The Competition Commission of India (CCI) will be broadening its investigation into the alleged cartelization and price-fixing practices in the advertising industry, now examining a potential Big Tech angle in the ongoing raids at major media agencies. CCI officials have discovered digital evidence suggesting possible involvement of Big Tech companies in digital media-buying deals.
Sources claimed that a routine investigation by GST officials at a leading media agency led to an unexpected crackdown by the Competition Commission of India (CCI) on several major advertising agencies. CCI officials raided GroupM, Dentsu, Madison, Publicis, and IPG, along with industry bodies such as the Indian Broadcasting and Digital Foundation (IBDF), the Advertising Agencies Association of India (AAAI), and the Indian Society of Advertisers (ISA), as part of an inquiry into alleged cartelization involving ad pricing and discount manipulation.
Sources close to the investigation revealed that during the raids, CCI officials discovered digital evidence suggesting possible involvement of Big Tech companies in digital media-buying deals. This revelation has prompted the antitrust watchdog to intensify its scrutiny and expand its probe beyond just advertising agencies.
The nature of the evidence retrieved from the digital records of the raided media agencies remains undisclosed. However, officials suspect that certain Big Tech firms may have played a role in influencing ad pricing, digital media spending, and long-term media-buying agreements. These deals could potentially reflect anti-competitive behavior, such as restricting fair competition, predetermining ad rates, or influencing bidding processes in favor of select companies.
Apart from media agencies and tech firms, CCI has also set its sights on Fast-Moving Consumer Goods (FMCG) companies and some of the biggest advertisers in the country. These companies will be questioned regarding their dealings with ad agencies and their media-buying strategies.
Investigators are looking into whether FMCG giants benefited from exclusive media-buying agreements, negotiated discounts, or preferential treatment in advertising slots. If proven, such arrangements could point to coordinated efforts to manipulate advertising rates and distort market competition.
During the raids, senior executives and CEOs of leading media agencies were questioned about their long-term media-buying contracts with broadcasters and digital platforms. CCI officials are meticulously analyzing Release Orders (ROs), which are official documents that outline the terms of media-buying transactions, to detect any potential irregularities or signs of price collusion.
A key focus of the probe is whether these long-term deals were structured in a way that locked advertisers into non-competitive pricing structures, preventing smaller players from negotiating better rates. If CCI finds evidence of such practices, it could lead to severe penalties for both media agencies and their business partners.
Legal experts suggest that this investigation could have far-reaching consequences for the advertising and digital media industry. If CCI establishes that major players engaged in anti-competitive practices, it could lead to hefty fines, regulatory action, and a complete overhaul of media-buying strategies in India.
Under Section 3(3) of the Competition Act, 2002, agreements between companies within the same industry that directly or indirectly determine pricing or restrict competition are illegal. The investigation will focus on uncovering evidence such as internal emails, pricing agreements, meeting records, or coordinated rate cards that could indicate anti-competitive behavior.
Meanwhile, companies under investigation have remained tight-lipped about the ongoing raids. When contacted, media agencies have declined to comment on the allegations and the nature of their dealings with Big Tech companies.