Delhi High Court Issues Notice On Apple's Plea Against Global-Turnover Penalty Rule; CCI Says Company Trying To Stall Probe

The Delhi High Court on Monday issued notice on a plea filed by Apple INC challenging the amendment to the Competition Act, 2002, allowing the Competition Commission of India (CCI) to impose penalties based on a company's global turnover.

The impugned provision empowers the CCI to impose fines of up to 10% of the average turnover of the preceding three financial years on enterprises found guilty of abuse of dominance or anti-competitive conduct.

In its petition, Apple has said that it could potentially face a fine of up to $38 billion.

A division bench comprising Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela heard the matter.

Senior Advocate Abhishek Manu Singhvi appearing for Apple submitted that in case of multi product companies, if the company has abuse of dominance for product A, CCI will always penalise for infringing product A which sells in India. "Never global turnover."

Singhvi submitted that imposing penalties based on global turnover is a breach of Supreme Court's judgments on proportionality and reasonableness.

He also objected to retrospectivity of the amendment stating, "This amendment is made effective from 6 March 2024. Which is going to effect prior cases."

The Court at this juncture asked Senior Advocate Balbir Singh, appearing for Central Government as well as the CCI, that if CCI initiates proceedings with respect to one product, how can it take into account turnover based on other product. "Is it not unreasonable to take into consideration other product?" the judges asked orally.

Singh however argued that it is following relevant turnover concept and that Global turnover concept is for completely different purpose.

"We have not ask for global turnover. We have asked for Indian turnover...Global turnover is for how much penalty is to be imposed. Nobody is saying the nexus of contravention in the relevant market. Global turnover is in the situation when information is not provided. They say we don't want to provide, then you take global turnover. In that case they can come forward…The object is to stall the proceedings,” he submitted.

The Court then asked Singh to file a short affidavit in the matter, "so that we can determine the position".

On this, Singh said that Apple has to file their reply before the CCI by December 08. We have not ask for global turnover. We have asked for indian turnover, he said.

To this, Singhvi responded that even if the response are for Indian turnover, Apple will not be able to file response by the said date as it needs time to collate the details.

The Court then listed the matter for hearing on December 16.

The plea states that Apple's maximum penalty exposure at the rate of 10% of its average global turnover derived from all of its services globally for three fiscal years to 2024 could be around $38 billion.

It has argued that imposition of such a penalty based on global turnover. would be manifestly arbitrary, unconstitutional, grossly disproportionate and unjust.

It has been submitted that CCI should only impose a penalty based on the Indian revenue of the specific unit which violates the Competition Commission Act.

“It would be arbitrary and disproportionate to levy a penalty on the stationery business's total turnover of 20,000 rupees, when the contravention is only in relation to the toy business that earns 100 rupees,” the plea said. 

Title: Apple Inc & Anr v. Union of India & Ors