total turnover related to all the goods sold or services provided by the enterprise in question, and not just the goods or services which were the subject matter of the breach of the Competition Act. This resulted in harsh and disproportionate2 penalties between single and multi-product enterprises for the same offence. Separately, these penalties ranged from 1% to 10% of turnover and there was no discernible trend linking the penalty to the severity of the offence committed.
Eventually the Supreme Court of India (Supreme Court) had to step in and in 2017, interpreted turnover under Section 27 of the Competition Act to mean relevant turnover, i.e., turnover of the products or services which were the subject matter of the contravention.3 Following this, the CCI generally levied penalties based on the yardstick of relevant turnover.
Through a recent amendment to the Competition Act (albeit a provision which is yet to be notified),4 the definition of turnover has been expanded to mean "global turnover" and the requirement to levy penalty based on relevant turnover has been done away with. The CCI will now have to consider the total, global turnover of an enterprise as the basis of levying penalty.5 This risks turning the clock back on the progress made in the past six years in applying the CCI's penalty regime.
While there can be no excuse for breaking the law, this amendment will likely lead to very high, even stratospheric, penalties based on the global turnover of enterprises which may not be proportionate with the degree of harm identified in India. The amendment is likely to impact multi-product companies more than single product players. It could also lead to unfair outcomes and discrimination between domestic companies and entities with global operations whose global turnover could include export turnover or turnover otherwise having no nexus with India.
This article discusses the need for objective guidelines for the application of global turnover and the need to apply penalties in a fair and proportionate manner. We also discuss some useful measures from experienced jurisdictions that should be considered while drafting these guidelines.
LAW AS IT CURRENTLY STANDS
What Constitutes "Turnover"?
In contrast to traditional penal provisions, the penalty under Section 27 of the Competition Act is not a fixed amount. It is effectively linked to the value of the goods or services (read as the success) of a contravening enterprise. While the word turnover is defined under the Competition Act as the "value of sale of goods or services",6 the penalty provision did not specify whether if it was to be based on total or relevant turnover.
In its formative years, the CCI tried to encompass the largest possible figure for the purpose of levying penalties and used total turnover as the benchmark.
As a result, penalty amounts involved were significant and more often than not, for the same offence, different parties would be penalized different (and at times, disproportionate) amounts. For example, in a case involving bid rigging for tenders for the supply of aluminum phosphide tablets (APT), three companies were penalized 9% of their total turnover amounting to INR 252.44 crores (USD 30.84 million) on United Phosphorous Limited (UPL), INR 63.90 crores (USD 7.80 million) on Excel Crop Care Limited, and a paltry INR 1.57 crores (USD 0.24 million) on Sandhya Organics Chemicals Private Limited. Excel Crop Care Limited and UPL were multi-product companies and APT represented a small proportion, i.e., in the case of UPL, as low as 0.3%, of their overall business.7
This disparity was seen as harsh and disproportionate.8 Consequently, there was increased litigation in the form of appeals (first to the erstwhile Competition Appellate Tribunal (COMPAT) and eventually to the Supreme Court).
Supreme Court's Attempt to Ensure Clarity
Appellate courts disagreed with the CCI's approach; and the COMPAT and eventually the Supreme Court settled the position in the Excel Crop Care case.
As noted above, three enterprises were found to have engaged in bid rigging for tenders for the supply of APT and were penalized on the basis of 9% of the total turnover which resulted in vastly different penalty amounts. Two of these enterprises were multi-product companies and APT tablets represented a small proportion of their overall business. Therefore, the penalty on the basis of total turnover was disproportionate.
In appeal, while agreeing with the CCI's finding of contravention, the COMPAT was of the view that relevant turnover - i.e., the turnover of the product that was the subject of the infringement - would be more appropriate and proportionate than total turnover.9 Both the CCI (on the interpretation of turnover) and the enterprises concerned (on the upholding of the finding of contravention) appealed this decision before the Supreme Court.
