BackStiff fines on the way for violation of competition law
The idea is to levy penalty as a percentage of the offending company’s global revenue or income, rather than the current practice of levying a part of the ‘local or relevant market’ revenue as penalty.
PremiumNew Delhi: The central government is likely to introduce further changes to the Competition Amendment Bill 2022, which is pending in the Lok Sabha, to steeply increase penalties for anti-competitive practices, said a person informed about government discussions on the matter.
This is one of the amendments the ministry of corporate affairs is proposing to get incorporated in the Bill before it is taken up for passage in the ongoing budget session of Parliament. The amendments are likely to be moved this week, said the person, who spoke on condition of anonymity.
The idea is to levy penalty as a percentage of the offending company’s global revenue or income, rather than the current practice of levying a part of the ‘local or relevant market’ revenue as penalty. This is a significant scale-up of the penalty provision and assumes importance given that increasingly global technology giants are being investigated for alleged anti-competitive practices in India. “This will step up deterrence in a big way," said the person quoted above.
The change is being proposed by introducing an explanation to the penalty provision to the effect that “turnover (revenue) means turnover derived from all the products and services by a person or an enterprise."
At present, the law says penalty in the case of anti-competitive agreements or abuse of dominance is not more than 10% of the average revenue for the preceding three financial years, on each of the guilty entities. A modification to the penalty provision proposed in the original Bill tabled in the House last year to give the option of levying penalty either in terms of revenue or income will be retained.
The parliamentary standing committee on finance led by the BJP’s Jayant Sinha has already reviewed the Bill. Some of its recommendations have been accepted while a few have not made it into the amendments being proposed by the ministry.
The Amendment Bill seeks to expand the scope of those covered under provisions prohibiting anti-competitive agreements.
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