Section 27 explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
Section 27 of the Competition Act, 2002 sets out what the Commission may order when, after an inquiry, it finds an agreement or the conduct of an enterprise in a dominant position to be in contravention of Section 3 or Section 4. The Competition (Amendment) Act, 2023 substitutes clause (b), the penalty clause: the ceiling now refers to turnover or income, the cartel proviso is re-stated, and two Explanations are added, including one that makes turnover mean global turnover.
As per the consolidated text of the Act published by the Competition Commission of India (amendments shown up to the Finance Act, 2017), read with the Competition (Amendment) Act, 2023 as published in the Gazette of India on 11 April 2023. After an inquiry the Commission may direct discontinuation, impose a penalty of not more than ten per cent. of the average of the turnover or income for the last three preceding financial years, direct modification of agreements and pass other orders. For a cartel, up to three times its profit for each year, or ten per cent. of its turnover or income for each year, whichever is higher. "Turnover" means global turnover from all products and services. The 2023 change applies from the date notified for that provision; the notification is not in the sources consulted and should be checked.
The opening words of Section 27
Section 27 says: "Where after inquiry the Commission finds that any agreement referred to in section 3 or action of an enterprise in a dominant position, is in contravention of section 3 or section 4, as the case may be, it may pass all or any of the following orders, namely". The word "may" means the Commission can choose some or all of the orders. The inquiry procedure that precedes it, including the show-cause notice added in 2023, is in our article on Section 26. If a notice has reached you at that stage, our legal dispute resolution team can help you plan the response.
Clause (a): discontinue and not re-enter
The Commission may "direct any enterprise or association of enterprises or person or association of persons, as the case may be, involved in such agreement, or abuse of dominant position, to discontinue and not to re-enter such agreement or discontinue such abuse of dominant position, as the case may be". The 2023 Act does not amend clause (a).
Clause (b) as substituted in 2023: the penalty
The 2023 Act (its Section 20) substitutes clause (b). As substituted:
"(b) impose such penalty, as it may deem fit which shall be not more than ten per cent. of the average of the turnover or income, as the case may be, for the last three preceding financial years, upon each of such person or enterprise which is a party to such agreement or has abused its dominant position:
Provided that in case any agreement referred to in section 3 has been entered into by a cartel, the Commission may impose upon each producer, seller, distributor, trader or service provider included in that cartel, a penalty of up to three times of its profit for each year of the continuance of such agreement or ten per cent. of its turnover or income, as the case may be, for each year of the continuance of such agreement, whichever is higher.
Explanation 1.—For the purposes of this clause, the expression 'turnover' or 'income', as the case may be, shall be determined in such manner as may be specified by regulations.
Explanation 2.—For the purposes of this clause, 'turnover' means global turnover derived from all the products and services by a person or an enterprise."
The consolidated text of clause (b) prints "ten percent" and "ten percent." in that form; we quote the 2023 text as "per cent." as printed in the gazette. The amending clause replaces the whole clause, including the cartel proviso that stood within it in the consolidated text, so the two can be compared directly.
| Point | Before (consolidated text) | After (2023 Act) |
|---|---|---|
| Base for the ceiling | "average of the turnover for the last three preceding financial years" | "average of the turnover or income, as the case may be, for the last three preceding financial years" |
| Ceiling | Not more than ten percent | Not more than ten per cent. |
| Who is penalised | "each of such person or enterprises which are parties to such agreements or abuse" | "each of such person or enterprise which is a party to such agreement or has abused its dominant position" |
| Cartel proviso | Up to three times of profit for each year of the continuance, or ten percent. of its turnover for each year, whichever is higher | Same structure; "turnover or income, as the case may be" |
| Meaning of turnover or income | Not defined here | Explanation 1: determined in such manner as may be specified by regulations |
| Global turnover | Not stated | Explanation 2: turnover means global turnover derived from all the products and services by a person or an enterprise |
Reading the ceiling
Two features of the printed words need care. First, the main ceiling is based on an average over the last three preceding financial years, whereas the cartel proviso is stated "for each year of the continuance" of the agreement and gives a choice between profit and turnover or income. The proviso takes the higher of the two. Second, Explanation 2 says turnover means global turnover derived from all the products and services, not only the turnover from the products or services in the market concerned. The text of the Act does not say anything further about how turnover or income is determined: that is left to regulations under Explanation 1, and our overview of the Determination of Turnover or Income Regulations, 2024 summarises them.