Relying on jurisprudence and principles from other jurisdictions on the application of penalties in competition law cases, which placed primacy on the doctrine of proportionality,10 the Supreme Court agreed with the COMPAT's view that the penalty under Section 27 of the Competition Act should be based on relevant turnover. The Supreme Court noted, that when the contravention of the Competition Act involved a given product, there was absolutely no justification for including other products for the purpose of imposing penalty. It stressed the importance of ensuring that penalties should neither over-deter nor discourage business or potential investors. The Supreme Court ruled that imposing penalties based on total turnover would go against the "ethos" of competition law.11
Doctrine of Proportionality
The doctrine of proportionality is a settled principle of administrative law, entrenched in equity and rationality, which mandates that "a punishment [should] be proportionate to the offence committed".12 While applying the doctrine in the Excel Crop Care case, the Supreme Court held that penalties under the Competition Act could not be disproportionate and should not lead to "shocking" results.13 It further noted that proportionality was a constitutionally protected right which could be traced to Article 14 as well as Article 21 of the Constitution of India.
Specifically, the Supreme Court held that:
"The doctrine of proportionality is aimed at bringing out 'proportional result or proportionality stricto sensu'. It is a result oriented test as it examines the result of the law in fact the proportionality achieves balancing between two competing interests: harm caused to the society by the infringer which gives justification for penalising the infringer on the one hand and the right of the infringer in not suffering the punishment which may be disproportionate to the seriousness of the Act (in this case, of the Competition Act). No doubt, the aim of the penal provision is also to ensure that it acts as deterrent for others. At the same time, such a position cannot be countenanced which would deviate from 'teaching a lesson' to the violators and lead to the 'death of the entity' itself."14 (Emphasis added)
The Excel CropCare case emphasized that the purpose and objective behind the Competition Act, was not to "finish" industries altogether by imposing penalties which were beyond their means.15 Rather, to discourage and stop anti-competitive practices for consumer benefit and market welfare. The penalty provisions under Section 27 of the Competition Act helped serve this purpose, as they aimed at punishing the offender while acting as a deterrent to others. Using relevant turnover as the appropriate measure would be in consonance with the purpose of the provision as it ensured catering to the public interest as well as to the interest of the national economy.
Lack of Objectivity in Arriving at the Percentage of Penalty
Separately, the CCI's penalties ranged from less than 1% to 10% of turnover and there was no discernible trend linking the penalty percentage to the severity of the offence committed. For example, in the Excel Crop Care case, the CCI penalized the parties at 9% of their total turnover. Yet, in another bid rigging decision, cement manufacturers were penalized only 0.3% of their total turnover.16 Similarly, in its price fixing decision in Bengal Chemists and Druggists Association,17 the CCI penalized the offending parties at 10% of their total turnover, whereas, airlines fixing a fuel surcharge18 were only penalized 1% of their total turnover. In the same vein, in abuse of dominance cases, the CCI has imposed a penalty at 7% of the total turnover on DLF (for imposing unfair conditions on apartment buyers),19 whereas Schott Glass20 was penalized 3% of its total turnover for unfair conduct. Again, in leveraging abuses, the CCI in its recent Google Android21 decision, penalized Google at 10% of its turnover (for leveraging the dominant position of Play Store to enter as well as protect its position with Google Chrome, etc.) whereas in its Shamsher Kataria decision,22 the CCI imposed a penalty on several automobile manufacturers at 2% of turnover (for leveraging dominance in the spare parts market to protect position of strength in the repair market).
This indicated that CCI's penalty regime lacked consistency and was not guided by any objective criteria in its application. Most of the orders passed by the CCI did not contain sufficient reasoning setting out how the penalty percentages were set. It was therefore not possible to discern why differing percentages were set in different cases and on what basis these were arrived at. The lack of penalty guidelines added to the inconsistency making it difficult for any comparative analysis to be made.
