By Kavita Mistry 
It has been the legal tangle that has been making tech headlines in India, and has seen Apple go to court. India recently revamped its Antitrust laws. The changes made are not sitting well with many global brands, and one of the most notable of these is Apple. The Cupertino tech giant has been the first to challenge these new provisions – as per Reuters, Apple has approached the Delhi High Court to challenge India’s new antitrust penalty law. But what is the law, and why is Apple not too happy with it? And what repercussions will this face-off have on the Indian tech space? Let us try and break it down for you.
The Act in Question: Competition Act 2002
The Competition Act 2002 is a legislative law created to regulate competition in the Indian market. This Act replaced the old Monopolies and Restrictive Trade Practices Act (MRTP), which was formulated in 1969, in order to be able to regulate new-age and digital marketing practices better. The new Act was aimed at bringing in global competition standards and was based on economic principles that better suited the new Indian market climate.
The purpose of the Competition Act is to “prevent practices having adverse effect on competition, to promote and sustain competition in markets, to protect the interests of consumers and to ensure freedom of trade carried on by other participants in markets, in India, and for matters connected therewith or incidental thereto”. In simple English, it aimed to create a competitive market even while taking care of the interests of consumers and making sure of free and fair trade. The Act also established the Competition Commission of India (CCI) to ensure the laws put in place were followed and penalties duly applied, if and when they are violated.
The Act came with penalties for activities that could prevent healthy competition. Companies would be penalised for misusing their dominant position in the market, restricting production, rigging prices, limiting supply, blocking competition, etc. For instance, if a fast food chain is in a dominant position in the market and makes it difficult for a new business to set up shop by rigging prices of patties or buns, the CCI can step in and, if the fast food chain is found guilty, impose a penalty.
Penalties based on global turnover – the amendment that triggered the dispute
New amendments were made to the Act starting in 2023 to bring it in line with global standards, especially keeping in mind modern market practices. The most significant change was that, as per the amended law, if a company was found guilty of engaging in any anti-competitive schemes, it could be penalised based on its global turnover rather than its domestic one. This means that if, for example, the fast food chain that we discussed earlier is found guilty, the penalty imposed would be based on its turnover in all markets, rather than just in India. So if the chain was running outlets overseas, their turnover would also be taken into account, along with their fast-food business turnover.
Not only this, the turnover of any other business being conducted by the chain (say, clothing or merchandise) would also be included while calculating the global turnover. This is a marked departure from the past, where a company would have only been penalised based on its Indian business turnover, and that too limited to the product or market they were competing in. In simple terms, companies now face much heavier penalties for crossing the line in the Competition Act than they did before.
“Manifestly arbitrary, unconstitutional, grossly disproportionate, unjust,”: Apple’s objection
The amendment with its new penalty clause is understandably not just a problem for Apple but for many major tech corporations that enjoy a strong position (some bordering on a monopoly) in different segments of the Indian market, and also have a significant presence overseas. Apple has been the first company to challenge the new Act. And it is easy to understand why – it has the potential to hurt it exponentially more than its previous edition. If found guilty now, the fine imposed on Apple could be as high as USD 38 billion, which is 10 percent of Apple’s annual global turnover. This means Apple could be made to cough up to roughly Rs. 3.4 lakh crores, if found guilty of engaging in anti-competitive activities. That is more than half the size of the entire Indian smartphone market, which is expected to reach USD 50 billion by the end of the year. It is also more than a third of Apple’s net income for 2024-25 (USD 112 billion). A penalty of this level could hit the Cupertino company really hard.
Apple has reason to be worried about incurring a penalty, thanks to an ongoing antitrust battle between Apple and the parent company of Tinder, Match, and a few Indian startups. The dispute is over Apple’s high commission on in-app purchases. Match has argued that Apple’s up to 30 per cent fees on in-app purchases have an adverse effect on revenues and growth in the country. An investigator’s report issued last year also found Apple guilty of engaging in “abusive conduct” on its app market of the iPhone’s operating system, iOS. While Apple has denied any wrongdoing, the CCI is yet to issue its final findings, including its decision on the penalty.
After the amendment, the chance of incurring a maximum penalty is enough to make matters tough for the Cupertino tech giant. In its 545-page court filing, Apple has said that a “penalty based on global turnover” would be “manifestly arbitrary, unconstitutional, grossly disproportionate, unjust,” The company has asked the court to either strike down the “global turnover” amendment or restrict the penalties only to the “relevant turnover” in India, basically asking to be fined only over App Store’s turnover and not its overall turnover.
All this has happened at a time when Apple’s revenue both in the global and domestic markets is on the rise. The company’s annual global revenue is around USD 390-USD 400 billion. The brand also recorded an all-time high revenue in India back-to-back in the past 14 quarters, in spite of the decline in overall smartphone shipments.
So what could happen next?
A verdict in the matter, going either way, would set a revolutionary precedent and change the way the market in India operates. If the rules are upheld, it may make multinational brands operating in India rethink their presence in the country, given the prospect of gigantic fines. But this would be good for smaller players and even the consumers, as better policing would allow for fairer competitive practices and might lead to more affordable overall service and product prices.
If the court rules in Apple’s favour, it would be a huge win for global brands, and while it would reassure large MNCs in the country, it might encourage some brands to indulge in anti-competitive practices as the penalties would no longer be prohibitive. The court could, of course, find a middle ground between the two extremes, offering some kind of relief to Apple while keeping the amended laws in place.
As to what will actually happen, stay tuned. This case could lay the groundwork for how other brands and businesses operate in India.