Why Apple is challenging CCI's global turnover penalty rule
What's the story
Apple has filed a writ petition against the Competition Commission of India (CCI), questioning the constitutional validity of a penalty rule based on global turnover. The tech giant's move comes after an amendment to competition rules in 2024, which allowed the CCI to impose penalties based on global turnover. Normally, penalties are imposed on 'relevant turnover' where market manipulation occurred.
Case details
Apple's petition cites Nagrik Chetna Manch case
Apple's petition cites the Nagrik Chetna Manch case as a reason for its challenge. In this case, the CCI had imposed a penalty on global turnover instead of relevant turnover. However, competition experts say that this verdict was an exception and shouldn't be generalized to all cases. They also say it shouldn't worry companies like Apple about potential penalties on their global turnover by the CCI.
Specifics
What was the Nagrik Chetna Manch case?
The Nagrik Chetna Manch case involved six Micro, Small and Medium Enterprises (MSMEs) accused of bid-rigging in Pune Municipal Corporation tenders. The MSMEs admitted their bids were sham, intended to ensure a pre-determined bidder won the tender. None of the accused entities were in waste management, leaving no relevant turnover for CCI to compute penalties on.
Legal perspective
Legal experts weigh in on Apple's anticipatory writ petition
Ketan Mukhija, a partner at Kochhar & Co., said Apple's writ petition could be seen as anticipatory. He explained that without a final penalty order applying the amended provision, the challenge is more about feared exposure than proven legal injury. Mukhija also stressed that proportionality, nexus to infringing conduct and deterrence still guide penalty determination under this new rule.
Ongoing dispute
Ongoing investigation into Apple's app store policies
In January, Apple told the Delhi High Court that the CCI's expansion of "turnover" to "global turnover" for penalty purposes was unconstitutional. The tech giant is also challenging a law that lets the CCI seek global financial records from companies under investigation. This dispute stems from an investigation into Apple's app store policies, which began in 2021.
Challenge
The 2024 amendment to Competition Act, 2002 challenged
Apple is challenging the 2024 amendment to Competition Act, 2002, which brought Section 27 (b). It permits the CCI to impose monetary penalties on companies found to have engaged in anti-competitive practices, by charging a 10% penalty on the firm's global turnover for three preceding financial years. As a result, Apple says it can face a fine of $38 billion (around ₹3,41,295 crore).