By Vikrant Rana and Shantam Sharma
Introduction
On 3 December, the Delhi High Court is scheduled to hear Apple Inc.’s petition challenging the Competition (Amendment) Act 2023 and the Monetary Penalty Guidelines 2024. The petition places India’s penalty framework under focused judicial scrutiny at a time when Apple already faces multiple investigations before the Competition Commission of India, including the App Store inquiry discussed in our earlier publication “Apple Under Scrutiny: A Detailed Look into the CCI Investigation”[1].
The amendments at issue enable the CCI to compute penalties on the basis of global turnover, including revenue earned outside India and revenue from business lines entirely unconnected to the alleged contravention.
This represents a clear departure from the penalty jurisprudence that has governed Indian competition law for over a decade. The core of Apple’s case is that penalties under Section 27 must retain a rational nexus with the specific conduct under inquiry. In Apple’s view, the 2023 amendment directly overturns the Supreme Court’s holding in Excel Crop Care v CCI[2], which confined penalties to the turnover of the product or service forming the subject matter of the infringement.
The petition therefore tests the boundaries of legislative redesign in competition law and raises concerns regarding proportionality, rational nexus and constitutional limits on civil penalties imposed by statutory regulators.
Statutory Framework Before and After the 2023 Amendment
Position Before 2023: Relevant Turnover as the Standard
Prior to the amendment, Section 27(b)[3] empowered the CCI to impose a penalty of up to ten percent of the average turnover for the preceding three financial years, without defining “turnover”. In Excel Crop Care (), the Supreme Court resolved this ambiguity.
The Court held that where an enterprise manufactures multiple products, penalties must be computed only on relevant turnover, meaning the turnover generated from the product or service that formed the subject matter of the contravention.
The Court rejected the CCI’s reliance on total turnover. It held that penalising a multi product firm on the basis of turnover unrelated to the infringing conduct would be inequitable, irrational and inconsistent with proportionality. The Court emphasized that:
- only turnover linked to the contravention has a rational nexus with the gravity of the infringement,
- overall turnover risks producing penalties bearing no relation to the conduct under scrutiny, and
- the objective of the Act is deterrence within a fair and proportionate framework, not punitive extraction.
This principle became a central pillar of penalty design from 2017 onward.
Position After 2023: Inclusion of Global Turnover
The Competition (Amendment) Act 2023[4] introduced an expanded definition of “turnover” to include:
- gross global revenues,
- from all products and services,
- regardless of whether those markets were involved in the alleged contravention,
- and irrespective of whether the revenue was earned in or outside India.
This has the direct effect of broadening the penalty base.
To operationalise the statutory change, the Monetary Penalty Guidelines 2024[5] expressly permit reliance on global turnover. Paragraph 3(6) provides:
“Where the determination of relevant turnover is not feasible… the Commission may consider the global turnover, derived from all products and services, for the purpose of determination of amount of penalty.”
Further, the Guidelines require that the penalty remain within the legal maximum, defined as the ceiling under Section 27(b), which is ten percent of turnover. Once turnover includes global revenue, the statutory maximum becomes ten percent of global turnover.
This is a fundamental shift. Unlike the regime under Excel Crop Care, the penalty base is no longer confined to turnover corresponding to the infringing product. Nor is global turnover merely a cap. It may now serve as the base for penalty computation.
The Impact of the Amendment
The Supreme Court’s Rationale
Excel Crop Care did not adopt relevant turnover as a pragmatic shortcut. It grounded the principle in constitutional and administrative law norms. The Court emphasized that penalties must comply with:
- a rational nexus between the infringement and the penalty base,
- proportionality to ensure that penalties are not excessive relative to the gravity of the contravention, and
- avoidance of inequitable results, particularly for multi product enterprises.
The Court specifically held that using total turnover at nine percent would produce irrational outcomes because it incorporated unrelated revenue streams into the penalty calculation ().
Policy Objective Behind the Amendment
The 2023 amendment explicitly overrides Excel Crop Care. The justification is grounded in the nature of digital markets, which are characterised by:
- substantial global revenues,
- relatively low monetisation of Indian markets,
- cross subsidisation across product lines, and
- network effects that blur the relationship between the locus of conduct and value extraction.
The aim is to ensure effective deterrence against global firms with marginal revenue in India. The question is whether the chosen method satisfies constitutional tests of rationality and proportionality.
Apple’s Position
Apple argues that the amended framework breaks the foundational nexus between infringing conduct in India and the penalty base. In its petition, Apple highlights that app store related allegations affecting its Indian operations could result in penalties calculated on worldwide revenues from iPhones, Macs, iPads, Services and wearables.
