The CCI Determination of Monetary Penalty Guidelines, 2024

The Commission issued guidelines on the determination of monetary penalty on 6 March 2024. They were necessary because the amendment of 2023 had enlarged the base on which penalties are computed to global turnover, and because penalties had until then been fixed without a stated method, which made them difficult to predict and vulnerable on appeal. The guidelines do not create a formula; they supply a sequence, and their central achievement is to preserve the proportionality required by Excel Crop Care within a much larger statutory ceiling.

1. The Method

Determine the base. The starting point is the turnover or income relating to the products or services to which the contravention relates, which is to say relevant turnover, computed under the Determination of Turnover or Income Regulations, 2024.
Apply a percentage reflecting the nature and gravity of the contravention. Cartels are treated most seriously, followed by abuse of a dominant position, followed by vertical agreements.
Multiply by duration, since a contravention sustained over years causes proportionately greater harm, and the statute itself computes cartel penalties per year of continuance.
Adjust for aggravating factors. Initiating, organising or enforcing the arrangement; repetition of contravention; obstruction of the investigation or non-compliance with directions; continuation of the conduct after the inquiry began; and the gain derived.
Adjust for mitigating factors. Cooperation beyond what is required; a genuine and documented compliance programme; cessation of the conduct on becoming aware of the inquiry; a minor, passive or coerced role; and compensation already made to those affected.
Apply the statutory ceiling, being ten per cent of the average global turnover or income for the preceding three financial years, or in a cartel the alternative of three times profit for each year, whichever is higher.
Test for proportionality and record reasons, having regard where appropriate to the ability of the enterprise to pay and to the effect on its viability.

2. What the Guidelines Achieve

Predictability. An enterprise assessing its exposure, and an adviser recommending whether to settle, can now estimate the range rather than guess.
Reviewability. An order that follows the sequence and records the reasons at each step gives the appellate forum something to examine, which is what the Supreme Court required in Excel Crop Care.
Consistency. Comparable contraventions attract comparable penalties, which is difficult to achieve where each order is reasoned from first principles.
Proportionality within a global ceiling. The base for the ceiling is global, but the starting point for the computation is the affected business, which is the reconciliation between the amendment and the case law.

⚠ Guidelines are not law, and that matters

The guidelines are issued by the Commission and bind it in the sense that a departure from them must be explained, but they are not delegated legislation and they cannot enlarge or restrict the statutory ceiling. Two consequences follow. A penalty is not bad merely because it does not match the arithmetic of the guidelines, provided the order gives reasons. And a party cannot claim a particular figure as an entitlement; what it can claim is that the Commission apply its own stated method or explain why it has not.

3. Related Topics and Provisions

Topic or provision	Connection
Penalties under the Competition Act	The statutory framework
The Determination of Turnover or Income Regulations, 2024	Computation of the base
Orders and Remedies: Sections 27, 28 and 48	The orders in which penalties are imposed
Lesser Penalty and Leniency: Section 46	Reduction applied to the penalty so computed
Sections 27 and 48, Competition Act, 2002	The ceiling and individual liability