The Supreme Court in Excel Crop Care noted the wide discretion given to the CCI under Section 27 of the Competition Act. In fact, Hon'ble Justice N. V. Ramana lamented the absence of objective criteria to determine penalties, while noting that:
"10. At this point, I would like to emphasise on the usage of the phrase "as it may deem fit" as occurring under Section 27 of the Act. At the outset this phrase is indicative of the discretionary power provided for the fining authority under the Act. As the law abhors absolute power and arbitrary discretion, this discretion provided under Section 27 needs to be regulated and guided so that there is uniformity and stability with respect to imposition of penalty. This discretion should be governed by rule of law and not by arbitrary, vague or fanciful considerations." (Emphasis added)
It is further relevant to note that the COMPAT in its Excel Crop Care decision23 too called out the CCI for failing to set out any reasons, justifications, or even a discussion on how it arrived at the penalty in this case. The COMPAT further stressed that it had, time and again, directed the CCI to provide reasons while determining the quantum of penalty.24
The Supreme Court in Excel Crop Care, placed reliance on the decision of the Competition Court of Appeal of South Africa, in Southern Pipeline Contractors Conrite Walls v. Competition Commission,25 and identified certain illustrative factors that could aid objectivity. These included: (a) the nature, gravity and extent of the contravention; (b) the role played by the infringer (a ringleader may face a higher penalty in contrast to a follower); (c) the duration of participation; (d) the intensity of participation; (e) loss or damage suffered as a result of the contravention; (f) market circumstances in which the contravention took place; (g) nature of the product; (h) market share of the entity barriers to entry in the market nature of involvement of the company; (i) bona fides of the company; and (j) profit derived from the contravention.26
The Impact of Relevant Turnover in Big Tech and Other Cases
While the Excel Crop Care case settled the argument on the basis of turnover to be applied for determining the penalty, the CCI still grappled with the issue of applying it for certain cases, specifically those where there is no relevant turnover, such as cases involving Big Tech companies and instances of cover bidding.
Big Tech Cases
India has seen an unprecedented expansion of technology driven businesses and digital enterprises whose operations are scalable across jurisdictions and are not constrained by national boundaries. The CCI has criticized the concept of relevant turnover when it comes to penalizing Big Tech players. Such cases usually involve multiple products / markets which are intricately intertwined and interwoven with each other, and the products / services offered by the enterprise derive strength from each other due to economies of scope and scale. Further, more than one side of these markets could be free to users and therefore have no turnover. In its decision in Matrimony.com v. Google,27the CCI first noted that the concept of relevant turnover may not be appropriate to digital / technology driven enterprises, as it is applied in the context of a conventional multi-product company.
The CCI concluded that applying the relevant turnover standard in multi-sided markets would defeat the very object and intent of the Competition Act. This would be the case if for example, Google were to be allowed to contend that, since its search is free, no penalty can be levied in case of a breach of the Competition Act, as there is no revenue stream from this side of the market. Therefore, in cases involving Big Tech, the CCI was of the view that the entire platform has to be taken as one unit and the revenue generated by the platform has to be seen as a whole. Similarly, in the Google Android28 and XYZ v. Google29 decisions, the CCI, once again, emphasized these challenges and adopted a platform-based total turnover approach to penalties.30
Separately, in the MakeMyTrip – Go-Ibibo (MMT-Go) decision,31 the CCI found MMT and Go-Ibibo abused their dominant position in the market for online intermediation services for booking of hotels in India. The CCI rejected MMT-Go's submission that any penalty must be based on relevant turnover and therefore, be limited to the commission charged by MMT-Go to hotels for rendering online hotel booking services. Reiterating its view in the Google cases, the CCI noted that while the relevant turnover approach may be appropriate in traditional markets, it would not be appropriate where the various segments are intricately intertwined with each other, and one product / service derives strength from the other(s). The CCI held that not considering the global turnover in such cases would defeat the deterrent effect that the penalties were to have on enterprises.
