India's ad industry raids followed tip-offs under leniency scheme

India's antitrust raids this week on media buying agencies followed tip-offs under a leniency scheme that reduces penalties for companies providing evidence, three people familiar with the matter told Reuters.

Japan's Dentsu was at least one firm that has applied for the scheme, one of the people said. Dentsu declined to comment.

On Tuesday and Wednesday, the Competition Commission of India raided the local offices of WPP-owned GroupM, Interpublic, Publicis and Dentsu, as well as high-profile Indian broadcasters' body IBDF, over suspected collusion on ad prices and discounts.

The three sources said the CCI investigation was linked to the watchdog's leniency programme, which allows a 100 per cent penalty waiver for the first company coming forward with evidence of wrongdoing, and lower waivers for subsequent ones, once the case concludes.

One of the sources with direct knowledge of the matter said Dentsu made a leniency submission around February last year and disclosed evidence related to pricing arrangements between industry body the Advertising Agencies Association of India and the IBDF, which dictated terms on discounting to win ad clients.

"If media agencies wanted to do business, they had to follow these guidelines," the person added, referring to what they viewed as a potential anti-competitive arrangement.

The CCI did not respond to Reuters queries. The AAAI and IBDF, both of which were raided in the enforcement action this week, also did not respond.

Ad giant GroupM, US-based Interpublic's IPG Mediabrands unit, and France's Publicis Groupe did not reply to requests for comment.

It's not clear if any other company has made similar leniency submissions.

The IBDF represents top domestic broadcasters, including billionaire Mukesh Ambani's Reliance-Disney joint venture, Sony and Zee Entertainment.

The CCI does not make public details of any price-fixing investigations, and conducts such raids to seize potential evidence. In the latest case, raids ran through Tuesday night for over 24 hours.

India is the world's eighth-biggest ad market where revenues of $18.5 billion last year are set to grow 9.4 per cent in 2025, GroupM estimates.

The investigation, which will drag on for months, comes amid major shifts in India's ad landscape following a $8.5 billion merger between Walt Disney and Reliance's Indian media assets, with the combined business estimated to have a 40 per cent share of the ad market in TV and streaming segments.

If found guilty, the media agencies may be liable to pay a penalty of up to three times their profit for each year during which the collusion took place, or 10 per cent of their turnover for each year of wrongdoing, whichever is higher.

In 2018, Anheuser-Busch InBev (AB InBev) told the CCI about a beer industry cartel, triggering investigations involving Carlsberg and United Breweries. In return, AB InBev got a full penalty waiver in 2021.