Tech giant Apple told the Delhi High Court that it should not be compelled to participate in an “unconstitutional penalty regime” under the Competition Act. The company challenged CCI’s power to impose penalties based on global turnover, calling it arbitrary and disproportionate.
Tech giant Apple Inc has approached the Delhi High Court, arguing that it should not be forced to face what it has described as an “unconstitutional penalty regime” under Indian competition law. The company is currently under investigation by the Competition Commission of India (CCI) over allegations that it abused its dominant position through its App Store policies.
In a rejoinder filed before the High Court, Apple strongly objected to recent amendments to the Competition Act that allow the CCI to impose penalties based on a company’s global turnover, instead of limiting fines to revenue earned from the specific product or service under investigation.
Apple told the court that being asked to wait for a penalty to be imposed and then challenge it before the appellate authority would already cause irreversible constitutional damage.
The company submitted that permitting it to approach the appellate forum, namely the National Company Law Appellate Tribunal, only after any such “unjust” penalty is imposed would mean that “constitutional harm” had already occurred. Apple emphasised that once such damage is done, later remedies would be ineffective.
Apple also clarified that its legal challenge is not meant to delay or block the ongoing proceedings before the CCI.
According to the company, its objection is limited to the legality of the penalty framework itself. It stated that when the “source” of power is under constitutional challenge, it cannot be forced to first suffer the consequences of that power.
Rejecting the regulator’s claim that it was trying to stall the probe, Apple told the court that the record clearly shows its “continual co-operation and timely engagement” throughout the investigation process.
In December, Apple had formally challenged the amendment to the Competition Act, 2002, which now allows penalties to be calculated on the basis of a company’s global turnover. Along with this, the company also questioned the CCI’s direction asking it to submit audited financial statements for several previous years.
In its rejoinder, Apple said it “embraced” competition, explaining that competition pushes companies to deliver better and more innovative products and services for users. It also maintained that it has always acted in compliance with all applicable laws.
The company further highlighted the serious financial impact of the amended law, stating that its “maximum penalty exposure”, under the new regime, could be around USD 38 billion.
Apple described this figure as “manifestly arbitrary, irrational and grossly disproportionate”, and argued that such a penalty framework is ultra vires Articles 14 and 21 of the Constitution of India.
The rejoinder clearly stated:
“(While the company) believe(s) that there is no basis for the imposition of any penalty against them. However, the petitioners have no choice but to bring this constitutional challenge now to avoid the entirely unjust outcome of the retrospective imposition of penalty against them based on global turnover derived from all products/ services.”
Apple also warned that delaying judicial scrutiny would defeat the purpose of constitutional protection. It said:
“Forcing the petitioners to wait until the proceedings are completed under an unconstitutional penalty regime, and only thereafter permitting them to approach the appellate forum after making a significant pre-deposit, would mean that the constitutional harm would already be complete before any effective judicial review is available.”
In its petition, Apple explained that the amended penalty provisions allow the CCI to aggregate turnover from all products and services of a company while calculating penalties, instead of limiting the calculation to the turnover from the “relevant product or services” involved in the alleged violation. According to Apple, this marks a drastic shift from earlier principles of proportionality in competition law enforcement.
The company further pointed out that after the amendment, the global turnover of an enterprise — including revenue earned outside India and beyond the jurisdiction of the CCI — could be taken into account while imposing penalties. Apple argued that this approach unfairly exposes multinational companies to massive fines disconnected from the actual alleged conduct in the Indian market.
The plea noted that the amended provision empowers the CCI to impose fines of up to 10 per cent of a company’s average turnover for the preceding three financial years in cases of abuse of dominance or anti-competitive conduct. Apple stressed that when this provision is applied to its worldwide business, the consequences become extreme and unreasonable.
Finally, Apple reiterated that its potential exposure — calculated as 10 per cent of its average global turnover from all products and services worldwide for the financial years 2022 to 2024 — could reach approximately USD 38 billion. According to the company, such a penalty is not only excessive but also constitutionally unsustainable, warranting immediate judicial intervention.
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