The Competition Commission of India (CCI) launched an investigation into potential cartelisation within the advertising industry. This inquiry follows complaints regarding guidelines and advisories issued by key industry bodies, including the Indian Society of Advertisers (ISA) and the Advertising Agencies Association of India (AAAI). The CCI’s probe aims to determine whether these guidelines violate competition laws.
Background of the Investigation
The investigation was initiated after the CCI received complaints in August 2024. The complaints suggested that the ISA, AAAI, and the Indian Broadcasting & Digital Foundation (IBDF) may have engaged in practices that restrict competition. The CCI’s director-general was authorised to conduct a detailed examination of these allegations.
Search Operations Conducted
On March 18 and 19, 2025, the CCI conducted searches at the premises of the ISA, AAAI, and IBDF. During these searches, various documents were seized for further analysis. The CCI aims to establish whether the actions of these associations have negatively impacted competition among advertisers and agencies.
Key Allegations Against Industry Bodies
The primary allegation against the ISA involves its Model Agency Agreement. This agreement reportedly restricts negotiations between advertisers and agencies, thereby limiting the agencies’ revenue potential. The ISA introduced this model agreement in August 2023. In response to the ISA’s actions, the AAAI released its own Guidelines on Media Agency Remuneration. These guidelines set minimum commissions and established a formula for fee-based services, which could also restrict flexibility in negotiations.
Role of the IBDF
The IBDF has also come under scrutiny for its advisory on media account transitions. This advisory prohibits agencies from offering discounts on existing rates while pitching for new business. It also requires new agencies to indemnify IBDF members against losses incurred from any unilateral discounts, potentially stifling competition.
Collaborative Actions and Whistle-blowers
The CCI noted the formation of a joint sub-committee by the AAAI and IBDF. This committee reportedly meets monthly to coordinate actions against certain clients, raising concerns about collective enforcement of restrictive practices. Some media agencies are believed to have acted as whistle-blowers in this case, revealing potential collusion.
Impact on the Advertising Market
Industry sources indicate that the complaints may have stemmed from large advertisers consolidating their accounts with a few major agencies. These agencies often secure accounts by offering lower rates, which can disadvantage smaller competitors. This practice raises concerns about fairness and transparency in the advertising market.
Questions for UPSC:
- Critically analyse the impact of competition laws on industry practices in India.
- Estimate the role of advertising agencies in influencing market dynamics in India.
- What are the potential consequences of cartelisation in the advertising sector? Discuss.
- Point out the significance of transparency in advertising negotiations and its effect on market competition.
