A Study Beyond the See-Saw of Relevant and Global Turnover: Finding a Mechanism for Adequate Penalty

Abstract

The Competition Act, 2002 (the Act) is the governing legislation to enforce compliance against antitrust practices in the Indian market using multiple tools, the primary being the imposition of penalties. Penalties have the effect of punishing offenders and deterring others. Under the current legislation, one of the crucial aspects while computing the amount of penalty is determining the “turnover” of the undertaking, as it is used as a proxy to determine the base fine. There exist other proxies, but “turnover” is the most accepted globally. The act of imposing a penalty is also accompanied by ensuring a balance i.e., the fine should be adequate to deter and should not be excessive to break the undertaking. Hence, the imposition of a penalty is not a mere mathematical exercise but a judicious one. With this backdrop, focusing on the Indian Competition Law, the authors in this paper will comprehensively analyze the concept of “turnover” along with an evolutionary analysis of its different shades i.e., relevant, and global turnover, and how they have failed to help in fulfilling the core objectives of the penalty regime. In the latter part of the paper, the authors provide an alternative perspective based on foreign jurisprudence to argue that “turnover” is not the only proxy available and demonstrate the best practices from around the world. Lastly, having understood the strengths and weaknesses of relevant and global turnover and gained an international perspective, the authors will be suggesting a flexible approach in the context that Indian antitrust authorities will have multiple tools/proxies at their disposal for tackling every situation with the best possible approach, but this flexibility will be exercised within a particular framework/guideline. This holistic approach is essential, as considering just relevant or global turnover would eventually defeat the very purpose of imposing penalties.