The Delhi High Court (HC) on Monday set a fresh hearing on the Competition Commission of India’s (CCI) power to levy penalties on foreign companies using their global-turnover (revenue earned in all countries) by asking the regulator and the Union government to file an affidavit on the legality of doing so by Apple Inc. The court has directed the CCI and the Centre to file their affidavit in the case within the next week. The hearing was continued after Apple filed an application in the Delhi HC challenging recent amendments to the Competition Act 2002 and the 2024 Monetary Penalty Guidelines which essentially empowers the CCI to levy penalties based on the global revenue of a company even if the alleged misconduct pertains only to India. Apple has alleged that the methodology of calculating the penalty is “arbitrary” and “grossly disproportionate”. Declining to pass any immediate orders on the CCI’s application to compel Apple to submit its global financial statements to the antitrust regulator by 8 December and Apple’s prayer for protection against coercive regulatory actions at this stage a bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela fixed the next date of hearing for 16 December. For now the Delhi HC’s order staying the request for the financial statements gives Apple some reprieve at least temporarily. The stay would remain in place unless the CCI and the Centre convince the Delhi HC that global-turnover is a legal basis for calculating penalties under the amended Competition Act. The background At the heart of this case is the long-standing debate over using global turnover as opposed to only “relevant” turnover (the turnover of the specific product or service or market impacted by the antitrust violation) for the purpose of calculating penalties. So far Indian courts have interpreted “turnover” in the narrow sense of only the relevant business segment or market under the verdict of Excel Crop Care v. CCI in 2017. In other words when determining the penalty for antitrust violations a regulator or court cannot use the company’s entire global revenues. But in 2023 the Centre amended Section 27(b) of the Competition Act and the 2024 Monetary Penalty Guidelines now define “turnover” to include all global revenue. This means that a company can potentially be fined up to 10% of its worldwide sales even if the alleged anti-competitive behaviour was local to India. For global behemoths like Apple which earn hundreds of billions of dollars in revenues outside India every year this matters. In the application filed in the Delhi HC Apple estimated that it might have to pay a penalty of nearly US$ 38 billion if the regulator were to apply the global turnover framework to its pending India-market probe. Apple is not the only multinational that could be hit with such large penalties under this amended law. Since the CCI’s investigations usually cover several product segments and markets several firms in the CCI’s dock for similar violations may face this possibility. At the same time the CCI’s view is that global turnover should be an option so that a foreign-headquartered company or a firm with minimal India-specific revenue is not shielded from penalties just because it has a relatively small Indian presence. In most cases the regulator says it is “obliged” to use the global turnover mainly where it is impractical or impossible to determine the “relevant turnover”. What now? Observers say this case could end up being a test case that establishes a precedent for the amended competition-law regime. If the court allows the global turnover framework tech majors and other MNCs would have a significantly larger potential exposure to CCI penalties. But if the court rules that the law only allows penalties to be based on India-specific or product-specific revenue then big tech and other foreign companies might once again be out of reach of Indian regulators. The December 16 hearing in the case will be watched with keen interest by all stakeholders from regulators to start-ups to global investors. This case could turn out to be a landmark one for how India governs global firms operating in its markets under domestic antitrust laws.