CCI notifies Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024

On 6-3-2024, the Competition Commission of India issued the Competition Commission of India (Determination of Monetary Penalty) Guidelines, 2024 to provide clarity on methodology, amount and factors to be considered while computing penalties.

These guidelines bring transparency in the method of calculating penalties. The provisions came into force on 6-3-2024.

Key Points: Guiding Factors for determining penalties:

1. Base for Determining Penalty for Enterprise under Section 27(b) of the Competition Act, 2002 (‘Act’):

• The Commission will decide the penalty that can be imposed on the enterprise on the following grounds which can be up to 30% of the average relevant turnover/ income of the enterprise:

• nature and gravity of the contravention;

• nature of the industry or sector affected because of the contravention and its implications on the economy;

• The penalty amount can be adjusted by the Commission on considering the following factors:

• duration of the contravention/ duration of involvement of the enterprise in contravention;

• role of the enterprise in orchestrating the contravening;

• recourse to coercive or retaliatory measures on other enterprises to participate in the contravention;

• repeated contravention;

• admission of contravention by the enterprise and the stage at which such admission is made;

• furnishing of cogent evidence by the enterprise establishing that its involvement in the contravention was substantially limited;

• extent of cooperation by the enterprise during the Director General’s investigation;

• voluntary termination of alleged anti-competitive conduct;

• implementation of a competition compliance programme within the enterprise.

• For calculating average relevant turnover or average income, the Commission will consider relevant turnover or income of 3 years preceding the year in which the Director General’s investigation report is received by the Commission.

• Turnover or income or relevant turnover or any other financial information should be based on audited financial statements of the enterprise. In case, the audited statement is not available, then the amount will be certified by the statutory auditor or the Chartered Accountant.

2. Base for Determining Penalty under Proviso to Section 27(b) of the Act:

Where the contravention pertains to an anti-competitive agreement entered into by a Cartel:

• Commission can impose penalty under Proviso to Section 27(b);

• Profit after tax will be considered for determining penalty;

3. Base for Determining Penalty for Persons liable under Section 48 of the Act:

• Maximum penalty that can be imposed penalized under Section 48(1) or 48(3), cannot be more than 10% of the average of Income for last 3 preceding financial years.

• Average income of any person will be calculated as per the gross income filed in Income Tax Returns.

4. Base for Determining Penalty under Section 43-A of the Act:

• Any enterprise/ individual can be penalized, in case of failure to give notice of combination extending up to 1% of the total turnover/ assets/ value of transaction, whichever is higher.

• Factors to determine amount of penalty:

• consummation or part consummation of combination without giving notice;

• violation of standstill obligations (substantive or procedural) prior to or after filing notice with the Commission;

• non-furnishing of information during an inquiry;

• voluntary filing of notice with the Commission;

• 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.

5. Base for Determining Penalty under Sections 42, 43, 44 and 45 of the Act:

• While calculating penalties under these sections, the Commission will have to consider minimum and maximum penalty that can imposed as per the respective provisions of the Act.

• Section 42- It can extend to Rs. 1 Lakh for each day during which such non-compliance occurs, subject to a maximum of Rs. 10 crores.

• Section 43- It can extend to rupees one lakh for each day during which such failure continues subject to a maximum of rupees one crore.

• Section 44- not be less than Rs. 50 Lakhs which may extend to Rs. 5 Crore.

• Section 45- It can extend to Rs. 1 crore.

• Factors to determine amount of penalty:

• extent and reasons of non-compliance or non-cooperation;

• nature of misleading information;

• knowledge of the person furnishing the information about the same being untrue or incomplete;

• repeated contravention.

Note: Reduction in Penalty amount with respect to Section 46 of the Act will be guided by the Competition Commission of India (Lesser Penalty) Regulations, 2024.