CCI launches probe into industry bodies over cartelisation allegations: Report

The Competition Commission of India (CCI) is investigating the advisories and guidelines of industry bodies such as the Indian Society of Advertisers (ISA), Advertising Agencies Association of India (AAAI) and Indian Broadcasting and Digital Foundation (IBDF) to determine whether they violated competition laws and supported cartelisation, according to a recent news report.

CCI reportedly initiated the investigation following an August 2024 order that gave its director-general power to conduct a probe into the matter after the regulator received complaints about cartelisation.

On March 18 and 19, CCI raided offices of media companies and industry bodies, seizing sensitive documents. The news report said that CCI, in its application in February seeking approval for the search from a Delhi court, observed that the allegations are related to the bodies' conduct, guidelines and advisories. It noted that their conduct could impact other participants in the supply chain that they operate in.

The respective industry association appears to evolve guidelines, advisories or negotiations parameters in the form of model agreements to secure the commercial interests of their members, said the report, quoting CCI.

The watchdog is reportedly scrutinising the ISA’s Model Agency Agreement for alleged negotiation restrictions between advertisers and agencies. The complaints say that ISA launched the Model Agreement on August 3, 2023, limited advertiser-agency negotiation and negatively impacted agency revenues.

The report added that in response, AAAI released Guidelines on Media Agency Remuneration on August 30, 2023, setting the limit for minimum commissions and incentives of traditional and digital advertising and a formula for fee-based services.

In September of that year, the IBDF then issued an advisory with procedures for media account transitions, said the report. It highlighted that no agency should unilaterally offer any discount on existing channel rates for advertisers while pitching.

It also directed that the new agency shall undertake “to indemnify IBDF members against all losses/damages/costs incurred and/or suffered by channels on account of any unilateral discount in channel rates offered by the agency".

The commission also alleged that AAAI and IBDF formed a joint sub-committee to take collection action against certain clients and enforce IBDF procedures on a monthly basis.

Some media agencies have played whistle-blowers as part of a leniency scheme to waive off penalties.

The report quoting sources suggests that the CCI complaints were triggered by a few big agencies consolidating large advertiser accounts. As per the sources, these agencies secured big ad accounts by promising their clients TV ad inventory at lower rates than their competitors.

In return, the broadcasters got more ad investments from clients managed by these agencies, said the news report.