Apple vs CCI: Why is the iPhone maker challenging India's antitrust regulator?

Apple has taken India's antitrust regulator CCI to Delhi High Court

Apple has taken India's anti-trust regulator Competition Commission of India to the Delhi High Court over a provision that penalizes the 'global turnover' of companies. The matter was listed for today before a division bench of led by Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela but could not be taken up. The matter will now be heard on December 3. The global tech giant is peeved over a specific provision in India's competition law that empowers the regulator to include not just the Indian revenue but the global income of companies found in violation of these laws.

The Competition Commission of India and the Union of India both are respondents in the case.

The amendment to Section 27(b) of the Competition Act and the 2024 monetary penalty guidelines have been contested by the iPhone maker. According to Section 27 (b) of the Competition Act, the companies that have been found to be in abuse of dominant position or in violation of competition act face a penalty which shall not be more than ten percent of the average of the turnover for the last three preceding financial years.

More teeth to the regulator

The amendment to the competition law is a significant move to align India's antitrust regulation with global best practices. In the case of European Union, the regulator also follows the same practice of penalizing companies with maximum fine of 10% of their global turnovers but it also depends on the severity and duration of infringement, the value of sales related to the violation among other things.

Big tech companies like Apple, Microsoft, Google, Meta are more at risk as they have been in the regulator's crosshairs. They earn more revenue from outside India even though number of internet users are more in India. This is due to the share of India's earnings per user in dollar terms which just a fraction of these companies' global earnings.

Recently, Alphabet's Google was slapped by the European Union regulator with a hefty penalty of $3.45 billion for indulging in anticompetitive practices in its adtech business. Apple has also challenged a fine of $587 million slapped by EU antitrust regulator for breaching landmark rules aimed at curbing big tech.

Apple vs CCI

In a writ petition filed before the Delhi High Court, Apple has argued that it faces a fine of $38 billion based on the global turnover for the three preceding years 2022, 2023 and 2024. It has also challenged CCI's order passed in March asking it to furnish its audited financial statements for the three years, according to Bar & Bench.

It further cites the Supreme Court verdict in the Excel Crop case stating that the competition law violates the judgment as it interpreted the turnover as income generated from a particular infringing good/service that is found to be in contravention of the law and not the total turnover from all products and services.

The Impugned Amended Penalty Provisions purport to reverse the letter and spirit of the Excel Crop Judgment without removing the basis for the judgment, which is the only permissible manner of altering the effect of the judgment,” the Bar & Bench report quoted from the plea.

The case will be closely looked at especially at a time when the big tech companies are being closely scrutinized not just in India but also in other jurisdictions for their anticompetitive behaviour.