CCI raids raise questions on price-fixing and collusive ad structures in India

As the industry reels from The Competition Commission of India’s (CCI) raids on the offices of global advertising giants like GroupM, Publicis, Dentsu, and Interpublic Group (IPG) over the last three days, a harsh spotlight has been thrown on the industry’s long-standing media buying practices.

A team of CCI officers and law enforcement personnel ostensibly searched approximately 10 locations across Mumbai, New Delhi, and Gurugram. The investigation reportedly focuses on alleged collusion in fixing advertising rates and discounts, with sources indicating that either a large advertiser or a smaller agency may have triggered the probe by filing a complaint. The authorities are supposedly scrutinising whether advertising agencies colluded with broadcasters to maintain artificially high ad prices and control discount structures.

Now, a brand strategy head at a luxury organisation familiar with local advertising practices is sharing exclusively with Campaign India that the recent raids come as no surprise. According to them, questionable conduct has become ingrained in the advertising industry.

“There are times when I get better rates if I work directly with the broadcasting platforms, but it means coordinating with yet another entity for documentation. Working with a single agency eases my burden of coordinating with different vendors, even if they charge me more, despite being on a retainer,” they added. However, their bigger grouse was the added percentage they were charged for these deals, which they felt was uncalled for, given the scope of work they already do with the agency, which is on retainer.

The CCI’s investigation into suspected price-fixing and collusion with major broadcasters has prompted concerns about whether these alleged collusive structures have been an open secret, quietly accepted by industry players for years.

The advertising industry operates on relationships, leverage, and scale. Many in the industry acknowledge that larger agencies wield disproportionate influence over media buying, dictating terms to both brands and broadcasters.

Zahid Gawandi, director—brand and marketing at hBits, notes, “The advertising industry has long operated with intricate relationships between agencies and broadcasters. Allegations of price-fixing and collusion, as suggested by the recent CCI raids, raise concerns about systemic issues that may have been tacitly acknowledged but not openly addressed.”

A deeper issue uncovered?

Industry observers say the acceptance of allegedly collusive structures is mainly due to the difficulty smaller players face when competing at scale. The convenience of working with a single large agency, despite higher costs, often outweighs the alternative of managing multiple vendors.

However, some industry veterans argue that this monopolistic structure has been intentionally preserved. Prathap Suthan, managing partner and chief creative officer of BangInTheMiddle and a former national creative director with multiple global agencies, is candid in his assessment.

"The CCI raids are just the latest proof of a system that has operated in the shadows for years,” he states, going on to argue that even bribery has been common when national and global agencies fight for new business.

Suthan cites the instance of WPP paying $19 million in fines to the Securities and Exchange Commission (SEC) in 2021. This was for alleged corruption in India, China, and Brazil, where it reportedly violated the anti-bribery, books and record-keeping, and internal accounting controls provisions of the Foreign Corrupt Practices Act (FCPA). As per media reports in India, a WPP subsidiary bribed government officials in return for advertising contracts, and the agency failed to respond to the issue after receiving several anonymous complaints.

A former Dentsu employee describes the current situation more bluntly. “The bullies have taken over the playground. It is the big four networks primarily doing this. They dictate the majority of the spends from their big clients and that's what the biggest problem is. They jack up the numbers to bill their own clients more. It's the smaller agencies and clients that suffer but unfortunately they are also the minority,” they fumed.

IPL and the potential disruption to media buying

The timing of these raids is significant, occurring just before the Indian Premier League (IPL), the biggest advertising event of the year that starts in 22 March and ends on 25 May 2025. Any disruption in media buying agreements could impact brands, agencies, and broadcasters alike. IPL sponsorships and ad slots are typically booked months in advance, often with agencies securing exclusive deals for clients.

Gawandi believes the investigation could force advertisers to rethink their strategies. “The ongoing investigation introduces an element of uncertainty that could disrupt media buying strategies and pricing structures. Brands and agencies may adopt a cautious approach, reassessing their ad spends to mitigate potential risks associated with regulatory findings.”