Cover Bidding Cases
The CCI also held a similar view in cases involving bid rigging through cover bidding, where a party that was not involved in a product / not serious about participating in a tender, would bid in order to have another party (with whom it had entered into an anti-competitive agreement) win the bid. In its decision in the Nagrik Chetna Manch case, the CCI held that relevant turnover could not be applied to cover-bid agreements. The instant case involved bid rigging of certain tenders floated by Pune Municipal Corporation for solid waste management. The CCI distinguished this case from Excel Crop Care and held that imposition of penalty on the basis of relevant turnover would imply that no penalty would be levied on several infringing parties, thereby defeating the objectives of the Competition Act.32 In appeal, the NCLAT remanded the case back to the CCI to revise this penalty as it believed that the CCI did not provide adequate reasons while exercising its discretion on the levy of penalty. The NCLAT further noted that where the CCI is imposing the highest possible penalty of 10% of turnover, it must afford a full opportunity to the concerned parties to address them as to why such penalty should not be imposed.33
RELEVANT / GLOBAL TURNOVER - POSITION ACROSS JURISDICTIONS
While it is yet to be seen how a global turnover regime would be implemented by the CCI, one should be mindful of the position adopted by mature competition regulators elsewhere. Several regulators have adopted guidelines / guidance notes to ensure objectivity and proportionality while implementing their penalty regimes.
In the European Union (EU), Regulations on the implementation of the rules on competition laid down in Articles 101 and 102 of the Treaty on the Functioning of the European Union (Regulation 1/2003)34 empower the European Commission (EC) to impose a penalty of up to 10% of the total turnover or worldwide turnover of an undertaking.
When determining the level of penalty, the EC relies on the EC Guidelines35 which propose a two step-methodology. The first step involves determination of the basic amount of the penalty. This will take into account the value of the undertaking's sales of goods or services to which the infringement directly or indirectly relates. The EC Guidelines consider adopting up to 30% of the value of relevant sales to arrive at the basic amount of penalty. This percentage is determined according to the gravity of the infringement (cartels are particularly harmful restrictions of competition, and thus, their gravity percentage starts at 15%.) Further, in order to determine the percentage of penalty, the EC has regard to a number of factors, such as: (a) the nature of the infringement; (b) the combined market share of all the undertakings concerned; (c) the geographic scope of the infringement; and (d) whether or not the infringement has been implemented.
Once the basic amount of penalty is determined, the second step involves an adjustment to the basic amount. The basic amount may be increased where the EC finds that there are aggravating circumstances, for instance where the undertaking continues to repeat the same / similar infringement. Equally, the basic amount may be reduced where there are mitigating circumstances, such as where the undertaking provides evidence that it terminated the infringement / or that the infringement was committed on account of negligence.
It is pertinent to note that the penalty is capped at 10% of the undertaking's overall annual turnover generated in the business year before the adoption of the decision and is not the starting point for considering the penalty amount. In contrast, in India, the CCI directly applies a percentage on the turnover of the offending enterprise.
The UK Competition Act provides that penalties for contraventions may not exceed 10% of an undertaking's turnover.36 Much like the EU, according to the penalty guidance issued by the Competition Market Authority (CMA),37 the starting point for determining the level of penalty to be imposed on an undertaking is the relevant turnover of the undertaking.
The CMA Guidance sets out a six-step process to arrive at penalties. For the first step, the CMA is to consider the relevant turnover which will be the turnover of the undertaking in the relevant product market and relevant geographic market affected by the infringement in the undertaking's last business year. The CMA Guidance too adopts a starting point of up to 30% to an undertaking's relevant turnover. Further, this percentage is determined according to the seriousness of the particular infringement (and ultimately the extent and likelihood of actual or potential harm to competition and consumers). Under the second step, the amount arrived at the first step, is either increased or decreased depending on the duration of the infringement. Similar to the EU Guidelines, under the thirdstep, the CMA considers aggravating and mitigating factors that may result in either an increase or decrease of the amount of the financial penalty. The penalty is increased where the undertaking has acted as a leader or instigator; or where the infringement has continued even after the commencement of the investigation. Certain mitigating factors like termination of the infringement, cooperation etc., may result in a reduction of the penalty. Under the fourth step, the CMA adjusts the penalty amount to take into account a deterrence factor. The intention behind this step is that penalty to be imposed on the undertaking must be sufficient to deter the undertaking from breaching competition law in the future. Under the fifthstep, an adjustment is made to check whether the penalty is proportionate and to prevent the maximum penalty from being exceeded. This is where the CMA "takes a step back" and re-assesses the quantum of the penalty to be imposed. As a last resort, under the sixthstep, the CMA further reduces the penalty where the undertaking is unable to pay the fine owing to certain financial hardships, etc.