Example. Veer Plastics Ltd is found to have abused a dominant position. Its average turnover for the last three preceding financial years is rupees two hundred crore (an invented figure). The ceiling in clause (b) is ten per cent. of that average, so the penalty cannot exceed rupees twenty crore. Within the ceiling the Commission "may deem fit" the amount. How the amount is arrived at within that limit is the subject of the Commission's Monetary Penalty Guidelines, 2024, summarised in our article on how penalty is computed.
If the proceeding concerns your business, early attention to the turnover and income figures matters.
Clauses (c) and (f)
Clauses (c) and (f) of Section 27 are printed in the consolidated text as "Omitted by Competition (Amendment) Act, 2007". We do not describe what they said.
Clauses (d), (e) and (g)
- (d) direct that the agreements shall stand modified to the extent and in the manner as may be specified in the order by the Commission;
- (e) direct the enterprises concerned to abide by such other orders as the Commission may pass and comply with the directions, including payment of costs, if any;
- (g) pass such other order or issue such directions as it may deem fit.
The 2023 Act does not amend these clauses. Clause (g) is a general power in the Commission's words. The settlement and commitment routes in Sections 48A and 48B, covered in later articles of this series, are separate from these orders.
The group proviso
The last proviso, inserted by the 2007 amendment, says that while passing orders under Section 27, if the Commission comes to a finding that an enterprise in contravention of Section 3 or Section 4 is a member of a group as defined in clause (b) of the Explanation to Section 5, "and other members of such a group are also responsible for, or have contributed to, such a contravention, then it may pass orders, under this section, against such members of the group." The 2023 Act does not amend the proviso, but the meaning of "group" it refers to is the one in the Explanation to Section 5 as substituted in 2023; see our article on control, group, turnover and value of assets.
Where it fits
Appeals against orders under Section 27 lie to the Appellate Tribunal under Section 53A and Section 53B; see our article on the appeal to the Appellate Tribunal. Division of an enterprise enjoying a dominant position is in Section 28, covered in a separate article. For a short overview of penalties, see our guide on penalties under the Competition Act, and the lesser-penalty route for cartel members is in the article on Section 46.
Need help with a notice that may lead to a penalty?
Penalty exposure depends on the facts found, the turnover or income figures and the group position. If you have received a show-cause notice or a Director General report, speak to our legal dispute resolution team about preparing your response.
Key takeaways
- Section 27 lists the orders available after an inquiry that finds a contravention of Section 3 or Section 4.
- The penalty ceiling in clause (b) is ten per cent. of the average of the turnover or income for the last three preceding financial years.
- For a cartel, the proviso allows up to three times of profit for each year or ten per cent. of turnover or income for each year, whichever is higher.
- Turnover means global turnover derived from all the products and services.
- The 2023 change applies from the date notified for that provision; the notification is not in the sources consulted and should be checked.
Read next
- Procedure for inquiry, prima facie order and Director General report
- Division of an enterprise enjoying dominant position
- Lesser penalty for cartel disclosure
- How penalty is computed under the CCI Monetary Penalty Guidelines, 2024
Disclaimer: Based on the consolidated text of the Competition Act, 2002 published by the Competition Commission of India (amendments shown up to the Finance Act, 2017), read with the Competition (Amendment) Act, 2023 as published in the Gazette of India on 11 April 2023, and on the regulations and guidelines of the Commission as notified in 2024, as consulted on 2 October 2026. Commencement notifications, notified thresholds, rules and later amendments should be checked. This article is general information, not legal advice; check the official text before acting.