Apple Contests India's $38 Billion Global Turnover Antitrust Penalty Framework in Landmark Legal Challenge

Apple is contesting India's new antitrust penalty legislation that could potentially subject the company to a fine of up to $38 billion, according to a Delhi High Court filing reviewed by Reuters.

This represents the first legal challenge to India's antitrust penalty framework, which was amended last year to allow the Competition Commission of India (CCI) to calculate penalties based on global turnover for companies found abusing their market dominance.

Since 2022, Apple has been engaged in an antitrust dispute with Match Group (owner of Tinder) and several Indian startups before the CCI. Investigators issued a report last year concluding that Apple had engaged in "abusive conduct" in the apps marketplace of its iOS platform.

While Apple has consistently denied any wrongdoing, the CCI has yet to deliver its final ruling or determine any potential penalties in the case.

In its 545-page court filing, which is not publicly available, Apple is seeking a judicial declaration that the 2024 law permitting the CCI to use global rather than just Indian turnover for penalty calculations is illegal.

The company stated that its "maximum penalty exposure" could reach approximately $38 billion, calculated at 10% of its average global turnover from all services for the three fiscal years through 2024.

Apple argued that such a "penalty based on global turnover...would be manifestly arbitrary, unconstitutional, grossly disproportionate, unjust."

Neither Apple nor the CCI responded to requests for comment on the matter.

It's worth noting that in the European Union, companies also face potential fines of up to 10% of global turnover for antitrust violations.

Apple cited the CCI's first application of these new rules on November 10 in an unrelated case, where they were retrospectively applied to a violation that occurred a decade earlier.

The tech giant claimed it has "no choice but to bring this constitutional challenge now to avoid retrospective imposition of penalty against them."

While Apple has consistently maintained it is a minor player compared to Google's Android in the Indian market, Counterpoint Research indicates that Apple's smartphone presence in India has quadrupled over the past five years.

Last year, the CCI found that Apple was prohibiting third-party payment processors from providing services for in-app purchases, where Apple's fee could reach up to 30%.

In a private submission to the CCI reported by Reuters in October, Apple's opponent Match 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 penalties based on the Indian revenue of the specific business unit violating antitrust law, illustrating with an example of a toy seller also running a stationery business.

Apple argued it would be arbitrary and disproportionate to penalize a stationery business's total turnover of 20,000 rupees when the violation relates only to a toy business earning 100 rupees.

Apple's petition is scheduled for hearing on December 3.

Gautam Shahi, a competition law partner at Indian law firm Dua Associates, observed: "Amended law is clear that CCI can consider global turnover. It will be difficult to convince the court to interfere with clearly laid down legislative policy."