A Study Beyond the See-Saw of Relevant and Global Turnover: Finding a Mechanism for Adequate Penalty
##plugins.themes.academic_pro.article.main##
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.
##plugins.themes.academic_pro.article.details##
References
- Aghion, P., R. Blundell, R., Griffith, P., Howitt, and Prantl, S. (2009). The effects of entry on incumbent innovation and productivity. The Review of Economics and Statistics, 91(1). https://doi.org/10.1162/rest.91.1.20
- Arjun, K. (2015). The Excel Crop Case and Relevant Turnover in the Competition Act 2002. https://repository.nls.ac.in/cgi/viewcontent.cgi?article=1200andcontext=nlsir
- Avimukt, D., Unnati, A., Parth, S., Manan, L., Yash, L., Swapnil, S., and Hrishav, K. (2023). Competition (Amendment) Act, 2023 comes into effect ’partially’. Mondaq. https://www.mondaq.com/india/cartels-monopolies/1323342/competition-amendment-act-2023-comes-into-effect-partially
- Beaton-Wells, C. and Parker, C. (2012). Justifying criminal sanctions for cartel conduct – A hard case. Journal of Antitrust Enforcement, 1(1), 8. https://doi.org/10.1093/jaenfo/jns009
- Bundeskartellamt. (2021). Guidelines for the setting of fines in cartel administrative offence proceedings. https://www.bundeskartellamt. de/SharedDocs/Publikation/EN/Leitlinien/Guidelines_setting_fines_Oct_2021.pdf?__blob=publicationFileandv=5
- Coimbatore District Central Coop. Bank v. Employees Assn. (2007) 4 SCC 669
- Competition Commission of India Case No. 19/2010, Belaire Owners’ Association v. DLF Limited, Huda and Ors. https://www.cci.gov.in/antitrust/orders/details/930/0
- Competition (Amendment) Bill, 2023. http://164.100.47.4/BillsTexts/ LSBillTexts/PassedLoksabha/185C_2023_LS_E3312023105854AM.pdf
- Competition Law Review Committee. (2019). Report of the Competition Law Review Committee. https://www.ies.gov.in/pdfs/ReportCompetition-CLRC.pdf
- Competition Commission of India (2019). Annual Report 2018-19. https://www.cci.gov.in/public/images/annualreport/en/3-annual-report-2018-191652253330.pdf
- Competition Commission of India Case No. 50/205, Nagrik Chetna Manch Vs. Fortified Security Solutions and Others. (2015). https://cci.gov.in/antitrust/orders/details/732/0
- Competition Commission of India Case No. 07 of 2021 with 14 of 2021 with 35 of 2021, XYZ v. Alphabet. https://www.cci.gov.in/antitrust/orders/details/1072/0
- Competition Commission of India Case No. 39 of 2018, Mr Umar Javeed and Others Vs. Google LLC and Another. https://cci.gov.in/anti-trust/orders/details/1070/0
- Competition Commission of India Case No. 7 and 30 of 2012, Matrimony v. Google LLC and Others. https://www.cci.gov.in/images/antitrustorder/en/07-and-3020121652434133.pdf
- Competition and Markets Authority. (2021). CMA’s Guidance as to Appropriate Amount of Penalty. https://assets.publishing.service. gov.uk/government/uploads/system/uploads/attachment_data/file/1060671/CMA73final_.pdf
- Competition Commission of India Case No. 22/2010, Kapoor Glass Pvt. Ltd. v. Schott Glass India Pvt. Ltd. http://164.100.58.95/sites/default/files/Case22of2010OrderMemberR.pdf
- Council of Economic Advisers. (2016). Benefits of competition and indicators of market power. Council of Economic Advisers Issue Brief. https://obamawhitehouse.archives.gov/sites/default/files/page/files/20160502_competition_issue_brief_updated_cea.pdf
- European Union. (2006). European Union cartel statistics. http://ec.europa.eu/competition/cartels/statistics/statistics.pdf
- European Commission. (2006a). Fines for breaking EU Competition Law. http://ec.europa.eu/competition/cartels/overview/factsheet_fines_en.pdf
- European Commission. (2006b). Guidelines on the method of setting fines imposed under Article 23(2)(a) of Regulation No 1/2003. Official Journal of the European Union, C210. https://eur-lex.europa.eu/legal content/EN/ALL/?uri=CELEX%3A52006XC0901%2801%29
- Excel Crop Care Ltd. v. CCI, (2017) 8 SCC 47. https://main.sci.gov.in/supremecourt/2014/3244/3244_2014_Order_08-May-2017.pdf
- International Competition Network. (2017). Setting of fines for cartels in ICN jurisdictions. http://www.internationalcompetitionnetwork.org/uploads/library/doc351.pdf
- In Re: Director, Supplies and Disposals, Haryana v. Shree Cement and Others, CCI, Reference Case No. 05 of 2013 (2017).
