CCI Penalties On Global Turnover – Relevant And Proportionate?

Views expressed here are personal.

INTRODUCTION

Section 27 of the Competition Act, 2002 (Competition Act) empowers the Competition Commission of India (CCI) to levy a penalty on enterprises involved in any anti-competitive agreement or found to be abusing their dominant position. The CCI can penalize an offending enterprise up to 10% of its average turnover for the last three years.¹

During its first eight years, the CCI levied penalties based on the total turnover of an enterprise. The term total turnover related to all the goods sold or services provided by the enterprise in question, and not just the goods or services which were the subject matter of the breach of the Competition Act. This resulted in harsh and disproportionate² penalties between single and multi-product enterprises for the same offence. Separately, these penalties ranged from 1% to 10% of turnover and there was no discernible trend linking the penalty to the severity of the offence