Apple challenges India’s new antitrust penalty law to escape $38 billion fine

Apple is reportedly challenging the legality of India’s revised antitrust sanctions law in the Delhi High Court, arguing that the new rules could expose the company to a potential fine of up to $38 billion. This represents the first constitutional challenge to the provision that allows India’s Competition Commission to calculate penalties based on a company’s global turnover, rather than its Indian revenue. Apple’s court documents, totaling 545 pages, have not been released to the public.

The 2024 legislative changes allow the CCI to impose fines using global sales volume as a basis, shifting from the previous practice of focusing on Indian revenue. Apple asserts that this approach is “arbitrary and disproportionate,” as it could result in much greater penalties for multinational companies, as reported by Reuters. The company’s “maximum sanctions exposure” of 10 percent of average global turnover for the three fiscal years to 2024 is estimated at $38 billion.

The report added that Apple says it “has no choice but to file this constitutional challenge now to avoid a retroactive penalty against them,” expressing concern about the possibility of applying the amended law to alleged violations before its enactment. The company cited a case dated November 10 in which the Chamber of Commerce and Industry used the law retrospectively in an unrelated matter to highlight the risks it faces.

Apple maintains that it is a smaller player in the Indian market compared to Android, although Counterpoint Research notes that Apple’s smartphone base has quadrupled in the country over the past five years. The company argues that fines should only be linked to revenue generated by the specific business unit found in violation, using the example of a stationery and toy company to illustrate the disproportionate impact of global penalties based on turnover.

The CCI previously found that Apple had blocked third-party payment processors from facilitating in-app purchases, with fees reaching 30 per cent. Apple’s competitor Match said that a fine based on global sales volume could “serve as a significant deterrent against recidivism.” However, Apple called this punishment “manifestly arbitrary, unconstitutional, grossly disproportionate, and unfair.”

Apple’s petition seeks a judicial declaration that the amended law is illegal. The case is scheduled for a hearing on December 3. Apple and CCI have not commented publicly on the proceedings.

In the broader context, the European Union also imposes fines of up to 10% of global turnover for antitrust violations. The measures in India will be closely monitored by multinational companies operating in the country.