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From “Relevant” to “Global” Turnover: Analyzing Penalty Under the Competition (Amendment) Act, 2023

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 ABSTRACT

The Competition (Amendment) Act of 2023 marks a important shift in penalty calculations, transitioning from a focus on “relevant” turnover to a broader consideration of “global” turnover. This article delves into the implications of this transition, analyzing its impact on businesses, the grounds behind the change, and its legal and regulatory implications. By examining international perspectives, case studies, and the Act’s effectiveness, this article provides valuable insights into the evolving landscape of competition law and enforcement. From strategic adaptations for businesses to broader implications for global competition policy, this analysis offers a comprehensive understanding of the shift from “relevant” to “global” turnover in penalty consideration under the Competition Act.

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INTRODUCTION

The Competition (Amendment) Act of 2023 represents a significant milestone in the evolution of competition law and enforcement. Among its many amendments, perhaps none are more consequential than the shift in the calculation of penalties—from a traditional dependence on “relevant” turnover to a broader consideration of “global” turnover. This transition has profound implications for businesses, regulators, and the broader landscape of competition policy. The Competition Commission of Indian, CCI, now has the power to penalise an enterprise based on a global turnover derived from all products and services, following to the Amendment Act.

The shift from “relevant” to “global” turnover in penalty calculations represents a significant departure in competition law and enforcement. Previously, penalties were based solely on turnover directly related to the infringing conduct, potentially resulting in underestimation of the economic impact of anti-competitive behavior.  The settled position in law, as determined in the landmark judgement of  Excel Crop Care Ltd. v. CCI[1], in 2017, considered the scope of penalty from the lens of principles of equity, rationality, and proportionality. The introduction of “global” turnover considers the entity’s overall economic power and reach, ensuring penalties are more proportionate and reflective of market influence. This shift acknowledges the interconnected nature of modern markets, where anti-competitive practices often transcend national boundaries. While presenting challenges for businesses with global operations, such as increased scrutiny and potentially higher penalties, it also offers greater clarity and predictability in compliance efforts. Ultimately, the transition to “global” turnover aims to promote a more harmonized and effective approach to competition enforcement, promoting fairness and integrity in competitive markets.

 Understanding the Competition (Amendment) Act, 2023 :

Prior to the 2023 amendment, the Competition Commission of India CCI imposed a fine based penalty on the ”relevant turnover” of the revenue generated infringing products and services. By avoiding absurdity and irrationality, this has been done in order to interpret the legislation. The Competition Commission of India (CCI) had the authority to charge penalties up to 10% of the average turnover from the previous three financial years.

The Act included provisions aimed at strengthening consumer protection measures, such as measures to address unfair trade practices, misleading advertising, or deceptive pricing strategies. The shift offers greater clarity and predictability in compliance efforts, as businesses can anticipate penalties based on their global turnover rather than specific transactions or activities.

LEGAL FRAMEWORK

The Competition (Amendment) Act, 2023, introduced several key provisions to facilitate the transition from “relevant” to “global” turnover in penalty calculation. One notable amendment is the modification of Section 27 of the Competition Act, 2002, which deals with the determination of penalties for anti-competitive conduct. The amended Section 27 now explicitly mandates the consideration of an entity’s global turnover in determining the quantum of penalties imposed by the Competition Commission of India (CCI).

Additionally, the amended legislation provides clarity on the definition of “global turnover” and outlines the methodology for its calculation. Section 2(o) of the Competition Act, 2002, now defines “global turnover” as the total revenue generated by an entity from all its business activities worldwide, including revenue from subsidiaries, affiliates, and other related entities. This definition encompasses revenue from product sales, service contracts, licensing agreements, royalties, and other income streams derived from business operations.

CASE LAWS:

In the case of Competition Commission of India v. Google India Pvt. Ltd[2], Google India being found guilty of anti-competitive conduct by the CCI. The Commission found that Google had infringed a number of provisions in Article 4(2) of the Act. Therefore, for failing to comply with Section 4 of the Act, a fine amounting to 1337.76 billion rupees has been imposed on Google. The Commission imposed substantial penalties on Google India based on its global turnover, reflecting the severity of the company’s violations and its economic power in the digital advertising market in India.

The primary issue in this case revolved around Google India’s alleged abuse of its dominant position in the digital advertising market in India and its restrictive practices regarding third-party advertising platforms constituted anti-competitive conduct in violation of India’s competition laws.

