Govt finalises affidavit in Apple case, submission to Delhi High Court soon

The Ministry of Corporate Affairs (MCA) has finalised the affidavit it will submit soon in the Delhi High Court in the matter

of Apple’s petition challenging the recent amendments to the Competition Act that allow penalties to be based on a company’s global turnover, a senior official said.

 

Apple is facing a probe by the Competition Commission of India (CCI) for alleged abuse of dominant position in the app store market, based on a complaint filed by non-profit Together We Fight Society.

 

CCI has not levied any penalty against Apple and is yet to take a decision in the case.

 

Apple’s petition is scheduled for hearing on Tuesday, December 16.

 

The Competition Amendment Act was passed in the Parliament in March 2023.

 

The changes included empowering CCI to impose penalties on the global turnover of the companies. This provision was notified by MCA a year later in March 2024.

 

The guidelines, brought by the CCI, said that penalty for anti-competitive practices would not be imposed initially on the global and total turnover, but will be adjusted over the penalty calculated on the relevant turnover of the company.

 

The CCI guidelines said that it would calculate the penalty amount up to 30 per cent of the average relevant turnover based on the nature and gravity of the contravention. It would, however, adjust this penalty amount up to the legal maximum which, as per the new law, can go up to 10 per cent of the company’s global turnover based on various factors. For instance, the role of the enterprise in orchestrating the contravening conduct, and duration of such contravention would be taken into account.

 

At the same time, the CCI introduced several mitigating factors such as taking into consideration the implementation of a competition compliance program within the enterprise and whether there is substantial evidence showing that the enterprise’s involvement in the violation was limited.

 

The Commission would take note of the extent of cooperation by the enterprise during the Director General’s investigation

in adjusting the penalty amount along with voluntary termination of alleged anti-competitive conduct, under intimation to the CCI.

 

Appearing before a Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela, senior advocate Abhishek Manu Singhvi, representing Apple, argued that the provision is unconstitutional and disproportionate.

 

For multi-product companies, Singhvi has said that penalties should be limited to the turnover generated by that specific product that is implicated in the alleged violation within India, rather than being calculated on worldwide revenues.

 

According to Apple’s plea, the new penalty framework exposes the company to potential fines of up to $38 billion, which is 10 per cent of its average global revenue over the past three years.

 

The company argued that such a penalty structure is arbitrary, excessive, and violates the principle of proportionality. It urged that any fines be calculated solely on the revenue of its India-based business segment.