Delhi High Court asks Centre to file reply on Apple's plea against CCI order

New Delhi: The Delhi High Court on Monday sought response of the Centre and Competition Commission of India on a plea by tech giant Apple Inc challenging CCI's direction to furnish the firm's audited financial statements for several years.

Apple has also challenged the amendment to the Competition Act, 2002, which allows CCI to impose penalties based on a company's global turnover.

A bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela issued notice to the Union Ministry of Corporate Affairs and CCI on Apple's petition and asked them to file reply affidavits within a week.

The court listed the matter for a hearing on December 16.

Apple, in its petition, said the effect of amended penalty provisions is that the turnover generated from all products or services of the enterprise can be aggregated for computation of the penalty, instead of the turnover generated from the affected "relevant product or services" of the enterprise.

It said after the amendment, the global turnover of an enterprise, generated from territories outside the jurisdiction of the CCI, can be considered for computation of the penalty, instead of the turnover of an enterprise as generated in the "relevant geographic market", that is, in the Indian market.

The plea said amended provision empowers the CCI to fine firms found guilty of abuse of dominance or anti-competitive conduct up to 10 per cent of its average turnover of preceding three financial years.

Apple stated that its maximum penalty exposure, that is, 10 percent of its average global turnover derived from all of its products or services globally for financial years 2022 to 2024, could be around USD 38 billion.

Senior advocate Abhishek Singhvi, representing Apple, argued that if a multi-product company has abuse of dominance for a product, the CCI will always penalise for the particular infringing product which is sold in India and imposition of penalty based on global turnover would be manifestly arbitrary, unconstitutional, and grossly disproportionate.

He said the authorities have asked them to submit the India turnover by December 8 which cannot be done as it has to be collated.

The court also sought to know from the government how penalties on global turnover could be justified even if the abuse of dominant position is with respect to one of the many products.

"Please tell us, prima facie, if the CCI initiates proceedings in relation to one product. How can you take into account turnover with respect to other products? Does it not appear very unreasonable to include other products?" the court asked.

Senior advocate Balbir Singh, appearing for government and CCI, responded that it was necessary so that an entity with no turnover in India can also be brought under the CCI net.

"The object of this is the global turnover concept has been taken in those circumstances where you don't have a base in India, how do you punish them?" he submitted.

Claiming that Apple has filed the petition to "scuttle" the CCI probe against it, Balbir Singh said the authorities have asked for only India turnover and not global turnover.

He said the company has been asked to give the India turnover by December 8 after which it will take 3-4 weeks to examine the information.