The Competition Commission of India (CCI) has proposed a set of draft penalty regulations in response to recent amendments to the country’s competition law.
Under these proposed regulations, indirect taxes, trade discounts and intra-group sales would be excluded when calculating penalties for violations. This move comes after the government’s amendment earlier this year, aiming to enhance deterrence by imposing penalties based on the global turnover or income of entities found guilty of anti-competitive behaviour.
According to the draft regulations, penalties could amount to as much as 10% of the average sales or income during the three previous years for entities involved in anti-competitive agreements or abusing dominant positions.
The computation of the penalty would be based on global turnover or income, as per the CCI’s regulations. Notably, the proposed regulations specify that turnover or income should exclude indirect taxes, trade discounts and intra-group sales.
In cases where an enterprise is required to prepare consolidated financial statements under section 129 of the Companies Act, 2013, or any other law, turnover or income would be derived from these audited consolidated financial statements, as per CCI guidelines.
If audited financial statements are unavailable, turnover would be determined by the amount certified by the statutory auditor, supported by an affidavit from an authorised signatory of the enterprise. In instances where no statutory auditor is appointed, turnover would be certified by a chartered accountant, also supported by an affidavit from an authorised signatory.
