Dentsu discloses, CCI investigates: India’s adland faces reckoning over alleged rate-fixing

In a significant development for India’s advertising sector, Japanese communications group Dentsu has revealed that it was the first to inform the Competition Commission of India (CCI) about suspected anti-competitive practices within the industry. The disclosure, made in February 2024 under the CCI's leniency framework, was a proactive step by the agency group, aimed, it says, at prompting reform.

The announcement comes three months after the CCI reportedly conducted a series of raids at nearly 10 locations in March 2024. The operation targeted leading advertising agency groups including GroupM, Publicis, Havas, IPG, and Madison. Also under scrutiny were key industry bodies such as the Advertising Agencies Association of India (AAAI), the Indian Society of Advertisers (ISA), and the Indian Broadcasting & Digital Foundation (IBDF).

These actions stem from an ongoing investigation into potential collusion related to ad pricing and discounting practices. Authorities are reportedly examining whether agencies and broadcasters were coordinating to establish fixed pricing structures, thereby eliminating competitive bidding and potentially inflating the cost of media buying for advertisers.

While the CCI has not officially detailed the nature or findings of its investigation, sources had suggested over the months that either a complaint by a large advertiser or a smaller agency prompted the regulatory scrutiny. According to reports, officials from WPP, Omnicom, Publicis, IBDF, and ISA were questioned during the searches, and materials including documents and emails were seized for examination.

If found guilty of cartelisation, the agencies involved could be subject to substantial penalties, including fines of up to 10% of their annual turnover or three times their profit for the years under investigation, depending on which is higher.

In an official response shared with Campaign India, a spokesperson for Dentsu India stated: "As one of the country’s leading agency networks, there is the responsibility to act with integrity and accountability. We had a choice — to remain passive or drive change. In February 2024, Dentsu proactively approached the Competition Commission of India (CCI) suo moto under its Leniency framework. This was not a reaction to external pressure but a decision to support reform from within. We proactively implemented meaningful changes including enhanced audits, stricter governance, and tighter internal controls. These reflect our ongoing commitment to build trust through transparency, action, and accountability to safeguard the interest of our clients. Change can't be affected by walking away – this may be a challenging moment for an industry we are proud to be a part of, but it also presents an opportunity for collective reform. At Dentsu India we are committed to this change for our clients and the future of a thriving industry."

The CCI’s leniency programme is designed to incentivise whistleblowing by offering reduced penalties to cartel participants who voluntarily come forward with relevant information. It has proven effective in exposing covert arrangements in sectors where collusion may be informal and undocumented, such as media buying.

Legal experts note that to establish a violation under Section 3(3) of the Competition Act, 2002, the regulator must demonstrate intent to collude, not just similar pricing. This could include records of meetings, correspondence, or circumstantial indicators such as uniform bid submissions and identical rate cards being used by different agencies.

Industry observers believe the outcome of this case could have wide-reaching implications for media buying in India. One senior executive, speaking on condition of anonymity, characterised the raids as a pivotal moment.

"After years of speculation and murmurs about alignment behind the scenes, the industry is finally seeing formal action on a concern that many have quietly acknowledged; that competition might not be as open as it appears,” he elaborated. "When brand managers allocate budgets across platforms, they expect their agency partners to negotiate independently and secure the most favourable deals. But if agencies are operating under an understanding to maintain minimum discount thresholds, then the competitive advantage promised to clients may be largely illusory."

Adding to this context, an industry veteran disclosed that the AAAI, in August 2023, distributed a memo to member agencies, standardising commission rates: 3% for digital media, 2.5% for traditional media, and up to 8% for smaller clients. In September that year, the association along with reportedly signed a joint agreement stipulating that agencies would not individually offer discounts while pitching.

"This effectively removed pricing as a point of competition, allowing agencies to protect margins while reducing options for clients. It was a calculated move in response to tighter profit margins and slowing revenue growth," the executive said.

Despite the attention surrounding the investigation, some remain sceptical about whether it will result in lasting change. A seasoned professional noted, "We may see public outrage, some initial conversations about the need for policy and maybe even a few short-term changes. But once the pressure subsides, it is possible the industry could return to familiar patterns." They added that in this space, one either adapt to the game or risks being edged out by it.

With Dentsu stepping forward under the leniency programme, the industry is now faced with a test of transparency and accountability. While the outcome of the investigation remains pending, the case has already prompted renewed debate around ethics and competition in India’s advertising market.

Whatever the eventual outcome, it is clear that longstanding norms within the sector are now under scrutiny, and how the industry responds may well define its next chapter.