THE NEED FOR OBJECTIVE GUARDRAILS TO AID IN THE DETERMINATION OF PENALTY IN INDIA
As can be seen above, the EU, and the UK have issued guidelines / guidance notes that ensure multiple checks on the penalty from being disproportionate. In stark contrast, India lacks any penalty guidelines that could provide an objective criteria for imposing penalties. This is despite the fact that the Report of the High-Level Committee on Competition Policy38 (Raghavan Committee Report) published in the year 2000, and whose recommendations were the genesis of the Competition Act, identified the importance of "Guidelines for articulation and interpretation of certain aspects of Competition Law". The Competition Law Review Committee (CLRC) too noted the need for penalty guidelines as recently as 201939 and recommended that the CCI should be mandated to issue guidance on the imposition and computation of the penalties under the Competition Act.
Separately, as observed above, both the COMPAT and the Supreme Court in the Excel Crop Care case also noted the need to draft penalty guidelines. Had such guidelines been in place, there would have likely been a more consistent application of the CCI's penalty regime.
This lack of guidance had separately been challenged before the High Court of Delhi (DelhiHigh Court) on the grounds of excessive delegation at the hands of the CCI.40 The parties to these proceedings highlighted that, in the absence of a statutorily mandated notice and opportunity for a separate hearing preceding the levy of a penalty, Section 27 of the Competition Act was arbitrary and unreasonable. Further, Section 27 provided no guidance or guidelines as to how penalty was to be imposed and what would be the quantum of penalty. The parties argued that in their case, the CCI had taken a uniform and arbitrary rate of 2% of total turnover, without differentiating between their individual facts and moreover departed from its own prescribed foundation of the relevant turnover (based on the relevant market defined in the case) while arriving at the penalty. The parties urged that the CCI must impose a penalty in a quasi-judicial manner, i.e., by adopting certain judicial procedures to ensure fairness. However, given that by this time, the Supreme Court's decision in Excel Crop Care was issued, the Delhi High Court noted that some checks and balances were in place and declined to interfere on this front. That said, the Court too held that a wide discretion has been provided to the CCI which needed to be objective and regulated with due application of mind, so that there was uniformity and stability with respect to imposition of penalty.
THE INTRODUCTION OF THE AMENDMENT ACT
Doing Away with Relevant Turnover
The Amendment Act revises the penalty regime under Section 27 of the Competition Act. Once the relevant provisions come into effect, it will include two explanations that effectively negate the Supreme Court's decision in Excel Crop Care.
Explanation 1 provides that a penalty may be imposed up to 10% on either the average turnover or 'income' of enterprises found to have engaged in anti-competitive agreements or abused their dominant position.
Explanation 2 expands the definition of turnover by qualifying it with the term "global". This will enable the CCI to impose a penalty of up to 10% of the global turnover of the offending enterprise, which includes export sales and sales derived from products or services that are not related to the offence in India.
It is worth noting that whilst the Amendment Act does away with the purposive interpretation given by the Supreme Court in the Excel Crop Care case, this amendment was not included in the original amendment bill, introduced by the Government in the Indian Parliament. Accordingly, the Parliamentary Standing Committee on Finance, which undertook a detailed examination of the provisions of the original amendment bill was not able to examine this issue. The Amendment Act was passed without debate and therefore no discussion on this point took place at all.41
A Positive Obligation on the CCI to Adopt Penalty Guidelines
Separately, in a welcome move, the Amendment Act has introduced a requirement for the CCI to frame guidelines regarding the imposition of penalties as well as requiring the CCI to provide reasons in case a penalty decision is arrived at, without adhering to the penalty guidelines.42 This may be a silver lining that, if implemented well, can perhaps address concerns that arise from the departure from the relevant turnover regime.
