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The Advertising Agencies Association of India (AAAI) has advised its members to avoid sharing pricing details, especially through informal channels like WhatsApp, in the wake of the recent raids conducted by the Competition Commission of India (CCI) on leading advertising firms over alleged price collusion, as per a Reuters report.
Ad Firms Raided Over Price Fixing Allegations
Earlier this year, on March 18, the CCI raided targeted offices of several major advertising firms, including GroupM, Publicis, Dentsu, and Interpublic Group, as part of an investigation into alleged price collusion in India’s advertising sector. The Commission suspects that these agencies fixed prices, rigged bids, and allocated markets – practices that harm competition and consumers.
Price collusion occurs when companies secretly agree to manipulate prices, rather than allowing market forces to determine them, leading to inflated costs and reduced market competition. The investigation is still ongoing, with CCI officials conducting searches and gathering evidence, including documents and statements from company executives.
AAAI’s directive on WhatsApp Communication
Following the raids, the Advertising Agencies Association of India (AAAI) sent a warning to its members. The group, guided by legal advice from the law firm Trilegal, told all member agencies to avoid any conversations, whether by email, WhatsApp, or in meetings, that involve sensitive topics like pricing strategies or discounts.
“Members are requested not to discuss (through any mechanism, including emails, WhatsApp groups, documents, any informal, or formal meetings), any commercially sensitive information,” said the AAAI in a March 26 advisory.
The notice also advised ad agencies to leave any existing WhatsApp groups they may be part of with competitors and not to communicate in ways that might raise red flags under competition laws.
Agencies that are part of AAAI include Indian units of major global players: GroupM (owned by UK-based WPP), Japan’s Dentsu, and France’s Publicis. All of their Indian offices, along with the AAAI, were among those raided last month.
While the CCI has not officially confirmed any names or findings, it is known that Dentsu became a whistleblower in the case. The company reportedly found evidence of price-fixing within the industry and approached the CCI under its leniency program, which can allow the first company to report misconduct to escape penalties.
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As part of the evidence, Dentsu submitted a 2023 document jointly created by AAAI and the Indian Broadcasting and Digital Foundation (IBDF), which represents major broadcasters like Reliance-Disney and Sony. That document discouraged agencies from offering lower prices to win clients and even required a “no objection” certificate before a client could switch to another agency.
The AAAI has now distanced itself from such practices. Its recent advisory clearly states that agencies “are advised to not impose any restrictions (including requirements for a no-objection certificate or embargo) shared by any other trade associations.”
Questions Sent to Trilegal
MediaNama has reached out to Trilegal with the following questions and will update this copy once we receive a response:
- What specific provisions of Indian competition law prompted the March 26 advisory?
- Was this advisory a proactive compliance measure or a response to the recent CCI raids on advertising agencies?
- Does the advisory effectively ban all informal communication among competing ad agencies, or is it specifically limited to discussions around pricing?
- How does Trilegal interpret the line between legitimate industry collaboration and anti-competitive behaviour in this context?
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