The Google India case serves as a landmark example of the application of the transition from “relevant” to “global” turnover penalties under the Competition (Amendment) Act, 2023 in India. It highlights the challenges faced by multinational corporations operating in India in adapting to the new penalty calculation methodology and underscores the importance of effective competition law enforcement in safeguarding fair competition and consumer welfare in the digital economy.

CRITICAL ANALYSIS

The transition to “global” turnover has significant implications for businesses. Entities with substantial global operations may face keen analysis and potentially higher penalties under the new calculation methodology. However, the shift also offers greater clarity and predictability in compliance efforts, enabling businesses to adopt more robust risk management strategies. Calculating penalties based on “global” turnover introduces complexity and compliance burdens for businesses, particularly those with multinational operations. Determining which components of global turnover are relevant and accurately assessing their contribution to the infringing conduct can be challenging and resource-intensive. This complexity may disproportionately affect smaller businesses with limited resources, potentially creating barriers to market entry and competition. Transparency and predictability are essential elements of an effective competition law regime. Businesses and stakeholders need clarity on how penalties are calculated and applied to ensure compliance

The evolution to “global” turnover aligns with international trends in competition law enforcement. Many jurisdictions are adopting similar approaches to address the challenges of regulating global markets and combating anti-competitive behavior across borders.

CONCLUSION

The transition from “relevant” to “global” turnover in penalty calculation under the Competition (Amendment) Act, 2023 represents a significant evolution in competition law and enforcement. By incorporating an entity’s global turnover into the penalty assessment process, the Act aims to promote fairness, transparency, and effectiveness in competition enforcement. However, the success of this transition depends on robust enforcement mechanisms, clear regulatory guidance, and effective international cooperation. As businesses and regulators navigate the complexities of the new penalty calculation methodology, a nuanced understanding of its implications is essential for promoting competition and consumer welfare in the global marketplace.

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[1] https://cci.gov.in/images/antitrustorder/en/0220201652426478.

[2] https://indiankanoon.org/doc/54000789

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Boyfriend’s Day 2023: Legality of Live-in Relationships in India

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“Living with the partner has no defined meaning or scope. The phrase “live-in relationship” refers to a living situation in which an unmarried couple lives together in a long-term relationship that mimics marriage. To the outside world, a pair portrays themselves as a couple. ‘Live in a relationship’ refers to a relationship in which the parties are not married in the sense of a legal marriage solemnization. Nonetheless, the parties live as a couple, demonstrating to the rest of the world that their relationship is stable and consistent.

 A ‘common law marriage’ is a term used to describe such a partnership. Marriage is a wonderful feeling that can unite people of every skin tone, ethnicity, socioeconomic status, or sexual orientation. Yet, having more time altogether, and perhaps even moving in together, can help couples strengthen and discover their love for one another. The terms “marriage” and “live-in relation” become relevant in this context.

It is generally believed by society and the law that married spouses should live together. Social acceptance has its own allure and gratification. Young folks nowadays can stay with their spouses even without the constraints of arranged weddings because of the rise of live-in relationships. There are benefits and drawbacks to all these societally created ways of expressing and experiencing love and romance.

 Live-in Relationships and the Law

“There is no explicit legislation in India that addresses live-in partnerships. The Hindu 

Marriage Act of 1955 provides legitimacy, succession, and property rights to children born in ‘void’ and ‘voidable’ marriages. The 2005 Protection of Women from Domestic Violence Act also provides some protection to the wounded parties from any sort of atrocity performed against females in “relationships like marriage”.”  

“A woman in a live-in relationship is entitled to the same legal rights as a wife if she has been in such a relationship for a reasonable period. This does not make an invalid marriage valid or provide legal recognition to bigamous marriages. While giving support to the woman with whom he is in a bigamous/adulterous relationship, a man may face allegations of adultery and bigamy.”  

The Treatment of Live-in Relationships by Indian Judges

“The Indian judiciary does not explicitly promote or condemn such live-in relationships. In each case, the judiciary simply dispenses justice by the law. The primary goal of the judiciary is to prevent a miscarriage of justice. The judiciary analyses cultural norms and constitutional principles while deciding cases. The meaning of the term “like marriage” is not immediately clear, and the PWEDVA is already arguing about it.”  

“The petitioner in Aruna Parmod Shah Vs UOI[1] challenged the Act’s validity, claiming that it discriminates against men and that Section 2(f) of the Act’s definition of “domestic relationship” is unconstitutional. In the second instance, the petitioner argued that equating “marriage-like relationships” with “married” status deprives the lawfully married wife of her rights. The Delhi High Court dismissed both challenges to the Act’s constitutionality. In answer to the second charge, the court ruled that a wife, as well as a woman living with a man as his “common law” wife or even a mistress, should be regarded similarly. In this decision, the judges defined “a connection resembling marriage” to encompass both a “common law marriage” and a relationship with a “mistress,” without going into detail about the legal and social consequences of these terms.”  

