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How the World’s Top Ad Agencies Colluded to Fix Prices in India

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Internal communications revealed that major global advertising firms secretly coordinated to rig ad prices in India’s vast market, undermining competition and client choice.

In October 2023, Omnicom Media’s India CEO, Kartik Sharma, expressed frustration in a WhatsApp group after a rival agency attempted to poach a client by offering lower rates—violating an industry-wide agreement on pricing.

The WhatsApp group, formed in August 2023 and including top executives from WPP’s GroupM, Omnicom Media, IPG Mediabrands, Publicis, Havas Media, Japan’s Dentsu, and India’s Madison World, discussed coordinating pricing strategies and responses to clients. According to evidence reviewed by Reuters and obtained from India’s Competition Commission (CCI), the agencies agreed not to undercut each other, colluded with broadcasters to penalize non-compliant firms, and coordinated financial terms for at least four major Indian clients.

The cartel was facilitated by two industry bodies—the Advertising Agencies Association of India (AAAI) and the Indian Broadcasting & Digital Foundation (IBDF)—both led by senior executives from WPP Media India and Reliance-Disney respectively. The AAAI circulated guidelines requiring agencies to charge minimum commissions on digital and traditional ads and agreed with broadcasters not to offer unilateral discounts.

The CCI dossier revealed discussions about client pitches involving firms like Swiggy, Cipla, Meesho, and Kshema Insurance. For example, the AAAI arranged a Zoom call to unify the industry’s stance on rebates for Swiggy’s ad campaign. A Dentsu executive noted on WhatsApp that the agencies would retain 30% commission and pass back 70% to clients as rebates.

In August 2023, AAAI’s president urged broadcasters like Walt Disney to withhold business from agencies breaking the cartel agreements. Tensions rose when Omnicom Media learned that ITW Consulting had bypassed these pacts with a direct deal on Disney’s Hotstar streaming platform during the Cricket World Cup.

Despite these revelations, the foreign headquarters of the involved agencies have not confirmed awareness of the collusion. Dentsu India disclosed its involvement under the CCI’s leniency program aimed at reforming industry practices from within. Other agencies declined comment, and the regulator has yet to conclude its probe.

This investigation adds to ongoing scrutiny of ad agency practices globally, with similar probes underway in the U.S. following suspicions of anti-competitive behavior.

Fast-Delivery Giants Zomato, Swiggy, Zepto Face Antitrust Case in India Over Discounting Practices

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An antitrust case has been filed against fast-delivery companies Zomato, Swiggy, and Zepto by Indian consumer product distributors, urging the Competition Commission of India (CCI) to investigate alleged predatory discounting practices. The All India Consumer Products Distributors Federation (AICPDF) claims that the deep discounts offered by these quick-commerce platforms are creating unfair pricing models that harm smaller retailers.

The rise of quick commerce—where consumer products are delivered within 10 minutes from local warehouses—has gained popularity among customers but sparked concern among small businesses. The sector, expected to reach $35 billion by 2030, has drawn intense scrutiny, as previous investigations found that e-commerce giants like Amazon and Flipkart had engaged in predatory pricing, benefiting select sellers at the expense of smaller competitors.

The AICPDF, with 400,000 distributor members across India, argues that local brick-and-mortar stores cannot compete with the aggressive pricing strategies of Zomato’s Blinkit, Swiggy’s Instamart, and Zepto, platforms that offer discounts on everyday products such as milk and pulses. Their complaint highlights the negative impact these practices have on independent retailers, particularly smaller stores, which cannot afford to match the prices offered by these larger players.

According to the filing, a variant of Nestle’s Nescafé coffee jar, typically priced at 622 rupees ($7.14) for small retailers, is being sold for as low as 514 rupees on Zepto, 577 rupees on Swiggy Instamart, and 625 rupees on Blinkit, further underscoring the disparity between online and offline prices.

While Zomato, Swiggy, and Zepto have not responded to requests for comment, the filing could add pressure on these companies, which are already under investigation for competition law violations in their food delivery businesses. Zepto, which raised funds last year at a $5 billion valuation, is also preparing for an IPO.

The CCI will review the filing and determine if further investigation is warranted, which could take several months. If the case is found to have merit, it could require these companies to justify their discounting strategies. If dismissed, the case will be closed.

Meta Warns India Antitrust Ruling Could Force Rollback of Features, Harm Business

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Meta has expressed concerns that a recent antitrust ruling by India’s Competition Commission (CCI) could compel the company to “roll back or pause” some of its features, potentially damaging its business in the country. This warning comes in response to a CCI directive that prohibits Meta’s WhatsApp messaging service from sharing user data with the parent company for advertising purposes.

The Antitrust Ruling and Its Implications

The CCI’s November directive found that Meta had abused its dominant position in India and coerced WhatsApp users into accepting a 2021 privacy policy change that allegedly expanded the company’s data collection and sharing practices. As a result, Meta was slapped with a $24.5 million fine and a five-year ban on sharing data between WhatsApp and Meta in India, where Meta has over 350 million Facebook users and more than 500 million WhatsApp users.

Meta has publicly defended its policy change, expressing disagreement with the CCI’s order. However, in its appeal, Meta highlighted the potential consequences of the ruling, which it claims would significantly impact its ability to deliver personalized ads on platforms like Facebook and Instagram. According to Meta’s filing, the ban on WhatsApp-to-Meta data sharing could prevent businesses, such as an Indian fashion company, from personalizing ads based on user interactions with WhatsApp. Meta has warned that this could force the company to “roll back or pause several features and products,” threatening the commercial viability of both WhatsApp and Meta in India.

Meta’s Concerns Over the Business Impact

Meta’s filing with the Indian appeals tribunal provides an in-depth look at the potential impacts of the CCI ruling. The company argues that the data-sharing ban would disrupt its ability to offer personalized advertisements and potentially hinder the company’s long-term revenue generation in India. While Meta has not specified the exact financial consequences, the company expressed concerns about the broader implications for its business operations in one of its largest markets.

Facebook India Online Services, Meta’s registered entity in the country responsible for selling advertising inventory, reported revenue of $351 million in 2023-24, marking its highest revenue in at least five years.

Global Challenges for Meta

This issue in India adds to Meta’s ongoing regulatory challenges worldwide. In 2021, WhatsApp was accused of violating EU laws by failing to adequately explain changes to its privacy policy. Although Meta later agreed to clarify these changes, the global scrutiny continues to affect the company.

The Indian antitrust investigation began in 2021, sparked by criticism over WhatsApp’s privacy policy changes. Meta argued that the changes were designed to provide clarity on optional business messaging features and did not expand data collection or sharing practices, but the CCI disagreed. The ruling mandates that WhatsApp allow users to decide whether or not they want to share their data with Meta, a significant shift from the previous policy that offered no opt-out option.

Meta’s Appeal Against the CCI’s Ruling

In its appeal, Meta has also criticized the CCI’s approach, stating that the regulator should have consulted with the company and WhatsApp before issuing directives to change its business practices. Meta argued that the CCI lacks the technical expertise necessary to fully understand the potential consequences of its decisions, especially as they pertain to the functioning of digital platforms.

Meta’s appeal will be heard by the Indian tribunal on Thursday, though the process could take weeks or months to resolve. In the meantime, the tribunal has the option to put the CCI directive on hold, potentially providing Meta some breathing room.