Suthan agrees, stating that IPL is advertising gold. “Every brand wants in. Every agency fights for the best deals. However, if the investigations reveal deep-rooted price-fixing, the entire media buying structure could shake. Exclusive deals, secret rebates and inflated pricing are all standard practice. If agencies can no longer guarantee these advantages, brands might rethink their spending,” he predicted.

The ongoing regulatory scrutiny could potentially drive the industry towards greater transparency and a more level playing field in media buying. Some brands may reallocate their advertising budgets to digital platforms, where pricing structures and audience metrics are more clearly defined, reducing the risk of opaque dealings. Others might opt to take direct charge of negotiations instead of relying on agency-led agreements.

One unintended consequence of the CCI’s intervention might be an opportunity for smaller media players, who have traditionally been sidelined due to exclusive arrangements between agencies and broadcasters, to gain a foothold in media planning and buying. Given that brands prioritise stability, the uncertainty surrounding these investigations—especially if prolonged—could push advertisers to diversify their spending strategies by distributing budgets more cautiously to mitigate potential disruptions.

The former Dentsu employee adds another concern, “The biggest victim of this fiasco is the trust we have with clients. They will now question more and trust less. Even the people who were not involved in this will be under the radar.”

With a projected $3 billion (INR 25,000 crore) in ad spending expected during IPL 2025, any disruption could send ripples across the industry. If agencies lose their grip on exclusive pricing deals, brands might explore direct negotiations with broadcasters or shift budgets to digital and influencer-led campaigns.

The thin line between market efficiency and collusion

In a volume-driven industry, larger players naturally secure better deals—whether it is airlines securing bulk fuel discounts or supermarkets getting supplier advantages. However, when volume discounts morph into exclusive agreements that prevent fair competition, the line between efficiency and cartel-like behaviour gets blurred.

Gawandi explains, “In volume-driven industries, it's common for larger players to negotiate favourable deals due to their substantial buying power. However, when such agreements evolve into exclusive pricing arrangements that hinder competition, they cross into anti-competitive territory.”

A source admits to Campaign, “Yes, it is natural, but this behaviour and this volume control was used to charge their own clients more money. That's wrong. It was used to jack up the prices of other clients too. That's wrong too.”

The key issue is distinguishing between genuine cost efficiencies and actions that veer into anti-competitive territory. Maintaining a balanced and open marketplace demands well-defined regulations and strict monitoring to curb any misuse of market power.

Suthan highlights the real issue: “When discounts are locked behind exclusivity agreements, it stops being about efficiency. It becomes control. When broadcasters rely too much on a few agencies, they lose control over their own pricing. When brands must go through specific agencies to access key slots, they lose their bargaining power. The market stops being competitive. It becomes dictated.”

The challenge for regulators is establishing clear guidelines for what constitutes fair negotiation versus anti-competitive behaviour. If the CCI rules against the agencies, it could lead to increased transparency in media buying. However, it could also disrupt the traditional business models of large agency networks.

A moment of reckoning for Indian advertising

The CCI’s investigation into alleged price collusion has the potential to reshape the Indian advertising industry. If proven, the agencies involved could face fines of up to 10% of their annual turnover or three times their profits for each year of the collusion. This could result in a restructuring of media buying strategies, with brands demanding greater control and transparency.

The industry is at a crossroads. On one side, the traditional agency model, which thrives on volume-based deals and long-standing relationships. On the other, a shift towards transparency, direct buying, and digital-led investments. The CCI’s findings could well determine which direction the industry takes.

Suthan sums it up best: “Where there is money, there is creativity—the kind that bends rules and plays in the grey. It is global; it is local; it is human. And no agency wants to be outed. Accusations are one thing, convictions are another. There is a long road between the two. So, let’s see what happens.”