CCI Misreads How Ad Pricing Works

In March, the Competition Commission of India (CCI) raided leading advertising agencies — GroupM, Dentsu, Publicis, and IPG — along with industry bodies such as the Indian Broadcasting and Digital Foundation (IBDF) and the Advertising Agencies Association of India (AAAI) over allegations of cartelisation and price collusion.

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Since then, the $16-billion advertising industry has been under heightened regulatory scrutiny. In a conversation with Manu Kaushik, Srinivasan K Swamy, the newly elected president of AAAI, speaks about the CCI probe, challenges in audience measurement, and the road ahead for the industry. Excerpts:

What's your take on the ongoing CCI probe?

CCI received a complaint from one of our members and initiated an investigation. Their preliminary view is that some agencies colluded on pricing. I find this conclusion narrow and simplistic. Advertisers do not choose agencies on price alone — strategy, team strength, and creativity are far more decisive. Price variations between agencies are marginal and cannot materially influence advertiser decisions.

What about the charges of cartelisation and price undercutting?