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India ad agencies, broadcasters face antitrust scrutiny

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Antitrust raids in March shocked industry players

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Document shows three groups indulged in alleged price

fixing

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Industry groups "coordinate their activities", document

says

By Aditya Kalra

NEW DELHI, May 23 (Reuters) - India's antitrust body

found that global ad agencies breached laws by coordinating on

commissions they charge advertisers, prompting the watchdog's

raids on advertising and media companies in March, according to

a document which sheds new light on the investigation into the

media sector.

The Competition Commission of India conducted surprise

raids in March at the local offices of ad agencies WPP ( WPP )-owned

GroupM, Interpublic, Publicis and Dentsu ( DNTUF ) and

at the offices of an Indian broadcasters' body and an

association of advertising companies.

A CCI document dated February 7 and seen by Reuters on

Friday sheds new light on allegations that three separate

cartels operated through three different industry groups: the

Indian Society of Advertisers (ISA), Advertising Agencies

Association of India (AAAI) and Indian Broadcasting and Digital

Foundation (IBDF).

Before the raids, the CCI document said, it reviewed

evidence that showed the alleged misconduct was prevalent since

at least 2023, and advertising agencies exchanged commercially

sensitive information on WhatsApp groups and agreed to adhere to

pre-decided commission structures.

"AAAI and its members are in contravention" of competition

laws, the CCI noted in its initial review, while ordering the

investigation which triggered the March raids, the document

said.

AAAI also often organised virtual meetings among members to

align on prices and responses to be shared with clients, and

discussed "retaliatory action" against members who don't follow

such guidelines, the document said.

The group "also fixed the formula for fee in case of

fee-based service to advertisers," CCI said.

The groups - AAAI which represents GroupM, Dentsu ( DNTUF ) and

Publicis, ISA which counts dozens of Indian and foreign

companies as members, and the IBDF group of broadcasters - did

not respond to Reuters queries.

The CCI also did not respond to a request for comment.

The CCI does not publicly disclose any details of price

fixing investigations. Reuters reported in March that the

allegations relate to collusion between media buying agencies

and broadcasters, and the case was triggered after Dentsu ( DNTUF ) made

disclosures under a whistleblower-type federal programme.

The raids cast a shadow on India's fast-growing media

and broadcast sector which counts Reliance-Disney

and Sony ( SONY ) as top players, and could alter how

ads are priced and sold in the country.

Detailing the allegations, the CCI document said the

advertisers "established a buyer's cartel", while the

broadcasters who provide channels separately engaged in

"collective action to refrain from giving discounts" to clients.

Another cartel "exists in the media segment of advertising

agencies and attempts are underway" to establish a cartel in its

creative business segment, the CCI added.

The three industry groups also "coordinate their activities

and indulge in collective negotiations ... on issues which

should ideally be negotiated independently," it added.

"The respective industry association appear to evolve

guidelines, advisories or negotiation parameters ... to secure

the commercial interests of their members," it added.

In recent weeks, AAAI privately asked its members to

avoid discussions over pricing during meetings, where the

group's legal adviser must be present, Reuters has reported.

The investigation comes amid major shifts in India's

advertising landscape following last year's $8.5 billion merger

between Walt Disney ( DIS ) and Reliance's Indian media assets, which is

estimated to have a 40% share of the ad market in TV and

streaming segments.

India is the world's eighth-biggest ad market, where

revenues stood at $18.5 billion last year, GroupM estimates.

The CCI investigation is likely to continue for several

months before final findings are issued.