- In Re: Bengal Chemist and Druggist Association, CCI, Suo Moto Case No. 02 of 2012 (2014).
- In Re: Express Industry Council of India v. Jet Airways (India) Limited and Others, CCI, Case No. 03 of 2013 (2015).
- Shreya Jha. (n.d). Evolution of Indian Competition Law. http://regulation.org.uk/competition-india-evolution.html
- Ministry of Corporate Affairs. (2008). Policy, provisions and performance. Annual Report 2007-2008. https://www.mca.gov.in/Ministry/annual_reports/annualreport2008/Eng/MCA_AR0708_English.pdf
- Monopolistic and Restrictive Trade Practice Act, 1969.
- OECD (2013a). Background notes by the Secretariat. OECD-IADB Latin American and Caribbean Competition Forum. DAF/COMP/LACF (2013)4/REV1. http://www.oecd.org/competition/latinamerica/2013-latin-american-competition-forum.htm
- OECD (2016a). Background paper by the Secretariat. OECD Global Forum on Competition DAF/COMP/GF (2016) 6. http://www.oecd.org/competition/globalforum/competition-and-sanctions-in-antitrust-cases.htm
- OECD (2016b). Sanctions in Antitrust Cases Summaries of Contribution. DAF/COMP/GF/WD (2016), 81. https://one.oecd.org/document/DAF/COMP/GF/WD(2016)81/en/pdf
- OECD (2018). Pecuniary penalties for Competition Law infringements in Australia. https://www.oecd.org/daf/competition/Australia-Pecuniary-Penalties-OECD-Report-2018.pdf
- OECD (2019a). OECD peer reviews of Competition Law and policy: Brazil. http://www.oecd.org/daf/competition/oecd-peer-reviews-of-competition-law-and-policy-brazil-2019.htm
- OCED (2019b). Latin American and Caribbean Competition: Fining Methodologies for Competition Law Infringement Background. https://one.oecd.org/document/DAF/COMP/LACF(2019)5/en/pdf
- OECD (2022). Annual report on competition policy developments in Germany. https://one.oecd.org/document/DAF/COMP/AR(2022)13/en/pdf
- Parker, C. and Nielsen, V. L. (2011). Deterrence and the impact of calculative thinking on business compliance with competition and consumer regulation. 56 Antitrust Bulletin 377. https://doi.org/10.1177/0003603X1105600207
- Press Information Bureau (2022a). CCI imposes a monetary penalty of Rs. 936.44 crore on Google for anti-competitive practices about its Play Store policies. https://pib.gov.in/PressReleasePage.aspx?PRID=1870819
- Press Information Bureau (2022b). CCI imposes a monetary penalty of Rs. 1337.76 crore on Google for anti-competitive practices about Android mobile devices. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1869748
- Singh, and Parashar. (2023). CCI penalties on global turnover are relevant and proportionate. Mondaq. https://www.mondaq.com/india/antitrust-eu-competition-/1347152/cci-penalties-on-global-turnover--relevant-and-proportionate
- Shinya, T., et. al. (2021). Cartel leniency in Japan: Overview. Thomson Reuters Practical Law. https://uk.practicallaw.thomsonreuters.com/2-517-3216?transitionType=DefaultandcontextData=(sc.Default)andfirstPage=true
- Smuda, F. (2012). Cartel overcharges and the deterrent effect of EU Competition Law. ZEW - Centre for European Economic Research Discussion Paper, No. 12-050. https://doi.org/10.2139/ssrn.2118566
- Sodhi, et. al. (2020). National conference on the economics of Competition Law: Optimal Antitrust Penalty. https://www.cci.gov.in/images/economicconference/en/papers-presented-in-2020-conference1652335876.pdf
- The Indian Competition Act, 2002, §3.
- The Indian Competition Act, 2002, §4.
- The Indian Competition Act, 2002, §27(b).
- Thomson Reuters Practical Law. (n.d). Definition of cover bidding. https://uk.practicallaw.thomsonreuters.com/3-591 4067?transitionType=DefaultandcontextData=(sc.Default)