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The Competition Commission of India’s recent raids on top ad agencies shook the media buying industry, but now, the panic is giving way to perspective.
While the investigation into alleged cartelisation is still underway, many insiders are now questioning whether the idea of a media buying cartel holds up at all in today’s fragmented, hyper-competitive environment.
Their argument? With fragmented deals, fluid fee structures, and increasing client oversight, systemic collusion isn’t just improbable, it’s operationally unviable.
From evolving pitch practices and shrinking margins to the growing role of independent audit firms, stakeholders insist the real story isn’t about conspiracy, but about the chaos of a business under pressure.
The legal trigger: Understanding prima facie evidence
But what exactly constitutes the initial indication of potential wrongdoing that prompts the CCI to launch an investigation? Akshayy S Nanda, an expert in competition law and personal data protection practice and a partner at Saraf & Partners, explains the concept of prima facie evidence in this context.
“In the realm of the CCI, a prima facie case signifies an initial evaluation suggesting that there is sufficient reason to investigate a complaint regarding anti-competitive behaviour. This preliminary assessment by the CCI determines whether there is credible information or material indicating a potential breach of competition laws, such as anti-competitive agreements or abuse of dominant position, necessitating a thorough investigation by the DG. It serves as a preliminary trigger for the investigative process and is not a final adjudication,” Nanda said.
The DG's investigation is designed to collect further evidence and conduct a comprehensive examination to ascertain whether there has indeed been a violation of competition laws.
According to Nanda, it is premature at this stage to conclude whether the media agencies have breached competition laws. At the prima facie stage, the CCI is not required to conclusively establish anti-competitive conduct. It only needs to form an initial opinion that a violation may have occurred based on the available information or evidence.
Why collusion seems unlikely: The evolving compensation landscape
Addressing the question of how collusion could even be orchestrated in the current environment, a senior agency executive cited the variability in agency compensation, explaining, “There’s no standard process, who follows the 15 percent rule today, or even 12.5?”
The 15% commission norm: Then and now
Historically, a 15% commission on media spend was considered the standard in Indian advertising, especially when an agency handled both creative duties and media buying (commonly known as EOR, or agency on record). Of this, around 12.5% typically went to the creative function, while 2.5% was retained by the media agency.
However, in recent years, this model has become more fluid.
In pure media EOR deals (without creative), commissions are often negotiated down to as low as 0.75%–1.5%, depending on the agency’s volume of business and client relationship. While 2.5% was once the norm, agencies today work at far lower margins due to rising competition, with some clients pushing even further for lower rates.
These figures are not formally documented, but are part of a long-standing informal understanding within industry bodies like AAAI. There’s no official directive available in the public domain, but the general consensus remains rooted in these benchmarks.
Fee based model vs commission model: Why collusion is not an option
Unlike the traditional commission model, where agencies earned a cut of the media spend, fee-based contracts offer fixed compensation regardless of volume, reducing incentives to inflate budgets or manipulate pricing. While commissions can vary, fee structures are often tailored to client needs and reviewed periodically.
“Even if it’s a fee-based client, you don’t know what the agency has arranged separately with the broadcaster,” one insider pointed out, highlighting possible opacity, not collusion, is the real challenge and that opt-ins are common but individually negotiated, not collectively enforced.
Evolving deal structures: Fixed rates and last-look arrangements
Amid changing commercial models, fixed-rate deals and last-look arrangements have become increasingly common in media buying.
A fixed-rate deal refers to an agreement where an agency locks in a pre-negotiated price with a broadcaster or platform, often as part of a larger volume or annual buy. While this ensures cost certainty for clients, it may create margins for the agency if actual market rates dip below the fixed price raising questions of transparency, but not necessarily collusion.
Last-look, on the other hand, is an informal but widespread practice where an incumbent agency is given the opportunity to match the winning bid in a pitch. This often stems from long-standing relationships and familiarity with the brand’s processes.
“This happens in every industry, if I get a better deal, I take it to the other agency and say, ‘match it’,” said a senior executive.
While critics may see this as preferential, industry leaders argue it’s simply a reflection of commercial pragmatism, not coordinated market manipulation.
According to competition law experts, not every opaque or preferential commercial practice qualifies as cartel behaviour.
The Competition Commission of India (CCI) focuses on whether there is explicit or tacit coordination among competitors with the intent to distort fair competition. Fixed-rate deals are typically one-on-one commercial contracts, while last-look is a discretionary call made by the advertiser, not a collusive move by agencies.
“In an industry with diverse commercial models, cartelisation may be alleged only if agencies are found to be colluding on non-price elements, like bid rigging in pitches, jointly boycotting certain clients or broadcasters, or aligning backend deal terms in a way that limits market access or reduces transparency. Hence, even with varying commission models, agencies can be accused of cartel behaviour if there's evidence of coordination to suppress competition,” said Kanika Chaudhary Nayar, Partner, DSK Legal.
Cartel behaviour, as per Section 2(c) and Section 3(3) of the Competition Act, is defined as an agreement among competitors to: (a) fix prices, (b) limit or control supply or production, (c) share markets or customers, or (d) engage in collusive bidding. What matters is whether there is (a) concerted practice or tacit understanding, (b) an intent to eliminate or reduce competition, or (c) coordinated actions that replace independent decision-making.
