The Competition Commission of India (CCI) on Tuesday raided the offices of media agencies, including GroupM, Dentsu and IPG Mediabrands, as well as the Indian Broadcasting and Digital Foundation (IBDF), an apex body of broadcasters, over alleged fixing of ad rates and discounts, industry sources told FE.
The action comes ahead of the 18th edition of the Indian Premier League (IPL), which begins on March 22. The raids were carried out in Mumbai, Delhi and Gurugram, sources in the know said.
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Executives at GroupM, Denstu, IPG Mediabrands or IBDF were not immediately available for comment.
The development has come as a surprise to industry watchers, who describe the raids as “unprecedented”. While the CCI is believed to have first initiated a case against the media agencies and broadcasters’ body before conducting the raids, sources in the know have hinted at industry rivalry for the action.
“Transactions for the IPL are currently underway. Typically, there are last-minute deals that happen, closer to the start of the tournament. All of this may get affected due to the ongoing CCI action,” an industry executive said.
According to legal experts, price collusion here refers to the practice of manipulating advertising rates, discounts, or inventory which distorts fair market competition. This practice could favour certain players, inflate prices and reduce choice for consumers. The CCI is said to be probing these angles and the raids were conducted as part of its ongoing investigation into price collusion by stakeholders.
“The allegations appear to be serious, which is why the raids are taking place. It seems that the Commission has solid evidence of price fixation for ads, which may amount to cartelisation under section 3 of the Competition Act. The offence under this section attracts huge penalties,” said MM Sharma, head (competition law) at Vaish Associates Advocates.
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The CCI action also comes at a time when the Indian media and broadcasting market has been rapidly consolidating, with players Star India and the Reliance-backed Viacom18 merging their operations in an $8.5-billion joint venture (JV) called JioStar last year. The combined viewership share of the JV is around 35-40% in TV.
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