Global ad giants face CCI crackdown for colluding on fees: Reuters

New Delhi: India’s antitrust body, the Competition Commission of India (CCI), has found evidence that major global advertising agencies breached competition laws by colluding on commissions charged to advertisers, according to a Reuters story. 

The findings prompted surprise raids on these agencies and related industry bodies in March, shedding new light on an ongoing investigation into alleged anti-competitive practices in India’s rapidly growing media sector.

As per the news report, the CCI document, dated February 7, alleged that three separate cartels operated through industry groups: the Indian Society of Advertisers (ISA), the Advertising Agencies Association of India (AAAI), and the Indian Broadcasting and Digital Foundation (IBDF). 

“India's antitrust body found that global ad agencies breached laws by coordinating on commissions they charge advertisers,” Reuters reported, citing the document. The investigation revealed that since at least 2023, agencies exchanged commercially sensitive information via WhatsApp groups and agreed on pre-decided commission structures.

The CCI’s probe uncovered that the AAAI held virtual meetings to align on pricing strategies and discussed “retaliatory action” against those who deviated from agreed terms. The document also noted that the AAAI “fixed the formula for the fee in case of fee-based service to advertisers,” a practice that violates India’s competition laws. 

Additionally, advertisers formed a “buyer’s cartel,” while broadcasters engaged in “collective action to refrain from giving discounts” to clients, further distorting the market, stated the report.

The raids targeted offices in Mumbai, New Delhi, and Gurugram, focusing not only on the ad agencies but also on the IBDF and AAAI. 

The news report further wrote that the investigation was triggered, in part, by disclosures from Dentsu under a whistleblower-type leniency program, which offers penalty reductions for companies providing evidence of wrongdoing.

In response to the raids, the AAAI advised its members to avoid discussing pricing or sensitive information during meetings, requiring the presence of a legal adviser.