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The Competition Commission of India (CCi) has come up with draft regulations for determination of ‘turnover’ of enterprises.
This proposed regulation is significant as it would have a bearing on how much penalties would be levied on enterprises for their anti competitive conduct. It maybe recalled that the Comprtition (amendment) Act 2023 had recently provided that penalties would be levied on ‘global turnover basis’ and that regulations would specify as to how turnover should be determined.
The CCI has now opened the window for furnishing stakeholders comments on turnover regulations till January 12 next year.
In the proposed regulations, CCI has now said that indirect taxes, intra group sales and discounts would be excluded from computation of ‘turnover’.
By introducing the concept of ‘global turnover’ on penalty imposition, the Government had earlier this year effectively nullified a Supreme Court ruling which restricted the powers of CCI in levying penalties by holding that turnover for calculating penalties can only be taken as relevant turnover i.e. revenues earned from infringing goods or services.
The apex court had in 2017 in the Excel Crop Care case observed that the penalty should be calculated using the ‘relevant turnover’, namely turnover of tainted products connected to anti-competitive conduct. Any penalty based on total turnover was deemed disproportionate, according to this SC ruling.
Levy of penalties on ‘global turnover’ basis could spell big trouble for multinational companies which operate in multiple jurisdictions globally. However, the same is also being seen by experts as strengthening the powers of CCI to deter potential violators of antitrust law.
The introduction of ‘global turnover’ as a benchmark for the levy of penalties arising from any abuse of a dominant position by enterprises is one of the salient features of the amended law. The provision was inserted through the Competition (Amendment) Act 2023 without public consultations.
CCI is also expected to soon issue guidelines on penalties, sources said.
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