India’s Competition Commission has unearthed evidence showing that the world’s leading advertising agencies secretly coordinated to fix commission rates and pitch pricing, effectively placing a floor under media-buying costs for major clients. Top executives from global groups—including WPP’s MediaCom, Omnicom Media, IPG Mediabrands, Publicis, Havas, Dentsu and Madison—used industry associations and encrypted messaging to align their offers and stave off undercutting. This concerted effort, spanning late 2022 through 2023, illuminates both the methods by which the cartel operated and the commercial pressures driving it.

Coordinated Pricing Pacts Through Industry Bodies

Rather than negotiating independently for each client, agency leaders funneled discussions through two key trade bodies: the Advertising Agencies Association of India (AAAI) and the Indian Broadcasting & Digital Foundation (IBDF). In August 2023, AAAI circulated new “minimum commission” guidelines: any client spending more than ₹230 million annually would face no less than 3 percent commission on digital media and 2.5 percent on traditional channels, with smaller advertisers paying up to 8 percent. A month later, AAAI and IBDF formalized a joint agreement stating that no member agency would unilaterally offer discounts below the agreed thresholds when pitching for new business.

Behind this façade of trade-union solidarity lay the real engine of collusion: a private WhatsApp group—named “AAAI Media Agencies”—in which 11 senior executives orchestrated pricing strategy. Chat logs reveal detailed deliberations on how to respond when a rival attempted to lure away a client with a cheaper bid. On October 5, 2023, Omnicom Media’s India chief flagged a competitor’s undercutting as a breach of the pact, prompting calls to “admonish the agency” and referrals to IBDF for enforcement. This closed‑door communication ensured that agencies presented a united front to media owners and clients alike, effectively removing price competition from the marketplace.

Enforcing Compliance and Penalizing Deviations

The cartel did not stop at setting price floors—it enforced them through coordinated pressure on non‑compliant firms. Executives agreed to withhold business from any agency that flouted the pact, leveraging their collective relationships with broadcasters and streaming platforms. In one case, when an independent agency struck a direct ad deal on a leading digital platform for a major sports property, cartel members lobbied broadcasters to divert future orders away from the offender. “This nuisance has to stop,” read a December message from Omnicom Media’s CEO, decrying one firm’s “direct deal” for cricket World Cup inventory.

Media owners were enlisted as unwitting allies. IBDF, chaired by a senior executive of a Reliance‑Disney venture, disseminated lists of compliant agencies for premium ad slots and urged broadcasters to honour the cartel’s unified rate cards. When an agency attempted to bypass the agreement by offering custom rebates or performance‑linked incentives, rival firms flagged the transgression in AAAI meetings and WhatsApp, ensuring swift collective rebuke. The message was clear: adherence to the price pact was non‑negotiable, and deviation risked commercial isolation.

Drivers Behind Collusion: Margin Pressure and Market Dynamics

Several factors propelled these market‑leaders toward collusion. India’s media and entertainment sector, valued at nearly $30 billion, has grappled with slowing ad‑spend growth—forecast to be just 7 percent in 2025, the weakest in three years. Rising digital inventory costs, fierce competition from global tech platforms and the need to invest in data analytics and programmatic trading squeezed agency margins. By stabilizing commission rates, agencies sought to safeguard profitability and fund the technological upgrades required for omnichannel campaign management.

At the same time, clients grew more price‑sensitive amid weak consumer sentiment and cost pressures. Large advertisers—ranging from food‑delivery firms to insurance companies—demanded bespoke rate cards and volume‑based discounts. The cartel’s uniform commissions stripped clients of leverage, compelling them to accept standardized fee structures or risk losing preferred inventory access. With procurement teams increasingly centralizing media‑buying decisions, agencies faced pressure to retain large retainer deals, further incentivizing collective rate‑rigging over individual undercutting.

Globally, similar dynamics have played out in mature markets, where digital disruption has unsettled traditional media‑buying models. Major agency holding companies have responded by consolidating service lines, offering integrated creative‑media solutions and streamlining overheads. In India, however, the collective decision to shore up legacy commission models through anticompetitive collusion underscores the transitional tension between established fee‑for‑service frameworks and emerging performance‑based contracting.

India’s antitrust regulator, after raiding agency offices and the IBDF in March 2024, has assembled a dossier documenting months of WhatsApp exchanges and meeting minutes. Under Indian law, fines may reach three times an offender’s profit or 10 percent of global turnover per year of infringement—penalties that threaten to devastate agency balance sheets. One industry insider predicts combined fines could exceed ₹10 billion, given the scale of the major players involved.

In response, at least one cartel member has sought leniency by volunteering evidence and agreeing to stricter internal compliance audits. Others are reevaluating contracts, preparing to recalibrate commission structures and exploring alternative revenue models—such as fixed‑fee retainers or performance‑linked fees—to reduce reliance on standardized markups. Clients, meanwhile, are pressing for transparent media‑buying practices and exploring direct platform relationships to circumvent traditional agencies.

The broader implications for India’s advertising ecosystem are significant. Should the CCI impose record‑breaking fines, global holding companies may reassess the viability of legacy commission models in emerging markets. Local, independent agencies could gain market share by undercutting established players within the bounds of competition law, while broadcasters and digital platforms may demand open access to advertising inventory without agency intermediation.

As the investigation proceeds, the unraveling of this clandestine price‑fixing network will serve as a cautionary tale: even industry titans face grave consequences when they conspire to neutralize competition. For now, the world’s top ad agencies in India find themselves navigating a new frontier—one where regulatory scrutiny, evolving client demands and digital transformation force a redefinition of how media‑buying value is created and captured.

(Adapted from MarketScreener.com)