Anti-trust penalty on global turnover not an entry barrier to big tech, experts say

Competition law

The amendment to the Competition Act, 2002, which empowers the Competition Commission of India (CCI) to levy a penalty on the global turnover of companies, will not act as an entry barrier to big tech companies, experts have said.

Anti-trust experts such as Christophe Carugati, Affiliate Fellow, Bruegel, Shruti Hiremath, Senior Associate, Clifford Chance at the United Kingdom, and Allan Asher, Chair, Fairer Future.Au interacted with the media on July 6 at a conference organized by a think-tank called 'The Dialogue.'

Carugati noted that while every law contemplates a maximum penalty, such provisions are rarely used and they may not be imposed so frequently that it will act as an entry barrier to technology companies. Hiremath noted that tech companies would not look at anti-trust penalties as an entry barrier but they will rather evaluate how their products would do in a specific geography. She further said that while companies may look at anti-trust penalties, it may not be the sole reason to decide on whether or not they should enter a nation.

Asher noted that some laws are passed for parliamentary purposes, however it is not necessary that they are used by the regulators frequently, thus a penalty on global turnover may not act as an entry barrier to big tech companies.

Experts also highlighted that the approach to ex-ante (based on forecasts) models across the world lacks consensus, with countries still experimenting based on their own market and policy realities. The implications of ex-ante laws, especially for concerns like innovation remain largely uncertain, raising concerns about potential impact on the startup ecosystem’s ability to innovate and attract investments.

Amendment to Competition act:

In April 2023, the President of India gave assent to the Competition Amendment Bill, 2023, which ushered in a series of changes to competition law for the first time since 2009.

Amongst a host of big changes brought in, was the provision empowering CCI to impose penalties calculated as a percentale of the global turnover of a company if it was found to be violating the competition law. Global turnover includes the company’s turnover from all products and services around the world.