The Allahabad High Court held in Payal Katara Vs Superintendent Nari and Others[2] that anybody above the age of 21 has the right to travel and that anyone, man, or woman, can live together if they like. In the case of Patel and others, the Supreme Court declared that a live-in relationship between two adults who are not married is not illegal. The Supreme Court ruled in Lata Singh Vs State of U.P. & Anr[3] that live-in relationships are only permitted between married important individuals of different genders.”  

“The Apex Court ruled in the Radhika Vs State of M.P.[4] that if a man and woman have been living together for a long time, they would be regarded married and their child will be declared genuine. In Abhijit Bhikaseth Auto Vs State of Maharashtra and Others[5], the Supreme Court of India declared on September 16, 2009, that a woman does not have to establish her marriage to be entitled to maintenance under section 125 of the Cr.P.C. Under Section 125 of the Criminal Procedure Code, a woman in a live-in relationship may be entitled to assistance.”  

“The Supreme Court awarded the live-in partner the status of the wife in Chellamma Vs Tillamma7. Katju J. and Mishra J. both stated that a man and a woman can live together even if they are not married in their opinion. Although society considers this immoral, it is not illegal. It is important to distinguish between law and morality.

The court went even further, declaring that children born to such a parent are legitimate and valid. The heirs of such a person can only inherit the property of his or her parents. This is because such offspring are not granted coparcenary rights to their parents’ inherited Hindu undivided family property.

During S.P.S. Balasubramanyam v. Suruttayan, the Supreme Court ruled that children born to unmarried parents in a common-law relationship are entitled to legal protection (1993). The Supreme Court has ruled that under Article 14 of both the Indian Evidence Act, of 1872, a probability of marriage exists when a man and a woman share a home and live together for a prolonged period. This means their offspring can officially be a part of the family tree and perhaps get an inheritance. 

The Apex Court ruled in Bharatha Matha v. Vijaya Renganathan (2010) that babies living with cohabiting couples are entitled to a share of their parent’s assets. The Apex Court determined that, if the connection lasts long enough, a kid born in such a situation may not be regarded as an illegitimate immigrant. 

They are the legal proprietors of their parents’ possessions. One benefit of the ruling is that it will not only deter couples from hastily divorcing, but it will also encourage couples to have children, who were previously anxious about their children’s future if they divorced. In Madan Mohan Singh & Ors. Vs Rajni Kant & Anr[6], the court held that a long-term live-in relationship cannot be deemed a “walk in and walk out” relationship and that the parties are presumed to be married.”  

India’s highest court has ruled that a live-in relationship is not a crime in the case of D. Velusamy Vs D. Patchaiammal[7]. The petition alleges that the appellant moved out of the respondent’s father’s house after two or three years and began living in his own country, but that he continued to visit the respondent regularly. According to the lower Family Court, the appellant was married to the respondent, not Lakshmi. The High Court and the Family Court Judge in Coimbatore’s rulings were overruled, and the matter was remanded to be considered again by the law.”  

“According to the judges in the case, the word marriage is not specifically defined in the PWDVA, 2005. The judges decided that a “relationship like marriage“ is equal to common- law marriage, tying it to the prevalent “live-in” partnerships in the west. If a man had a ‘keep,’ whom he financially supports and hires solely for sexual purposes and/or as a servant, it would not be a marriage-like arrangement, the judges said. A ‘domestic relationship’ is more than merely hanging around on weekends or having a one-night stand. The Supreme Court’s ruling would exclude many ladies who have had a live-in relationship from benefiting from the 2005 Act.”  

By stating this, the judges appear to be implying that the term “live in relationship” has a far broader scope than “relationship like marriage”. In 2010, the New Jersey State Assembly passed a law requiring the parties to have a formal agreement before asserting palimony. Palimony is a phrase used in the United States to denote the provision of maintenance to a woman who has lived with a man for a long time without marrying him and then been abandoned by him. In Alok Kumar Vs State & Anr[8], the complainant sought to have his First Information Report (FIR) dismissed.”  

Suggestions 

  • “Legal system does not want to recognize all live-in partnerships as marriages. Only solid and sufficiently long-term relationships between the parties qualify for protection under the 2005 Act. “
  • “Simultaneously, it is not hostile to new emerging partnerships such as live-in couples, which are particularly common in cities. The judge should be pragmatic rather than dogmatic when dealing with such issues. “
  • “In the absence of unambiguous social and legal categorization of non-marital relationships, the field has been left wide open.”
  • “Even the highest court authorities preach on the need to separate a “relation like marriage” from a “servant” or a “keep” and a “one night stand”. It should also be noted that none of these legislative measures are intended to encompass the entire spectrum of live-in partnerships.”

