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Competition Comm can now impose fines based on companies’ global turnover

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The amendment empowers the CCI to impose a penalty on the global turnover of a company derived from all the products and services

New Delhi: Fair trade regulator Competition Commission can now impose penalties on companies based on their global turnover for violations, with the government notifying the amended competition norms.

Till now, the Competition Commission of India (CCI) has been deciding penalties on the basis of a company’s turnover from a particular business segment where violations have been found.

The corporate affairs ministry has notified the provisions under the amended Competition Act with effect from March 6.

Vaibhav Choukse, Partner and Head of Competition Law at JSA Advocates and Solicitors said the amendment empowers the CCI to impose a penalty on the global turnover of a company derived from all the products and services.

This amendment is likely to have major implications on multi-product companies and those with global operations and may lead to unfair and discriminatory outcomes between (I) domestic companies and the one with global operations and (II) multi-product companies and single-product firms.

To avoid steep penalties, the amendment would encourage companies under investigation, especially big techs, to opt for the settlements or commitments mechanism in abuse/vertical restraint cases or, leniency in cartel cases.

On Wednesday, CCI came out with the penalty guidelines.

It provides for both aggravating and mitigating factors and a comprehensive methodology to be considered while imposing penalties. It will also ensure multiple checks on the penalty from being disproportionate, Choukse said.

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