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The Competition Act, 2002, gives power to the Competition Commission of India (CCI) to impose penalties against entities committing antitrust violations. Last year, the CCI issued its Competition Commission of India (Determination of Monetary Penalty) , 2024, setting out its objectives and methodology for calculating such antitrust penalties. Before these guidelines came into force, the law on enforcement was based on the Supreme Court judgment in . This held that penalties must be based on relevant turnover, that is revenues derived from the product or service involved in the infringement, not on a company’s total revenues. Following this decision, the CCI has, in most cases, calculated penalties using relevant turnover, that is revenues from the impugned product, market or conduct, as a starting point. The exception has been for cases concerning digital platforms.

In the technology sector, the CCI often determines penalties based on the total turnover recorded by the entity. This is because it takes the view that a tech platform receives revenues from interrelated products or markets, or from network effects. This is presumably based on the rationale that penalties must be sufficiently high to punish the impugned product or service and to deter similar practices in related markets. In , the National Company Law Appellate Tribunal upheld CCI penalties calculated using Google’s total India revenues, although it reduced the penalties imposed on the company’s Play Store earnings to those calculated under the relevant turnover basis. In , the CCI levied penalties determined from MMT’s entire revenues.

Against this confusing and sometimes arbitrary background, the CCI’s guidelines are a welcome move, introducing a logical and transparent set of steps to calculate penalties.

Step 1: The CCI will calculate an entity’s average relevant turnover in India.

Step 2: The CCI will determine a base penalty amount of as much as 30% of the average relevant turnover. The percentage decided will account for factors such as the gravity, nature and effect of the entity’s conduct.

Step 3: The CCI can increase or decrease the base penalty amount based on an inclusive nine-point factor list and a general catch-all power. Such matters include the duration of the conduct, the role of the entity and whether it has ended the conduct. Contrition is rewarded.

Step 4: Regardless of the adjustments made, the final penalty is capped at a maximum of 10% of the entity’s global turnover. Should the CCI take the view that the final penalty computed after adjustments is insufficient, it can further increase the penalty up to that maximum.

Following the introduction of the guidelines, the CCI has defined what will now constitute relevant turnover. Unlike the previous approach, the CCI now specifies the scope of relevant turnover, taking into account the revenues earned from the impugned product or service. It will be able to include associated products or services that are intrinsically linked to the impugned product, market, or conduct. In the Whatsapp case, , the CCI imposed a penalty on 4% of relevant turnover, calculated from the turnover of OTT messaging services, the product or service in which the alleged conduct took place, and the turnover of online display advertisement services, the product or service which allegedly benefitted from the conduct complained of. Similarly, in the Android TV , the settlement amount was determined from the revenues of TV devices as well as apps on these devices.

The introduction of the guidelines marks a significant change to the approach the CCI takes to enforcement. The revamped penalty regime is likely to see the CCI embrace greater proportionality, transparency and predictability, always provided that it applies the mechanisms in the guidelines consistently. The CCI’s penalty assessments should now contain more reasoning and analysis, aligning with global best practice. This will not only enhance due process and regulatory certainty but also improve the way in which the CCI makes its enforcement decisions.

Dinoo Muthappa is a partner and Sanjeev Kumar Sriram is a counsel at AZB & Partners