Apple Challenges India Antitrust Penalty Law, Faces USD 38 Billion Fine Risk

Apple is contesting India's antitrust penalty law, which could potentially result in a fine of up to USD 38 billion for the company. A court filing at the Delhi High Court details Apple's challenge to the new legislation.

Credit: APPLE

The dispute marks the first challenge against India's antitrust penalty law, which allows the Competition Commission of India (CCI) to calculate penalties based on a company's global turnover. This law, enacted in 2024, allows the Competition Commission of India (CCI) to calculate penalties based on a company's global turnover.

Since 2022, Tinder-owner Match and various Indian startups have been engaged in an antitrust battle with Apple before the CCI. Investigators issued a report in 2024, alleging Apple engaged in abusive conduct concerning the app market of its iPhone Operating System, iOS.

Apple has denied all allegations of wrongdoing. The CCI has not yet reached a final decision in the case, which includes any potential penalty.

The technology company is requesting judges to declare the 2024 law illegal. This law permits the CCI to use global turnover, rather than solely Indian turnover, when determining fines.

According to Apple's 545-page court filing, its maximum penalty exposure could be approximately USD 38 billion. This figure represents 10% of its average global turnover from all services globally for three fiscal years ending in 2024.

Apple argued in the filing that such a penalty based on global turnover would be "manifestly arbitrary, unconstitutional, grossly disproportionate, unjust." The court document remains private.

Organisations also face potential fines of as much as 10% of their global turnover for antitrust violations within the European Union.

Apple cited the CCI's application of the new rules previously in an unrelated case. In that instance, the rules were applied retrospectively to a violation by an affected company a decade earlier.

Credit: APPLE

Apple asserted it had no choice but to bring this constitutional challenge now. This action aims to prevent the retrospective imposition of a penalty against the company.

The company has consistently maintained its position as a small player in the Indian market compared to Google's Android, which holds a dominant share. However, Apple's smartphone base in India has quadrupled over the past five years, according to Counterpoint Research.

The CCI found in 2024 that Apple was not allowing any third-party payment processor to offer services for in-app purchases. These purchases could incur a fee of up to 30%.

In a private submission to the CCI, Apple opponent Match previously argued that a fine based on global turnover could act as a significant deterrent against recidivism.

In its court filing, Apple contended that India should only impose a penalty based on the Indian revenue of the specific unit violating antitrust law. The company provided an example of a toy seller also running a stationery business.

Apple stated it would be arbitrary and disproportionate to levy a penalty on the stationery business's total turnover of 20,000 rupees when the contravention related only to the toy business earning 100 rupees.

Apple's plea is scheduled for a hearing on December 3. Competition Law Partner Gautam Shahi of Indian law firm Dua Associates commented that the amended law clearly states the CCI can consider global turnover.

Shahi added that it would be difficult to convince the court to interfere with clearly established legislative policy.

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• Apple is challenging India's 2024 antitrust penalty law at the Delhi High Court.

• The law allows the Competition Commission of India (CCI) to calculate penalties based on a company's global turnover.

• Apple could face a fine of up to USD 38 billion, representing 10% of its average global turnover derived from all of its services globally for three fiscal years to 2024.

Source: REUTERS