A routine GST enquiry has opened a can of worms in India’s Rs 1.2 lakh crore advertising industry. The Competition Commission of India raid on several media agencies just ahead of the 2025 IPL season will force the industry to take a relook at pricing strategies, explains Alokananda Chakraborty
What triggered the raids?
Insiders say the search by the Competition Commission of India (CCI) could have been triggered by one of the following two reasons — unfair commissions and price collusion — or both. Simply put, the investigation centres on whether top broadcasters and tech companies were hand in glove with member agencies of the Advertising Agencies Association of India (AAAI) to prioritise their advertisements, in contravention of the antitrust rules under the Competition Act, 2002.
It is suspected that a bunch of advertising agencies, broadcasters, and large tech support agencies — both global and local — have come together to manipulate advertising rates and discounts or even fiddled with advertising inventory in a way that helped some players dominate the digital advertising platforms (digital comprises 60% of total ad spending in the country). Coming just days ahead of the 2025 season of the Indian Premier League (IPL) — the cricket tourney starts on March 22— the industry is speculating that the raids are connected to the advertising contracts for the sports extravaganza.
Which are the agencies under scrutiny?
The CCI initiated searches at the Mumbai, Delhi and Gurugram offices of top media agencies, including GroupM, Publicis, Dentsu, Madison and IPG Mediabrands, as well as the Indian Broadcasting and Digital Foundation (IBDF), an apex body of broadcasters, over alleged fixing of ad rates and discounts.
Industry insiders believe the March 18 search operation primarily targeted GroupM, owned by the UK’s WPP, and therefore, it might face tougher scrutiny from the anti-trust body going forward. However, all of these agencies along with many smaller ones are handling ad deals for big and small advertisers for the IPL.
The regulatory heat on the sector also comes at a time when India’s advertising market is undergoing major shifts, following the $8.5 billion merger between Walt Disney and Reliance’s India media assets, expected to control 40% of the TV and streaming ad market. That apart, there’s the Omnicom-Interpublic merger which has just secured shareholder approval and is set to close in late 2025.
What does the law say about price collusion?
Under section 3(3) OF the Competition Act, 2002, pacts between companies in the same industry that directly or indirectly determine pricing or restrict competition are illegal. Thus, clandestine deals to fix advertising rates are anti-competitive as they keep out some while favouring others. By inflating costs artificially, manipulators are able to keep smaller advertisers out of the playing field, ultimately hurting consumers who do not have enough material to take informed decisions. Such collusion invariably involves kickbacks in the garb of agency commission.
Was there any specific complaint?
The investigations, say insiders, was triggered by a routine Goods and Services Tax (GST) enquiry at one of the top five media agencies in India, which allegedly threw up evidence of cartelisation. Experts say the CCI raids weren’t random or routine but were preceded by an extended period of hush-hush investigation into allegations that top ad agencies conspired to game the system by fixing advertisement rates and eliminating fair discounts. Many advertisers told FE that the CCI had specific information and had been monitoring irregularities over time and gathering relevant information.
The investigation arm of the CII conducts raids only if the fair trade watchdog concludes that there is prima facie violation of competition norms.
Will the raid affect IPL ad rates?
The timing of these raids is particularly important as they took place just days before the IPL takes off. Like the festive season, the 2-month IPL season is regarded as a key advertising period when top advertisers make substantial investments anticipating huge viewership surge. With 620 million viewers in 2024 compared to 449 million in 2023, the IPL 2024 witnessed a 38% surge in audience reach on JioCinema the digital rights holder. More than 100 advertisers threw their hats into the ring during IPL 2024. The IPL 2025 ad spends are expected to be between Rs 6,000 crore and Rs 7,000 crore. With an element of uncertainty creeping in, many fence-sitting advertisers could back out, taking spot rate pricing downward.
What happens if any unfair trade practice is proven?
The allegations, IF proven, mean that large advertisers, who rely on these agencies for media planning/buying and ad placements, would have been systematically overcharged, thanks to coordinated manipulation. If proven guilty, these agencies would face hefty financial repercussion — to the tune of 10% of their annual turnover, besides substantial reputational damage.
The upside is that the episode would force advertising agencies and broadcasters to review their pricing strategies and help establish more transparent and accountable media buying/selling practices.