Apple submits that the new regime may produce penalties several orders of magnitude larger than the size of the affected market, thereby undermining the proportionality principles embedded in Excel Crop Care.
Comparative Perspective: How Global Turnover is Used in Mature Competition Regimes
Global turnover is not unique to India. The European Union and the United Kingdom also rely on global turnover, but only as a statutory ceiling, not as the penalty base.
The UK Competition and Markets Authority’s CMA73 Penalty Guidance[6] adopts a structured methodology:
- Start with relevant turnover in the affected market.
- Apply a percentage based on seriousness.
- Adjust for aggravating and mitigating factors.
- Apply deterrence multipliers.
- Ensure proportionality.
- Apply the cap of ten percent of worldwide turnover.
The worldwide turnover cap is therefore the final constraint, not the starting point.
Distinction Between UK and Indian Penalty Design
| Analytical Step | UK CMA Method (CMA73) | India After 2023 |
| Starting point | Relevant turnover | Global turnover when relevant turnover not feasible |
| Proportionality filtering | Mandatory | Limited, discretionary |
| Use of global turnover | Cap only | Penalty base itself |
| Safeguards | Structured, rigorous | Fewer structural safeguards |
This comparison is relevant because it demonstrates that deterrence can be preserved without eliminating the link between conduct and turnover.
Illustration: Why the Penalty Base Matters
Assume:
Global turnover: USD 383 billion
App Store India revenue: USD 350 million
Allegation: Restrictive app store billing rules in India
Scenario A: Pre amendment (relevant turnover)
Penalty base: USD 350 million
Ten percent penalty: USD 35 million
Scenario B: Post amendment (global turnover)
Penalty base: USD 383 billion
One percent penalty: USD 3.83 billion
Ten percent penalty: USD 38.3 billion
Even the lowest penalty under the global turnover regime may exceed the maximum penalty under the earlier model by more than one hundred times.
What Other Indian Decisions Contribute to the Analysis
Mahindra and the Proportionality Principle
In Mahindra[7], the Delhi High Court reiterated that penalties must be appropriate and necessary relative to the harm identified. Although the case did not concern turnover, it reinforces the broader requirement of proportionality that permeates administrative penalty jurisprudence in India.
NCLAT’s Application of Excel Crop Care
Later NCLAT decisions, including the Google Play Billing appeal[8], reaffirm that Excel Crop Care remains the controlling authority for the pre amendment period. These decisions repeatedly highlight that using total turnover, even at the domestic level, risks producing inequitable outcomes. They therefore illuminate the doctrinal tension that the amendment must now withstand.
Implications for Merger Control and Big Tech Investigations
Although Apple’s challenge concerns penalties for anticompetitive conduct and abuse, the shift toward global metrics has indirect implications for:
- defining significant market power,
- identifying systemic digital firms,
- designing ex ante digital competition regulation, and
- assessing merger thresholds for high revenue global enterprises with limited domestic monetisation.
Ongoing CCI investigations into app store restrictions, bundling practices, search markets and digital advertising will now operate in an environment where penalty exposure may be significantly higher. For global platforms, this alters compliance strategies, settlement calculus and litigation posture.
Conclusion
Apple’s petition arrives at a pivotal moment in the evolution of Indian competition law. Parliament has adopted a deterrence oriented penalty model intended to align India with major jurisdictions. At the same time, the amendment departs sharply from the Excel Crop Care principle that limited penalties to relevant turnover.
The Delhi High Court will have to reconcile:
- legislative intent to strengthen deterrence in digital markets,
- the Supreme Court’s emphasis on nexus and proportionality,
- constitutional limits on the design of civil penalties, and
- comparative frameworks that use global turnover as a cap rather than a base.
The outcome will shape how India applies the global turnover standard to multinational enterprises, particularly in digital markets characterised by cross subsidisation and global revenue concentration. It will also determine whether Excel Crop Care remains part of India’s penalty jurisprudence or becomes a doctrinal relic.
[1] https://ssrana.in/articles/apple-under-scrutiny-a-detailed-look-into-the-cci-investigation/
[2] https://cci.gov.in/legal-framwork/judgements/8/0
[3] Orders by Commission after inquiry into agreements or abuse of dominant position- Section 27(b)- https://www.cci.gov.in/images/legalframeworkact/en/the-competition-act-20021652103427.pdf
[6] https://assets.publishing.service.gov.uk/media/622f73c58fa8f56c170b7274/CMA73final_.pdf
[7] https://www.cci.gov.in/public/images/legalframeworkjudgement/en/10-mahindra1652249439.pdf