Inside CCI raids: Ad agencies grilled over commissions, cartelisation

New Delhi: A day after the CCI raids on advertising agencies and broadcasters’ bodies concluded, details about the nature of the raids began to emerge.

The Competition Commission of India (CCI) initiated searches on Tuesday morning that continued until at least 4 a.m. on Wednesday. The operation spanned the Mumbai and Gurugram offices of top media agencies, including GroupM, IPG Mediabrands India, Dentsu, Publicis, and Madison.

Reliable sources told BestMediaInfo.com that a large part of the questioning by sleuths acting on behalf of the anti-trust regulator focused on commissions, contrary to industry speculation about price collusion.

Also read: CCI’s forensic experts to analyse data and documents seized in raids on ad agencies

“According to the AAAI and ISA guidelines, minimum charges as commission are apparently being viewed as cartelization, and 80-90% of the questioning centred on that alone. Only 10-20% of the questioning was about pricing,” confirmed sources from at least three agencies.

When asked about the intensity of the questioning, sources described it as relatively soft for them.

However, multiple sources believed the search operation primarily targeted GroupM, which may have faced tougher scrutiny from the anti-trust body.

“If GroupM received different treatment from the CCI, we suspect there was a specific complaint against them, which was then expanded to other agencies and industry bodies,” said one of the three sources quoted earlier, while declining to speculate on the nature of the complaint or the complainant.

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While some industry leaders suggested the complainant could be one of the raided media agencies, others speculated it might be someone from the broadcast side.

A person familiar with CCI matters told BestMediaInfo.com that raids are typically conducted across all entities, including the complainant.

“This is a general practice to protect the complainant from any risk,” the person said, adding that a leniency petition could be behind the action.

Leniency petitions in CCI cases are considered akin to someone turning approver in criminal cases.

“Suppose a party under CCI scrutiny for alleged anti-trust practices seeks relief. It can file a leniency petition, revealing industry practices or implicating others,” the CCI expert elaborated.

As the advertising industry grapples with this unprecedented action, questions arise about the beneficiaries.

All the senior players BestMediaInfo.com spoke with agreed that this action is unlikely to benefit anyone. “Indeed, it’s a setback for the entire ecosystem,” they added.