Competition law amendments: Of penalties and misses
Penalties based on total global turnover will impact MNCs and cartels will miss a settlement option
Based on recommendations made by a parliamentary panel in December 2022, the government has tweaked its proposed amendments to India’s competition law and is set to introduce the Competition Amendment Bill (2023 Bill) in Parliament. The most significant change in the 2023 Bill is that the Competition Commission of India (CCI) can now impose penalties up to 10% of the total global turnover of enterprises found to have contravened the competition law. Currently, penalties are generally calculated as a percentage of only ‘relevant turnover’ in India, which excludes sales from products which have no relation to the contravention. The current law uses the word ‘turnover’ in the penalty provision and does not specify if it is ‘total’ or ‘relevant’. In 2017, the Supreme Court clarified that turnover for imposing penalty should mean ‘relevant turnover’. It held that when the contravention “involves one product, there seems to be no justification for including other products" for imposing a penalty. Some argued that this significantly watered down the deterrent effect which the law and its draftsmen sought to achieve.