Conclusion

“It is encouraging for the country that, rather than ignoring the problem, it has opted to take steps to safeguard women living in shared households, even if they are not married. Given India’s social and cultural context, enacting legislation to govern live-in relationships would be unwise. Most individuals choose this option to escape the burden and commitments that come with a long-term commitment.

 In the event of a dispute on whether to continue the partnership, a partner is free to come and go as he pleases without the tedium and complication of divorce processes. That is how some people prefer it. It is not the job of the government to regulate and monitor human lives and decisions on such a minute scale. “  

“It is a person’s choice whether to marry or get into a live-in relationship. I believe that the existing system in the United Kingdom and other nations should be studied. Couples should be able to sign cohabitation contracts outlining their rights and responsibilities if they so want.”  

“Even then, the rights and responsibilities will be limited in comparison to those granted in marriage. Another important aspect to consider is that, even under the Domestic Violence Act of 2005, the man in a live-in relationship has no legal rights. This part of Indian legislation must also be investigated.”  

“In India’s current marriage laws, common-law marriages, or partnerships in the form of marriage must be recognized and provided for. Wherever there is a need to change the legislation to give rights and responsibilities for such a partnership, it should be done. There is a need to restructure the legal system to meet societal changes, but there is no need to establish new and distinct legislation to do so.”  

References

  • Landmark Judgments- Live-In Relationship: SC’s Judgments Concerning the Legal Standing   Of                Live-In      Relationships      lawyersclubindia, https://www.lawyersclubindia.com/articles/landmark-judgments-live-in-relationshipsc-s-judgments-concerning-the-legal-standing-of-live-in-relationships-14068.
  • Important Judgements on Live-In Relationship in India Law Trend, https://lawtrend.in/important-judgements-on-live-in-relationship-in-india/ Landmark Supreme Court judgments concerning the legal standing of live-in relationships
  • Are Live-in Relationships Legal in India? https://www.latestlaws.com/articles/arelivein-relationships-legal-in-india/

[1] Aruna Parmod Shah Vs UOI 2008(102) DRJ543. 

[2] Payal Katara Vs Superintendent Nari and Others AIR 2001 All 254. 

[3] Lata Singh Vs State of U.P. & Anr AIR 2006 SC 2522. 

[4] Radhika Vs State of M.P. AIR 1966 MP 134, (1969) ILLJ 623 MP. 

[5] Abhijit Bhikaseth Auto Vs State Of Maharashtra and Others AIR 2009 (NOC) 808 (Bom.).  7 Chellamma Vs Tillamma AIR 2009 SC 112. 

[6] Madan Mohan Singh & Ors. Vs Rajni Kant & Anr AIR 1992 SC 756 

[7] D. Velusamy Vs D. Patchaiammal 2010 10 SCC 469 

[8] Alok Kumar Vs State & Anr 1968 AIR 453, 1968 SCR (1) 813  

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How India’s Banking and Finance Laws Are Set to Change in 2023

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For several years now, banking, investing, and financial management practices have been evolving swiftly throughout India. This has primarily been due to the dual advancement of fintech and internet connectivity. It has increasingly become the norm for Indian consumers and companies alike to conduct financial transactions and related business via digital means. This has led to a more dynamic and inclusive Indian economy, but it has also introduced fresh concerns regarding the need for more financial regulations and protections. Accordingly, earlier this year, Finance Minister Nirmala Sitharaman proposed a series of regulatory amendments for the 2023-24 Union Budget.

The proposed amendments concern the Banking Regulation Act, the Banking Companies Act, and the Reserve Bank of India Act. The collective goals behind them are to “improve bank governance and enhance investors’ protection,” as one write-up summarised.

Now, it is worth noting that similar improvements have been suggested and implemented several times in recent years. On an institutional level, for instance, a wide-ranging banking regulation bill was passed in 2020 to improve the performance of cooperative banks under the supervision of the central bank. And regarding individual Indian consumers who are increasingly active in the fintech world, recent privacy rights protections have made it safer to operate in digital spheres without risking personal data. Where the 2023-24 Union Budget is concerned, however, Minister Sitharaman and the Indian government have suggested more sweeping changes designed to fortify the Indian financial system for ongoing fintech expansion.