WAY FORWARD: PENALTY GUIDELINES TO BRING PROPORTIONALITY?
As seen with other jurisdictions, notwithstanding the wide powers granted under the statutes, mature jurisdictions apply their regulations to penalize companies in an objective and proportional manner, by relying on penalty guidelines / guidance notes which set out objective factors in applying penalties.
The Supreme Court in the Excel Crop Care case attempted to set out various illustrative factors that the CCI should consider when applying penalties. These included: (a) the nature, gravity and extent of the contravention; (b) the role played by the infringer; (c) the duration and intensity of participation; (d) the bona fides of the infringer; (e) the profit / benefit derived from the contravention; (f) loss or damage suffered as a result of the contravention; (g) the market circumstances in which the contravention took place including: (i) the nature of the product; (ii) market share of the entity; and (iii) barriers to entry in the market. The COMPAT too had noted the importance of the EU Guidelines.
Whilst still on the drawing board, we are hopeful that the penalty guidelines take into account the illustrative factors discussed above, as well as take an appropriate cue from the factors established by the CMA Guidance and the EC Guidelines.
Useful measures from the CMA Guidance and the EC Guidelines that should be considered
Starting point: The CMA Guidance systematically lays down six steps for determining the penalty to be imposed on infringing parties. It states that the starting point must be to identify the relevant turnover of the undertaking. This is the turnover of the undertaking in the relevant product market and relevant geographic market affected by the infringement. Similarly, under the EC Guidelines, when determining the basic amount of the fine to be imposed, the value of the undertaking's sales of goods or services to which the infringement directly or indirectly relates, in the relevant geographic area within the European Economic Area is used as a starting point.
Company figures: The CMA Guidance also adds that relevant turnover is to be calculated after the deduction of sales, rebates, etc. and taxes. While relevant turnover figures are normally based on figures from an undertaking's financial statements, where these are not available the CMA Guidance also proposes to assess the true scale of an undertaking's activities in the relevant market.
Aggravating and mitigating factors: Both the CMA Guidance and the EC Guidelines then consider aggravating and mitigating factors. They provide a non-exhaustive list of indicative factors to consider while increasing or decreasing the penalties. The penalties are increased (owing to aggravating factors) for: (a) repetition of the offence by the undertaking; (b) refusal to cooperate with the investigation; and (c) assessing the steps taken to coerce other undertakings to participate in the infringement. The penalties are decreased (owing to mitigating factors) where the undertaking: (a) is acting under duress or pressure; (b) cooperates with the investigation; and (c) provides evidence to show that the infringement occurred out of negligence.
Deterrence: Once the relevant turnover and aggravating and mitigating factors are considered, the CMA Guidance prescribes that the tentative penalty arrived at is assessed under the lens of deterrence. The intent of the CMA Guidance is that the penalty to be imposed must be sufficient to deter the infringing undertaking from breaching competition law in the future and must be imposed in accordance with the undertaking's specific size and financial position, and any other relevant circumstances.
Cap on penalty: The CMA Guidance and the EC Guidelines recognize the statutory upper limit when determining the penalty. They state that the final amount of the fine shall not exceed 10% of the total turnover. Accordingly, they must ensure that the penalty calculated up to this stage, does not breach this cap.
Ability to pay: In the next step, the EC Guidelines and CMA Guidance provide that in exceptional circumstances, the penalty may be reduced where an undertaking is unable to pay the penalty proposed due to its financial position. A financial hardship claim needs to be made by the undertaking concerned (which has the burden of proving that it merits such a reduction). Interestingly, the CCI has recently been cognizant of an undertaking's ability to pay and has reduced the penalty,43 as well as imposed no monetary penalties44 on certain companies, despite finding a contravention. The CCI has done this keeping in mind the financial hardships endured (particularly by micro, small and medium sized enterprises) during the Covid-19 pandemic.
