MCA notifies Competition Act provision to levy penalty on global turnover

New Delhi, Mar 6, 2024 

Competition Commission expected to soon publish guidelines on methodology for computing penalties 

The Ministry of Corporate Affairs has notified a legal amendment that empowers the Competition Commission of India (CCI) to impose penalty on the global turnover of a company and not just the turnover derived from the product or service under investigation.

The CCI is expected to soon publish guidelines on the methodology for computing penalties, as required by the amendment to the Competition Act.

“The Central Government hereby appoints the 6th day of March, 2024 as the date on which the provisions of sections 20, 35 and 40 of the said Act shall come into force,” said the ministry’s notification dated March 5.

“To avoid steep penalties, the amendment would encourage companies under investigation, especially Big Techs, to opt for, the settlements or commitments mechanism in abuse or vertical restraint cases or, leniency in cartel cases,” said Vaibhav Choukse, partner and Head of Competition Law, JSA Advocates and Solicitors.

According to experts, the move would have implications for multi-product companies and those with global operations. It might lead to unfair and discriminatory outcomes between domestic companies and the one with global operations and multiple products versus single-product firms, they believe.

The amendment empowers the CCI to “impose such penalty, as it may deem fit, which shall be not more than 10 per cent of the average of the turnover or income”. The amended Act defines “turnover” as global turnover derived from all the products and services provided by a person or an enterprise.

[The Business Standard]