Blitz Bureau
The CCI is investigating the role of two industry bodies, the Advertising Agencies Association of India (AAAI) and the Indian Broadcasting & Digital Foundation (IBDF), in orchestrating the suspected cartel.
The former group is led by WPP Media India head Prasanth Kumar, while the broadcasting body’s president is Kevin Vaz, a top Reliance-Disney venture executive. Neither industry group responded to requests for comment.
The dossier shows the AAAI circulated guidelines to ad agencies in August 2023: They must charge clients whose annual spending exceeds $29 million a minimum 3 per cent commission for digital ads and 2.5 per cent for traditional media. Lower-spending clients would pay higher minimum commissions of up to 8 per cent.
AAAI and IBDF orchestrated the cabal
A month later, the industry associations entered a joint pact, agreeing no agency would “unilaterally offer any discount” on rates while pitching for business. The pact, reviewed by Reuters, declared its aim was to eliminate “lower pricing as a reason to award a pitch”.
The advertising firms began coordinating their activities at least as early as August 2023, according to the CCI documents. Ad executives who met on December 1 that year hailed their collaboration as a “great success” and resolved to continue, according to meeting minutes cited in the CCI’s evidence.
“All aligned”
In the US, the Federal Trade Commission this month sought information from advertising agencies as part of a probe into whether they coordinated boycotts of certain sites. The Justice Department in 2016 probed agencies it suspected of rigging bids to favour in-house units, but eventually closed the case without bringing charges. Brewer Anheuser-Busch InBev used CCI’s leniency programme to blow the whistle on an industry cartel in India in 2017.
In the case of the ad industry, Dentsu India told Reuters it filed its leniency application with the CCI not as a reaction to external pressure but out of a decision to “support reform from within”.
Two people with knowledge of the matter told Reuters the evidence Dentsu submitted included a transcript of the WhatsApp group. The group, formed in August 2023 and reviewed in part by Reuters, was named “AAAI media agencies” and contained scores of chat messages.
Participants included Kumar of WPP’s media company, Sharma of Omnicom Media, IPG Mediabrands’ Sinha, Havas Media India CEO Mohit Joshi, Dentsu South Asia CEO Harsha Razdan and then-media business CEO Anita Kotwani, Publicis South Asia chief Anupriya Acharya and Madison boss Sam Balsara, the investigators’ evidence shows.
Members of the group discussed advertising pitches and coordinated on interactions with clients such as food delivery giant Swiggy, drug maker Cipla, SoftBank-backed e-commerce firm Meesho, and Kshema Insurance.
In Swiggy’s case, the AAAI arranged a Zoom call with media agency heads to discuss the company’s advertising pitch. Later, GroupM’s Kumar, as AAAI president, suggested an email response to Swiggy explaining the industry’s agreed position on rebates. “Ok all aligned thanks,” he wrote after a consensus emerged.
Kshema told Reuters the insurer was unaware of the matter. The other clients didn’t respond to questions.
During another discussion on client rebates, an unspecified Dentsu executive told rivals over WhatsApp that “the lowest we go to is retain 30 per cent and 70 per cent we pass back to the client,” according to the CCI dossier.
CCI officials noted in the document that advertisers and the broadcasters’ group had sought to penalise enterprises that didn’t comply with the pricing pacts.
In an email to Walt Disney in August 2023, Kumar wrote that broadcasters should refrain from granting business to a firm that had breached the pacts, ITW Consulting, though he said it had later agreed not to approach clients directly. ITW didn’t respond to Reuters questions.
Tensions heated up again over WhatsApp three months later. Sharma, of Omnicom Media, learned that ITW had done another “direct deal with a client of ours” for advertising on streaming platform Hotstar, which was run by Disney.
This irked Sharma, as Hotstar had the rights for the cricket World Cup held in India at the time.
“This nuisance has to stop,” he wrote in the group.