The Competition Commission of India (CCI), the country’s fair trade watchdog, has been equipped with a sharper tool to combat anti-competitive practices. As per the recently notified amendments to the Competition Act, the CCI can now impose penalties on companies based on their global turnover, not just the turnover from the specific business segment where the violation occurred. This significant shift, effective from March 6, 2024, is likely to have a far-reaching impact on the Indian market.
Wider Net, Steeper Fines:
Previously, the CCI’s fines were capped at 10% of the relevant turnover generated from the infringed products or services. This primarily affected companies with diverse product portfolios or limited global presence. However, the new regulation casts a wider net, potentially exposing multi-national giants and companies with a global reach to steeper penalties, irrespective of the specific violation location.
Experts’ Concerns and Potential Solutions:
While the amendment aims to deter anti-competitive behavior more effectively, concerns have been raised about potential unfairness and discrimination. Critics argue that domestic companies and single-product entities might be at a disadvantage compared to their global counterparts with diversified revenue streams.
To mitigate the risk of hefty fines, the amendment is expected to encourage companies, especially big tech players, to explore alternative avenues like settlements, commitments in abuse/vertical restraint cases, or leniency programs in cartel cases. Additionally, the CCI is mandated to publish detailed penalty guidelines outlining the methodology for calculating fines, offering much-needed clarity and transparency.
This amended regulation marks a significant step towards strengthening India’s competition law framework. While its long-term impact remains to be seen, it is bound to influence the strategic decision-making of companies operating in the Indian market.