Assessment of proportionality: As a final step, the CMA Guidance proposes to "take a step back" to determine and check whether the overall penalty reached after following the steps above is proportionate. This assessment of proportionality is not a mechanical assessment, but one of evaluation and judgement. It is required to ensure that the penalty proposed to be imposed is not disproportionate to the level of infringement.
The change of the penalty regime from relevant turnover to total turnover is a mixed bag. The nature of the penalty regime based on global turnover in India will turn on the penalty guidelines that are expected to be issued soon. The focus on the Supreme Court's jurisprudence, as well as the CMA Guidance and the EC Guidelines has been on the principle of proportionality and the CCI should place reliance on them when framing its own guidelines.
It is hoped that the CCI's guidelines would aid in ensuring transparency in the delivery of justice on the one hand and will also expedite the decision-making process of the CCI on the other. This would also enable the CCI to be consistent and predictable with its penalty regime. By giving businesses greater certainty on how the amount of penalty, and any reductions to it, will be calculated, it may encourage applicants to consider offering commitments or settling a case45 leading to quicker disposal. It will also be instrumental in safeguarding due process.
We hope that the CCI, through these guidelines, will build on the principle of proportionality, and adopt a balanced approach in their design and application. A failure to do so could result in further litigation and uncertainties, raising the issues seen in the Excel Crop Care case. A failure to strike a balance through the CCI's guidelines may even risk attempts (such as that seen in the Mahindra case) at striking down this expansion for being discriminatory, disproportionate, and therefore unconstitutional.
1. In the case of cartels, the CCI may instead impose a penalty of up to three times of its profit or 10% of the turnover of the offending enterprise for each year of the continuance of the cartel.
2. Paragraph 70, Excel Crop Care Limited. v. Competition Commission of India and Another (Excel Crop Care), Supreme Court, Civil Appeal No. 2480 of 2014 (8 May 2017).
3. Paragraph 74, Excel Crop Care case.
4. Through the Competition (Amendment) Act, 2023 (Amendment Act).
5. Explanation 2, Section 20 of the Amendment Act.
6. Section 2(y) of the Competition Act.
7. In Re: Aluminum Phosphide Tablets Manufacturers, CCI, Suo Moto Case No. 02 of 2011 (23 April 2012).
8. Paragraph 70, Excel Crop Care case.
9. Excel Crop Care Limited v. Competition Commission of India and Others, COMPAT, Appeal No. 79 of 2012 (29 October 2013).
10. For example, the Guidelines on the method of setting fines imposed pursuant to Article 23(2)(a) of Regulation 1/2003 (2006/C 210/02) issued by the European Commission (EC Guidelines); Section 36(8) of the (United Kingdom) Competition Act, 1998 (UK Competition Act); Office of Fair Trading (OFT)'s guidance as to the appropriate amount of a penalty (OFT Guidelines) (September 2012); and Southern Pipeline Contractors v. Competition Commission, Case No. 105/CAC/Dec 10; 106/CAC/Dec 10.
11. Paragraph 74, Excel Crop Care case.
12. Paragraph 68, Excel Crop Care case.
13. Paragraph 74, Excel Crop Care case.
14. Paragraph 74, Excel Crop Care case.
15. Paragraph 74, Excel Crop Care case.
16. In Re: Director, Supplies and Disposals, Haryana v. Shree Cement and Others, CCI, Reference Case No. 05 of 2013 (19 January 2017).
17. In Re:Bengal Chemist and Druggist Association, CCI, Suo Moto Case No. 02 of 2012 (11 March 2014).
18. In Re: Express Industry Council of India v. Jet Airways (India) Limited and Others, CCI, Case No. 03 of 2013 (17 November 2015).
19. Belaire Owner's Association v. DLF Limited and Others, CCI, Case No. 19 of 2010 (12 August 2011).
20. Kapoor Glass Private Limited v. Schott Glass India Private Limited, CCI, Case No. 22 of 2010 (29 March 2012).
21. Umar Javed and Others v. Google LLC and Another (Google Android), CCI, Case No. 39 of 2018 (20 October 2022).
22. Shamsher Kataria v. Honda Siel Cars India Limited and Others, CCI, Case No. 03 of 2011 (25 August 2014).
23. Paragraph 43, Excel Crop Care Limited v. Competition Commission of India and Others, COMPAT, Appeal No. 79 of 2012 (29 October 2013).
