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April 04, 2023 09:29 pm | Updated 09:29 pm IST - New Delhi
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The proposed amendments, cleared by Parliament, to the Competition Act gives more powers to the Competition Commission of India (CCI) in pursuing what it sees as anti-competitive behaviour.
Recently, the National Company Law Appellate Tribunal (NCLAT) upheld a ₹1,337 crore fine imposed by the CCI on Google for the firm’s contracts with mobile manufacturers.
The amendment to the Competition Act was cleared by the Rajya Sabha on Monday, while the Lower House had given its nod last month. The Bill, which amends the Competition Act, 2002 for the first time since 2007, allows the CCI to penalise entities found engaging in anti-competitive behaviour based on their global turnover, as opposed to their income in India alone. While this change is not worded to be exclusive to Big Tech companies, firms like Google that have found themselves in the cross hairs of CCI investigations have high revenues outside India, multiplying the potential impact on them.
The “introduction of provisions regarding computation of penalty on global turnover... has taken the legal fraternity as well as the business community by surprise, as they have been introduced without inviting any comments from stakeholders,” five lawyers from the firm IndusLaw wrote in a note on the law in February.
The Act also empowers the CCI to pass orders in relation to anti-competitive agreements and the “abuse of dominant position”, by imposing a penalty that can either go up to 10% of the average income or turnover for the three preceding financial years.
Tech giants such as Google or Meta report vastly smaller Indian turnovers in comparison to their U.S. or European markets. While India has millions of Internet users, the share of revenue per user in dollar terms tends to be a small fraction of the earnings in western markets.
The changes will also give the CCI a greater say in mergers and acquisitions, as entities will have to seek its approval if deals are worth more than ₹2,000 crore, and if both parties have substantial business operations in India.
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