The government has introduced changes to competition laws, enabling the Competition Commission of India (CCI) to impose penalties based on a company’s global turnover. Previously, CCI could only penalize a company’s sales within the specific business segment under scrutiny. Now, companies can be fined based on their overall revenue from all products and services, not just those involved in the investigation.
This amendment is particularly significant for large technology companies with diverse business arms. To mitigate hefty penalties, companies, especially big tech firms, are likely to opt for settlement mechanisms during investigations or leniency in cartel cases.
Also, the amendment mandates CCI to publish detailed penalty guidelines, outlining how penalties will be calculated. These guidelines are expected to establish a transparent and proportionate process for determining penalty amounts, considering both aggravating and mitigating factors.
Under the new rules, penalties can amount to up to 30% of a company’s average relevant turnover or income, adjusted based on specified factors. If determining relevant turnover proves difficult, CCI has the discretion to consider a company’s global turnover. This move aims to ensure consistency, transparency, and fairness in penalty assessments, providing stakeholders with certainty and aiding risk assessment.
Overall, these changes empower CCI to enforce competition laws more effectively, particularly against companies with global operations, while ensuring fairness and transparency in penalty imposition.
