The Competition Commission of India (CCI) has released the latest guidelines for determining monetary penalties under the Competition Act, 2002. These guidelines aim to provide clarity and transparency regarding the imposition of penalties on enterprises and individuals for contraventions of the Act.
The guidelines outline the methodology for calculating penalties based on various factors such as the nature and gravity of the contravention, the duration of involvement, the role of the enterprise or individual, and the extent of cooperation during investigations. The CCI may consider factors like turnover, income, profit after tax, and total assets to determine the penalty amount. Additionally, provisions are made for cases of anti-competitive agreements, non-compliance with notice requirements, and misleading information.
With the issuance of the new penalty guidelines, the CCI aims to ensure fair and consistent imposition of penalties for violations of competition law. Enterprises and individuals are advised to familiarize themselves with these guidelines to understand their obligations and potential liabilities under the Competition Act, 2002. Compliance with these guidelines is essential to promote fair competition and protect consumer interests in the Indian market.
THE COMPETITION COMMISSION OF INDIA
NOTIFICATION
New Delhi, the 6th March, 2024
The Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024
Notification No. 01 of 2024 | Dated : 6th March, 2024
No. B-14011/1/2024-ATD-II.—In exercise of the powers conferred by Section 64B(1) read with Section 64B(3) of the Competition Act, 2002, the Competition Commission of India hereby makes the following guidelines with respect to the determination of monetary penalty to be levied on the enterprise(s) and/or persons, for any contravention of the provisions of the Act, namely:-
CHAPTER I
PRELIMINARY
1. Short Title and Commencement
(1) These guidelines may be called The Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024.
(2) They shall come into force on the date of their publication in the Official Gazette.
2. Definitions
(1) In these guidelines, unless the context otherwise requires:
a. “Act” means the Competition Act, 2002 (12 of 2003);
b. “Chartered Accountant” means a chartered accountant as defined in Explanation (a) to Section 35 of the Act;
c. “Commission” means the Competition Commission of India established under sub-section (1) of Section 7 of the Act;
d. “Company” means a company as defined in Explanation (a) to Section 48 of the Act;
e. “Income” means the income as determined under the Competition Commission of India (Determination of Turnover or Income) Regulations, 2024;
f. “legal maximum” is the maximum amount of monetary penalty leviable under the relevant provisions of the Act;
g. “penalty” means the monetary penalty leviable for any contravention of the provisions of the Act;
h. “relevant turnover” means the turnover derived by an enterprise directly or indirectly from the sale of products and/or provision of services, to which the contravention relates and determined for the purposes of imposition of penalty;
i. “repeated contravention” means contravention by an enterprise or a person more than once, either of the same provision or any other provision of the Act;
j. “turnover” means turnover as defined under the Competition Commission of India (Determination of Turnover or Income) Regulations, 2024;
k. “year” means financial year.
(2) Words and expressions used but not defined in these guidelines shall have the same meanings as assigned to them in the Act or the rules or regulations framed thereunder or in the Companies Act, 2013 (18 of 2013).
CHAPTER II
METHODOLOGY FOR DETERMINATION OF PENALTY FOR ENTERPRISES UNDER SECTION 27(b) OF THE ACT
3. (1) The Commission, to begin with, would consider, having due regard to all or any of the following factors, an amount up to thirty percent of the average relevant turnover or average income, as the case may be, of the enterprise for the purpose of determination of penalty to be imposed on an enterprise under Section 27(b) of the Act: –
a. nature and gravity of the contravention;
b. nature of the industry or sector affected because of the contravention and its implications on the economy; and/or
c. any other factor which the Commission may deem appropriate in the facts and circumstances of each case.
(2) The Commission may impose penalty by adjusting the amount so determined in paragraph 3(1) subject to the legal maximum, on each enterprise in terms of turnover or income, as the case may be, having due regard to all or any of the following factors, namely: –
a. duration of the contravention and/ or duration of involvement of the enterprise in such contravention;
b. role of the enterprise in orchestrating the contravening conduct;
c. recourse to coercive or retaliatory measures on other enterprises to participate in the contravention and/ or any retaliatory measures taken against other enterprise(s) with a view to enforcing the conduct or practices constituting the contravention;
d. repeated contravention;
e. admission of contravention, if any, by the enterprise and the stage at which such admission is made;
f. furnishing of cogent evidence by the enterprise establishing that its involvement in the contravention was substantially limited;
g. extent of cooperation by the enterprise during the Director General’s investigation and/ or proceedings before the Commission;
h. voluntary termination of alleged anti-competitive conduct, under intimation to the Commission;
i. implementation of a competition compliance programme within the enterprise; and/ or
j. any other factor which the Commission may deem appropriate in the facts and circumstances of each case.
(3) For calculating average relevant turnover or average income, the Commission, subject to the facts and circumstances of each case, may consider the relevant turnover or income of three years of the enterprise preceding the year in which the Director General’s investigation report is received by the Commission.
Provided that, in appropriate cases, for the reasons to be recorded in writing, the Commission may consider the relevant turnover of three years preceding the contravention.
(4) Turnover or income or relevant turnover or any other financial information, as sought by the Commission, shall be based on the audited financial statements of the enterprise furnished by way of a certificate from a statutory auditor of the enterprise, or in his absence by a Chartered Accountant, and supported by an affidavit by a person duly authorised by the enterprise in this regard.
