The Competition Commission of India (CCI) has leveraged its leniency program to crack down on alleged cartelization and price-fixing in the media advertising industry. The leniency program, designed to encourage whistleblowers within cartels to come forward, played a key role in uncovering alleged collusion between major media agencies and broadcasters. However, the CCI officials were also probing media agencies around the commissions and guidelines framed by the industry bodies.
The CCI raids conducted at offices of Dentsu, GroupM, Publicis, IPG and Madison alongwith industry bodies AAAI, ISA and IBDF on Tuesday continued till Wednesday morning. Sources close to the development stated that the officials took statements from the agency heads, collected data and asked questions around the commissions and the guidelines set by AAAI around commissions and ad rates.
Akshayy S. Nanda, Partner at Saraf and Partners, emphasized the effectiveness of leniency programs in detecting and dismantling cartels. “These regulatory and investigating agencies have developed robust methodologies and programs, such as leniency programs, to effectively combat cartel activities. Leniency programs have significantly impacted the discovery and prosecution of cartels by incentivizing members to come forward with crucial evidence. These programs reduce fines or offer immunity to the first cartel member who cooperates with authorities, thereby destabilizing the cartel’s secrecy.”
Nanda further noted, “The introduction of leniency programs has led to a notable increase in successfully prosecuting the cartels. By providing a safe avenue for whistleblowers, these programs have uncovered cartels that might have otherwise remained hidden, enhancing the overall effectiveness of anti-cartel enforcement. It is possible that the recent raid conducted by the CCI was on account of one of the companies blowing the whistle on the alleged price-fixing arrangement.”
Leniency programs reduce fines or offer immunity to the first cartel member who cooperates with authorities, thereby destabilizing the cartel’s secrecy. The introduction of leniency programs has led to a notable increase in successfully prosecuting cartels.
CCI’s approach
The investigation aligns with Section 3(3) of the Competition Act, 2002, which addresses anti-competitive agreements, particularly horizontal agreements between enterprises engaged in similar trade or services, including cartels. Such agreements are presumed to cause an “appreciable adverse effect on competition” (AAEC) if they involve price-fixing or other anti-competitive practices.
According to CCI lawyers, proving a violation of Section 3(3) requires establishing an anti-competitive agreement between cartel members. The CCI must first demonstrate the existence of such an agreement, which can include any formal or informal arrangement, understanding, or action in concert. While direct evidence such as contracts, emails, or meeting records is ideal, the CCI often relies on circumstantial evidence like parallel pricing, identical bids, or communication via trade associations to infer collusion.
The CCI also considers “plus factors,” additional indicators beyond mere parallel behavior, such as suspicious timing of price changes or communication records that suggest coordinated actions. However, unilateral price increases without evidence of coordination do not automatically constitute a violation.
Aniket Ghosh, a competition lawyer, highlighted the challenges of proving collusion: “To establish a cartel, the CCI needs to demonstrate an agreement—formal or informal—between media agencies and/or broadcasters showing that they colluded to fix ad prices. This can be done by examining emails, WhatsApp messages, meeting records, communications with third parties, and interviewing employees. Any agreement between competitors to fix prices or reduce competition is presumed to cause harm to competition. Once an agreement is identified, the burden shifts to the investigated parties to prove it does not harm competition, requiring them to demonstrate benefits or necessity, which is a high threshold to meet.”
Citing global regulatory actions, Natasha Treasurywala, Partner at Desai & Diwanji, noted, “Global regulators such as the FTC in the USA and the European Commission have taken stringent action against price-fixing arrangements. This crackdown will lead to greater transparency in collaborations between advertising agencies and broadcasters. Businesses will need to be more careful to ensure that the agencies they are dealing with are above board with their agreements and do not engage in such price-fixing activities.”
Market Impact and Future Implications
Neelambera Sandeepan, Partner at Lakshmikumaran & Sridharan Attorneys, provided insights into the current market landscape. “The broadcasting market in recent times has been significantly consolidated, especially following the CCI’s approval of the Reliance-Disney merger. Further, digital advertising platforms now account for the largest ad spends, as per recent CCI orders. While collaboration between advertising agencies and broadcasters may not necessarily be problematic, the CCI may scrutinize them under ‘vertical agreements’ in competition law parlance. Such agreements are tested for their market effects and are not automatically deemed illegal.”
Emphasizing the need for compliance, Unnati Agrawal, Partner at IndusLaw, said, “As CCI tightens its oversight, advertising agencies and broadcasters must shift towards compliance-driven, transparent, and flexible advertising models. They must engage in fair competition, which ultimately bolsters the advertising and broadcasting market in India.”
Siddharth Chandrashekhar, Advocate at the Bombay High Court, reinforced the seriousness of price-fixing allegations. “Price-fixing falls into a ‘per se’ violation category—once proven, no justification can save the erring entity. The onus is on the accused to prove that their conduct didn’t harm competition. In simpler terms: If CCI finds a cartel, the accused can’t simply wriggle out by claiming, ‘But we had a good reason!’ The law assumes guilt unless proven otherwise—a legal tightrope for agencies and broadcasters alike.”
As the investigation progresses, all eyes are on the CCI’s next moves. If strong evidence of cartelization emerges, hefty penalties and long-term regulatory reforms could reshape the media buying industry in India. One thing is certain—this crackdown is not just about punishing violators but about setting the tone for a more accountable and competitive future in media advertising.