CCI seeks comments on new regulations to determine turnover of enterprises

The CCI has opened the window for stakeholders to submit their comments on the turnover regulations.

In a significant move, the Competition Commission of India (CCI) has proposed new regulations to determine the turnover of enterprises. The proposed regulations come in response to the Competition (Amendment) Act 2023, which mandates that penalties should be calculated on a global turnover basis. The regulations will specify how turnover should be determined.

The CCI has opened the window for stakeholders to submit their comments on the turnover regulations. The stakeholders have until January 12 of next year to submit their comments. The proposed regulations exclude indirect taxes, intra-group sales, and discounts from the computation of turnover.

In April 2023, the President of India approved the Competition Amendment Bill, 2023, which brought in a series of changes to competition law for the first time since 2009. The new regulations are part of these changes.

Earlier this year, the Government introduced the concept of 'global turnover' for penalty imposition to nullify a Supreme Court ruling that restricted the powers of the CCI in levying penalties. The Supreme Court had held that turnover for calculating penalties could only be taken as relevant turnover, which includes revenues earned from infringing goods or services.

Also Read | CCI’s power to levy penalties on global turnover needs balanced approach

Previously, penalties were generally based on 'relevant' turnover, which was linked to the products or services affected by the infringement. However, this sometimes resulted in companies being subjected to large penalties based on turnover from all their products and services, even though the infringements related only to some or one such product or service.

Under Section 27 of the Competition Act, 2002, the CCI can impose penalties on enterprises or individuals for participating in anti-competitive agreements or abusing a dominant position.

Also Read | Penalty on global turnover for anti-trust violations may not be a deterrent to MNCs, say lawyers

Multinational companies that operate in multiple jurisdictions globally might face significant problems due to the imposition of penalties based on their global turnover. However, experts consider this as a strengthening of the powers of the CCI to discourage potential violators of antitrust law.