24. Paragraphs 64 - 68, Gulf Oil Corporation v. Competition Commission of India and Others, COMPAT, Appeal No. 82-90 of 2012 (18 April 2013); Paragraphs 22, 26 - 31, MDD Medical Systems India Private Limited v. Competition Commission of India and Others, COMPAT, Appeal Nos 93-95 of 2012 (25 February 2013).
25. Southern Pipeline Contractors v. Competition Commission, Case No. 105/CAC/Dec 10; 106/CAC/Dec 10.
26. Paragraph 71, Excel Crop Care case.
27. Matrimony.com Limited and Another v. Google LLC and Others, CCI, Case Nos. 07 and 30 of 2012 (08 February 2018).
28. Google Android case.
29. XYZ (Confidential) v. Alphabet Inc. and Others, CCI, Case No. 07 of 2020 (25 October 2022).
30. Google LLC and Others v. Competition Commission of India and Others, NCLAT, Appeal No. 01 of 2023 (29 March 2023). The National Company Law Appellate Tribunal (NCLAT) upheld the CCI's approach to platform-based turnover in the Google Android case.
31. Federation of Hotel and Restaurant Associations of India and Others v. MakeMyTrip and Others, CCI, Case No. 14 of 2019 (19 October 2022).
32. Paragraph 96, Nagrik Chetna Manch v. Fortified Security Solutions, CCI, Case No. 50 of 2015 (01 May 2018).
33. Paragraph 25, Manoj Gupta and Others v. Competition Commission of India and Others, NCLAT, Competition Appeal (AT) No. 44 of 2018 (23 December 2022). The CCI has filed an appeal against the NCLAT's decision before the Supreme Court.
34. Article 23(2)(a), Regulation No 01/2003.
35. Paragraph 32, EC Guidelines.
36. Section 36(8), UK Competition Act.
37. Paragraphs 1.8 and 2.1, CMA Guidance as to the appropriate amount of penalty (2018) (CMA Guidance), United Kingdom (UK); also see CMA Guidance (ed. 2021). Note, these proceed the OFT Guidelines which were considered by the Supreme Court in the Excel Crop Care case.
38. Paragraph 6.4.6 of the High-Level Committee on Competition Policy, Raghavan Committee Report, available at: https://theindiancompetitionlaw.files.wordpress.com/2013/02/report_of_high_level_committee_on_competition_policy_law_svs_raghavan_committee.pdf.
39. The CLRC was tasked with the responsibility to review and recommend a robust competition regime. Available at: https://www.ies.gov.in/pdfs/Report-Competition-CLRC.pdf.
40. Mahindra and Mahindra v. Competition Commission of India and Another (Mahindra Case), Delhi High Court, W.P (C) 6610 of 2014, etc. (10 April 2019).
41. It is also worth noting that the proposal to introduce penalties based on global turnover was not discussed in the Report of the CLRC, nor found mention in the Draft Competition (Amendment) Bill, 2020 which was published on 12 February 202 inviting public comments.
42. Section 45 of the Amendment Act.
43. Chief Materials Manager, Northwestern Railway v. Moulded Fibreglass Products and Others, CCI, Reference Case No. 03 of 2018, (04 April 2022).
44. Paragraphs 108 and 110, In Re: Mr. Rakesh Khare, Chief Materials Manager (Stores), Eastern Railway v. Krishna Engineering Works and Others, CCI, Reference Case No. 02 of 2020 (11 October 2022); Paragraph 166, In re: Federation of Corrugated Box Manufacturers of India v. Gujarat Paper Mills Association, CCI, Case No. 24 of 2017 (12 October 2022).
45. Under a separate regime also introduced by the Amendment Act.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.