Apple has taken its dispute with India’s competition regulator to the Delhi High Court, questioning new penalty rules that could expose the company to fines of up to 38 billion dollars. The tech giant argued that India’s updated competition law allows the Competition Commission of India to calculate penalties using a company’s global turnover, which it has called “unconstitutional, grossly disproportionate, unjust”. This challenge comes at a time when Apple is expanding its manufacturing operations in India.
The clash began with a CCI probe launched in 2022 after complaints by two groups that accused Apple of hurting competition by charging up to 30% on in app purchases and forcing developers to use its billing system. A confidential CCI report submitted on June 24, 2024 stated that “Apple App Store is an unavoidable trading partner for app developers” and said Apple’s policies negatively affected developers, users and alternative payment processors. Apple has denied these findings and argued that it remains a small player in India compared to Android.
At the centre of the legal challenge are Section 27 of the Competition Act, 2002 and the CCI’s Monetary Penalty Guidelines, 2024. Parliament amended the law in 2023 to redefine turnover as global turnover from all products and services. The guidelines issued in March 2024 allow the regulator to use global turnover when it cannot determine relevant turnover and also permit higher penalties if needed for deterrence. Based on Apple’s average global turnover for three fiscal years up to 2024, its maximum penalty exposure at the 10% rate is about 38 billion dollars. Apple has urged the court to strike down the amendment and guidelines and argued that penalties should be based only on Indian revenue linked to the specific business segment under investigation.
Apple warned that the rules have already been applied retrospectively in another case and said it had “no choice but to bring this constitutional challenge now”. It used an example of a toy seller with a stationery business to show why global turnover-based penalties would be arbitrary. The case will be heard by a bench led by Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela on December 3. Globally, regulators have taken strong actions in similar cases. The European Union imposes penalties of up to 10% of global turnover for antitrust breaches and is currently reviewing Apple’s compliance with the Digital Markets Act. In the United States, a federal judge recently held that Apple violated a court order aimed at promoting competition in the App Store.
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