Could be fined $38 billion: Here's why Apple has moved Delhi High Court against Indian competition laws

Multinational tech giant Apple has told the Delhi High Court that it could be penalised for nearly US$38 billion if Indian law allowing the Competition Commission of India (CCI) to impose penalties on the "global turnover" of companies was to stand [Apple Inc & Anr v. Union of India & Anr]. .The CCI has been dealing with a case against Apple regarding allegations of anti-competitive conduct in the market for the App Store. Apple has said that it is challenging the law at this stage because the CCI had passed an order in March this year asking the company to submit its audited financial statement for the financial years 2022, 2023 and 2024. In a case decided on November 10, the Commission imposed retrospective penalties on a different entity. Apple contends that the imposition of similar fines on it would be “manifestly arbitrary, unconstitutional, grossly disproportionate, unjust and totally unwarranted”.“The Petitioners’ maximum penalty exposure, i.e., at the rate of 10% of the Petitioners’ average global turnover derived from all of the Petitioners’ products/ services globally for FY 2022 to FY 2024 could be approx. USD 38 billion. It is respectfully submitted that any retrospective imposition of penalty on the Petitioners in terms of the Impugned Amended Penalty Provisions by the Respondent Commission would be manifestly arbitrary, irrational and grossly disproportionate, rendering the same to be ultra vires the provisions of Article 14 and Article 21 of the Constitution of India.".In a writ petition, Apple has challenged Section 27(b) of the Competition Act, 2002, as well as the Competition Commission of India (Determination of Turnover or Income) Regulations, 2024 and the Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024. These provisions allow CCI to penalise an enterprise or a group of enterprises up to 10% of the average of its global turnover or income of the last three years for abuse of dominant position or for entering into anti-competitive agreements. Apple has also challenged the March 3, 2025, order of the CCI asking the firm to furnish its financial statements for the financial years 2022, 2023 and 2024. .The matter was listed for hearing before a Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela. However, the case could not be taken up and is now likely to be heard on December 1. .The company has argued that the effect of the amended penalty provision is that the turnover generated from all products or services of the enterprise can be aggregated for the computation of the penalty, instead of the turnover generated from the affected relevant product or services. It states these penalty provisions are “patently unconstitutional and an impermissible legislative abrogation” as they purport to alter the scope of the penalty provision by way of an ‘explanation’, but in effect, expand the limits of the main section.The petition contends that the law violates the Supreme Court’s 2017 judgment in the Excel Crop case, which interpreted that the term turnover meant “turnover generated from the particular infringing good/service related to the alleged contravention by an enterprise (and not the total turnover from all products and services of such enterprise)”.“The Impugned Amended Penalty Provisions purport to reverse the letter and spirit of the Excel Crop Judgment without removing the basis for the judgment, which is the only permissible manner of altering the effect of the judgment,” the plea says. Further, it says that the amendments carried out came into effect in March 2024 and should have a prospective application. .Before the High Court, Apple will be represented by a team from J Sagar Associates led by Partner Nisha Kaur Oberoi..Follow Bar and Bench channel on WhatsAppDownload the Bar and Bench Mobile app for instant access to the latest legal news.