Apple Challenges Indian Competition Law Over $38 Billion Potential Fine

Apple Inc., the American technology giant, has filed a petition with the Delhi High Court challenging amendments to the Competition Act of 2002. The amendments allow the Competition Commission of India (CCI) to impose penalties on companies based on their global turnover, which could lead to fines amounting to approximately $38 billion for Apple. This legal action follows a CCI directive requiring Apple to submit its audited financial statements for the financial years 2022, 2023, and 2024.

The CCI is currently investigating Apple for alleged anti-competitive practices related to its App Store. In a decision made on November 10, the CCI imposed retrospective penalties on another company, setting a precedent that Apple fears could be applied to it. The company contends that such penalties would be “manifestly arbitrary, unconstitutional, grossly disproportionate, unjust, and totally unwarranted.”

Apple's petition specifically challenges Section 27(b) of the Competition Act and the newly established Monetary Penalty Guidelines of 2024. These provisions allow the CCI to impose fines of up to 10% of an enterprise's average global turnover over the preceding three financial years for violations related to abuse of dominant market position or anti-competitive agreements.

The amendments, which took effect in March 2024, have raised concerns about their retrospective application. Apple argues that this approach contradicts the Supreme Court's 2017 ruling in the Excel Crop Care case, which clarified that penalties should be based on the turnover generated from the specific product or service involved in the alleged violation, rather than a company's total global revenue.

The legal team representing Apple, led by Nisha Kaur Oberoi from J Sagar Associates, asserts that the new penalty framework expands the scope of what constitutes turnover and could lead to disproportionate fines based on activities unrelated to the alleged infractions in India.

The Delhi High Court is scheduled to hear the case on December 3, with significant implications for Apple and other multinational corporations operating in India. This legal challenge not only highlights the complexities of competition law in India but also reflects broader concerns among technology firms regarding regulatory frameworks that could impose heavy financial burdens.

As Apple continues to expand its presence in the Indian market, reporting a substantial increase in revenue driven by the popularity of its iPhone 17, the outcome of this case could have lasting effects on its operational strategies and financial liabilities in the region. The company commands a significant share of the premium smartphone segment in India, which underscores the stakes involved in this legal battle.