It’s a similar story with opt-in models, often misunderstood as opaque backend deals, when they’re in fact standard commercial arrangements built on volume and efficiency.
Yes, ‘opt-ins’ are legal and considered best practices
In the media buying ecosystem, ‘opt-in’ refers to an arrangement between broadcasters/platforms and agencies where the agency chooses to participate in a special incentive or benefit program. These can include special rebates, volume discounts, bonus inventory, target-linked incentives or other such offers.
Such opt-in models, though perfectly legal, are often misunderstood.
Stakeholders argue that these are standard commercial arrangements between agencies and broadcasters, not backroom deals.
Legal experts echo this view, clarifying that unless multiple agencies coordinate such incentives to distort market access or pricing, they don’t amount to cartelisation under the Competition Act. At worst, critics say, the industry suffers from inconsistent transparency, not collusive intent.
A senior industry executive elaborated on how opt-ins actually work in practice.
“Opt-ins are not structured against a single client. They’re based on collective volume across multiple clients. When an agency strikes a volume-based deal with a publisher, the benefits are distributed based on each client’s benchmarks. These models are designed to deliver added efficiencies,” they said.
Explaining it with an example they added, “If the agency negotiates inventory at Rs 90 instead of Rs 100 using an opt-in model, it may pass Rs 5 of that efficiency back to the client. While the agency earns a margin, the client benefits too. Importantly, clients are not kept in the dark, there’s a service-level agreement (SLA) signed in advance, ensuring full transparency and consent. Opt-ins, when done correctly, are considered best practices, not loopholes.”
“Under Indian competition law, practices like opt-in incentive models or backend rebates are not per se considered to be anti-competitive. These mechanisms are widely used across industries and are typically viewed as commercial arrangements between parties – provided they do not result in appreciable adverse effects on competition,” said Chaudhary Nayar.
“The Competition Commission of India (CCI) examines the intent and effect of such practices. If rebates or incentives are transparent to clients, individually negotiated, or/and do not lead to exclusionary practices or a collective distortion of market prices, then they are unlikely to be considered anti-competitive,” she added.
However, if multiple agencies collectively agree to adopt similar rebate structures or withhold transparency from clients to distort fair competition, that coordinated conduct may attract scrutiny under Section 3(3) of the Competition Act, which prohibits anti-competitive agreements, including cartels.
“The current scrutiny into media agencies suggests that the CCI is trying to pierce the complexity of these models to test for potential collusion – but proving cartelisation, especially without explicit agreements or “smoking gun” evidence, remains a high threshold,” said Chaudhary Nayar.
Agency clout ≠ cartel: What CCI may be overlooking
Some industry leaders argue that what’s being labelled as cartelisation is, in fact, just the natural consequence of scale and market power.
“Cartelisation? Honestly, what people call cartel behaviour is often just agency might. Let’s take an example, if GroupM goes into the market to buy IPL inventory worth Rs 1,000 or Rs 2,000 crores, obviously they’ll get better rates. If another agency goes with Rs 300 or Rs 400 crores, they’ll get it at a higher price. That’s how volume-based negotiation works,” a senior leader in the media ecosystem said.
“People then say, 'Oh, it’s the GroupM lobby, or the IPG lobby, or the Publicis lobby.' This is the kind of lobby that exists, the present context is misconstrued,” they said,
“So yes, there is power imbalance, but it’s based on size and long-standing client relationships—not on some backroom cartel. The real issue is opacity and lack of trust, not conspiracy,” they added.
The real risk: Not cartels, but audit overlap
“Auditors are deeply embedded in the process, they track savings, validate performance, and work directly with both clients and agencies,” said one agency leader, pointing to the growing reliance on independent verification.
With firms like A.T. Kearney, Ebiquity, and EY overseeing major media pitches and audits, the notion of agencies secretly colluding on rates becomes increasingly difficult to sustain.
As another executive put it: “How is collusion possible when someone else is driving the car?”
This is another structural concern, insiders point out. According to them, the expanding role of audit firms in both evaluation and new business pitches raise questions of neutrality and confidentiality.
“In media buying, the commercial agreement is between three parties. This includes the agency, the client, and the publisher. Rates negotiated with broadcasters are confidential by design and meant to stay within this triangle. The concern arises when clients share these rates with audit firms that are simultaneously managing competing brands. If the same agency is auditing Hyundai, Kia, and Maruti, it risks exposing proprietary pricing. There needs to be some discipline, audit agencies should not be handling both audits and pitches across competing accounts. When these boundaries blur, it doesn’t just compromise trust, it fuels rate wars and undermines the integrity of the entire ecosystem,” an industry insider explained.
The cascading impact of this opacity, insiders say, shows up most visibly in the pitch process itself.
They said, "In today’s pitches, the focus is meant to be on strategy, scale, proprietary tools, and overall capability, not just price. But more often than not, it boils down to one number. When a brand turns around and says, ‘They’re offering 12%, can you match it?’ all differentiation disappears. It becomes a rate match exercise. If this is just a bidding war, seal the bids and award the business. Instead, there’s often a second round, sometimes unofficial, driven by pressure to win. That’s not collusion. It’s simply a broken pitch process.”
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