Altogether, the proposed amendments are quite comprehensive, suggesting small but significant changes to various aspects of Indian banking and financial law. Here, we will endeavour to examine some of the most significant proposals and how they may change things for consumers throughout India.

Setting Up a National Financial Information Registry

One of the boldest initiatives attached to the Union Budget amendments was the suggested establishment of a National Financial Information Registry or NFIR. Described as a more advanced version of the existing entity of CIBIL, the NFIR would be designed to support more comprehensive credit information checks. CIBIL already helps banks, government entities, and lenders view information related to credit before issuing loans to borrowers. The NFIR, however, would also reveal non-credit information amounting to “all financial information” relevant to a borrower.

There are numerous potential ramifications of such a registry, but two in particular have to do with the ever-evolving banking and financial ecosystem in India. The first is that individuals or companies with questionable credit but responsible financial habits may be better able to secure loans for investment. The second is that lenders will have access to more insight into a financial environment that is increasingly complex.

Simplifying Investor Education and Reclamation

One of the biggest consequences of an evolving fintech economy is a significant increase in online trading activity. As digital financial management has been normalised, individuals throughout India have gained access to mobile apps that provide them with access to international stock markets. These apps offer favourable market conditions, analytical assistance, up-to-the-moment charts, and rapid transaction processing. They have, as it is commonly put, democratised trading. At the same time, however, growing access to market investment has led to calls for more regulations and protections for investors.

One measure within the proposed banking and financial policy amendments that appears to be aimed at this goal is that of simplifying investor education and share reclamation. The Indian government established something called the Investor Education and Protection Fund Authority (IEPFA) back in 2016. It is designed to spread awareness among investors, as well as to issue refunds in relation to unclaimed dividends and other circumstances.

The newly proposed amendments include an effort to build up an IT portal related to the IEPFA in order to simplify its use. This, in theory, would help to protect the growing population of freely trading Indian investors.

Supporting Fintech Development

Ongoing support for fintech development was also a key aspect of Minister Sitharaman’s initial reveal of the proposed banking and finance amendments. Per the Ministry of Finance, Sitharaman commented specifically on fintech services and noted that they have been facilitated by India’s “digital public infrastructure.” She cited entities such as India Stack and UPI but also “proposed to enable more fintech innovative services” moving forward.

Sitharaman also introduced proposals for “up to 100 labs” to be used for the development of 5G applications. These would, in turn, bring about a range of new digital opportunities across industries, as well as create new employment in the process.

Altogether, these aspects of the proposed amendments will all work to support the ongoing growth and spread of fintech practices.

Supporting Digital Payment Infrastructure

On top of general support for fintech expansion, the Ministry of Finance’s recap of Sitharaman’s proposals noted that there is also language in place regarding digital payment infrastructure. Sitharaman cited data indicating that the number of digital payments had increased by 76% in 2022 alone. During the same year, the cumulative value of those payments had increased even more sharply, by 91%. Perhaps more than any other data, these numbers speak to the comfort level the Indian public has reached with making digital financial transactions.

Because of the increases in digital payment activity and value, Sitharaman made sure that her proposals included “continuation of fiscal support for this digital public infrastructure” in 2023-24. By all appearances, the government will continue, if not expand, its financial backing of digital payment infrastructure expansion.

These specific ideas and initiatives do not cover the entire scope of the banking and financial amendments that have been proposed. They do, however, speak to the nature of these amendments. Through initiatives like the ones discussed above, the Ministry of Finance is attempting to both support fintech expansion and make related practices safe and efficient. Digital financial practices offer a world of convenience and opportunity, but it is important that financial institutions, companies, investors, and consumers alike feel safe and confident taking advantage of those benefits. The proposed amendments represent an effort to meet that need.

Thank you for reading, and please return to the site for more information concerning legal news in India!

AUTHOR BIO:
Billy Ann Page is a freelance writer and blog contributor. Her work covers business, finance, technology, and an occasional foray into entertainment coverage. Billy Ann spends much of her time as a nomad, travelling the world to gain a fresh perspective.

References:

https://timesofindia.indiatimes.com/business/budget/govt-proposes-changes-in-banking-regulation-act-other-laws-to-enhance-investors-protection/articleshow/97533273.cms

https://primelegal.in/2023/09/24/the-impact-of-the-digital-personal-data-protection-act-2023-on-privacy-rights-in-india/

https://www.cnbctv18.com/finance/national-financial-information-registry-requires-many-legislative-changes-expert-15960231.htm

https://www.exness.com/ar/

https://pib.gov.in/PressReleasePage.aspx?PRID=1895290

https://primelegal.in