(5) In case audited financial statements are not available, turnover or income or relevant turnover or any other financial information, as sought by the Commission, shall be the amount certified by the statutory auditor of the enterprise, or in his absence by a Chartered Accountant, and supported by an affidavit by a person duly authorised by the enterprise in this regard.
(6) Where the determination of relevant turnover is not feasible under paragraph 3(3) above, the Commission may consider the global turnover, derived from all products and services, for the purpose of determination of amount of penalty under paragraph 3(1) above.
(7) If, in view of the Commission, the amount of penalty so determined is not sufficient to create deterrence, the Commission may, further increase the amount of penalty, subject to the legal maximum.
CHAPTER III
METHODOLOGY FOR DETERMINATION OF PENALTY UNDER PROVISO TO SECTION 27(b) OF THE ACT
4. (1) In cases where the contravention by an enterprise pertains to an anti-competitive agreement entered into by a cartel, the Commission may impose penalty in terms of proviso to Section 27(b) of the Act.
(2) For determining penalty under proviso to Section 27(b) of the Act, profit after tax shall be considered.
(3) While taking a decision in this regard, the Commission may have due regard to all or any of the factors mentioned in paragraph 3(2) of these guidelines.
CHAPTER IV
METHODOLOGY FOR DETERMINATION OF PENALTY FOR PERSONS LIABLE UNDER SECTION 48 OF THE ACT
5. (1) The Commission may impose penalty on persons, under Section 48(1) or 48(3) of the Act, as the case may be, which shall not be more than ten percent of the average income of the person for the last three preceding financial years.
(2) In determining the percentage of the average income to be considered in a given case, the Commission may have due regard to all or any of the following factors: –
a. nature and gravity of contravention by the company, for whose conduct such person has been held liable under Section 48 of the Act;
b. role, extent and duration of involvement of such person in the contravening conduct;
c. extent of cooperation by the person during the Director General’s investigation or the Commission’s proceedings;
d. repeated contravention;
e. furnishing of cogent evidence showing that his or her involvement in the contravention was substantially limited; and/ or
f. any other factor which the Commission may deem appropriate in the facts and circumstances of each case.
(3) For determining the average income of the person, the gross total income as per the income tax returns filed under the Income Tax Act, 1961 and rules framed thereunder shall be considered. Such gross total income would exclude: (a) income from house property; and (b) income from capital gains. Further, the Commission shall consider income tax returns of the person for the same years as that of the company for whose conduct such person has been held liable.
(4) Where income tax returns of the person for such period or years are not available, the total income as certified by a Chartered Accountant, supported by way of an affidavit by such person, shall be considered.
(5) In cases where the contravention pertains to an anti-competitive agreement entered into by a cartel, the Commission may levy penalty on a person in terms of proviso to Section 48(1) or Section 48(3) of the Act, as the case may be, with due regard to factors mentioned at paragraph 5(2) of these guidelines.
CHAPTER V
METHODOLOGY FOR DETERMINATION OF MONETARY PENALTY UNDER SECTION 43A OF THE ACT
6. (1) The Commission may levy penalty on a person or enterprise who fails to give notice of combination under sub-section (2) or sub-section (4) of Section 6 of the Act or contravenes sub-section (2A) of Section 6 of the Act or submits information pursuant to an inquiry under sub-section (1) of Section 20 of the Act, which may extend to one percent of the total turnover or assets or the value of transaction referred to in clause (d) of Section 5 of the Act, whichever is higher, of such a combination.
(2) The Commission, while determining the amount of penalty to be imposed under Section 43A of the Act, may have due regard to all or any of the following factors, namely: –
a. consummation or part consummation of combination without giving notice;
b. violation of standstill obligations (substantive or procedural) prior to or after filing notice with the Commission under Section 6(2A) of the Act;
c. non-furnishing of information during an inquiry under Section 20(1) of the Act;
d. voluntary filing of notice with the Commission;
e. conduct of the parties including making voluntary disclosures, cooperation during the inquiry, furnishing all requisite material or documents in response to the information sought by the Commission; and/ or
f. any other factor which the Commission may deem appropriate in the facts and circumstances of each case.
CHAPTER VI
METHODOLOGY FOR DETERMINATION OF MONETARY PENALTY UNDER SECTIONS 42, 43, 44 AND 45 OF THE ACT
7. (1) In determination of penalty to be imposed on a person under Sections 42, 43, 44 and 45 of the Act, the Commission shall consider the minimum and maximum penalty leviable as per the respective provision of the Act.
(2) While determining the amount of penalty, the Commission may have due regard to all or any of the following factors, namely: –
a. extent and reasons of non-compliance or non-cooperation;
b. nature of misleading information;
c. knowledge of the person furnishing the information about the same being untrue or incomplete;
d. repeated contravention; and/or
e. any other factor which the Commission may deem appropriate in the facts and circumstances of each case.
CHAPTER VII
RESIDUARY POWERS OF THE COMMISSION
8. (1) Notwithstanding the general methodology for determining the amount of penalty, considering the particularities of a given case and in exceptional circumstances, the Commission may divert from these guidelines.
(2) In case of any divergence from general methodology for imposition of penalty under Section 27(b), Section 43A and Section 48, the reason(s) for such divergence shall be recorded in writing.
(3) Any reduction in the penalty amount with respect to Section 46 of the Act would be guided by the Competition Commission of India (Lesser Penalty) Regulations, 2024.
ANUPAMA ANAND, Secy.
[ADVT.-III/4/Exty./805/2023-24]
