CCI can impose fines based on companies' global turnover under new norms

Fair trade regulator Competition Commission can now impose penalties on companies based on their global turnover for violations, with the government notifying the amended competition norms.

Till now, the Competition Commission of India (CCI) has been deciding penalties on the basis of a company's turnover from a particular business segment where violations have been found.

The corporate affairs ministry has notified the provisions under the amended the Competition Act with effect from March 6.

Vaibhav Choukse, Partner and Head of Competition Lawa at JSA Advocates and Solicitors, said the amendment empowers the CCI to impose a penalty on the global turnover of a company derived from all the products and services.

This amendment is likely to have major implications on multi-product companies and those with global operations and may lead to unfair and discriminatory outcomes between (I) domestic companies and the one with global operations and (II) multi product companies and single product company.

To avoid steep penalties, the amendment would encourage companies under investigation, especially big techs, to opt for the settlements or commitments mechanism in abuse/vertical restraint cases or, leniency in cartel cases.

The amendment also requires the CCI to publish detailed penalty guidelines to provide clarity regarding the methodology for computing penalties, which is also expected to be published soon, he added.