Why is India’s ad land in a legal limbo

In a move that's caught the advertising world off guard, the Competition Commission of India (CCI) has launched an unprecedented investigation into the country's biggest ad agencies and industry bodies. 

On March 18, 2025, CCI officials conducted surprise dawn raids at about 10 locations across Delhi-NCR and Mumbai, targeting major players like GroupM, Dentsu, Interpublic Group, Publicis and Madison. The probe, and accompanying raids, didn't stop at agencies; it also encompassed industry bodies such as the Indian Broadcasting and Digital Foundation, Advertising Agencies Association of India, and Indian Society of Advertisers.

These weren't casual inspections. CCI officials sealed premises, confiscated mobile phones, and meticulously examined emails, financial records, and internal communications. Some senior executives, including CEOs, reportedly faced overnight questioning as evidence was gathered. The core of the investigation revolves around allegations of anti-competitive practices, including price-fixing, eliminating fair discounts, collective action to maintain high ad rates, and creating long-term deals that potentially lock advertisers into unfair terms.

“At the core of the inquiry is the alleged undercutting of commissions and collusive arrangements between agencies and broadcasters to influence advertising rates. The CCI’s dawn raids across multiple locations suggest the presence of prima facie evidence pointing to potential contraventions of Section 3(3) and Section 4 of the Competition Act, 2002,” says Kunal Sharma, Partner, Singhania & Co.

“Section 3(3) explicitly prohibits agreements that directly or indirectly determine purchase or sale prices, limit production or supply, and result in bid-rigging or collusive tendering, all of which could be relevant given the nature of the allegations. Meanwhile, Section 4 prohibits abuse of a dominant position, particularly if agencies are found to be engaging in exclusionary practices or unfair trade conditions that distort market competition,” he explains.

A legal expert told exchange4media that the CCI only had to prove the existence of an agreement to fix prices and indulge in discriminatory practices, not even that the agreement had been acted upon, for the big ad firms and other entities to be investigated for ‘cartelization’, and for the dawn raids to be carried out.

The timing of this probe is significant, coming just before the Indian Premier League season, one of the most lucrative periods for advertising in India. With the country's ad market valued at $18.5 billion and projected to grow by 9.4% in 2025, there's a lot at stake. The investigation highlights the issue of market concentration, with GroupM alone commanding a 45% media market share in India and handling 45 of India's top 50 advertisers.

Sources suggest the investigation might have stemmed from a routine GST probe that uncovered potential cartelization signs. Others hint at a formal complaint from either a large advertiser or a smaller agency feeling disadvantaged by industry practices. Regardless of its origin, the scale and scope of the CCI's action indicate a serious concern about the state of competition in India's advertising sector.

Kunal Mehra, Partner, DSK Legal, noted that: “Typically, search and seizure operations are conducted in cases whether the investigating officer of the CCI has reason to believe that evidence (including books, papers, electronic records, etc.) in possession of the parties under investigation may be destroyed or altered. Search and seizure operations can only be conducted after taking permission from the Chief Metropolitan Magistrate (Delhi). During the operation, the investigating officer can seize any  information, documents or electronic records as may be considered necessary for the purpose of the investigation.”

For the agencies involved, the potential consequences are severe. If found guilty, they could face penalties of up to 10% of their annual turnover or three times their profits for each year of continuous violation. Beyond financial penalties, this investigation could force fundamental changes in how media buying operates in India. The probe may lead to increased scrutiny of long-term deals, pricing structures, and the overall transparency of the media buying process.

However, as one lawyer informed exchange4media, with recent amendments to the competition law taking effect (oddly enough, a mere week before these raids), the CCI has now gained the authority to levy fines of up to 10% of a company's worldwide revenue for breaches of competition law. Given that these are the largest ad companies in the world, the financial repercussions could be enormous.

The same lawyer opined that they were likely not to be used this time, as the government would hold this trump card for cases involving big tech, when the financial implications are truly staggering.

Smaller, independent agencies are watching closely, as the outcome could potentially level the playing field and open up new opportunities. The investigation might lead to more transparent practices, allowing these smaller players to compete more effectively for clients and media space. However, they're also aware that any major disruption in the industry could have unpredictable consequences for all players, big and small.

Advertisers and brands are reassessing their agency relationships in light of the probe. Some industry observers predict more brands might take direct control of their ad negotiations, especially as platforms promise increased transparency and insights for advertisers during major events like the IPL. This shift could lead to a restructuring of how brands interact with media platforms and potentially change the role of agencies in the advertising ecosystem.

Indeed, according to Sharma, the CCI has the authority to issue cease-and-desist orders and mandate structural or behavioural modifications to prevent future violations. “Moreover, advertisers and other affected entities may pursue damages under Section 53N of the Act, opening the door for class-action lawsuits against agencies engaging in unfair trade practices.”

The CCI isn't limiting its investigation to ad agencies. The probe has expanded to examine potential involvement of Big Tech firms and major advertisers, particularly in the FMCG sector. The question is whether these companies benefited from exclusive media-buying agreements or preferential treatment in advertising slots. This broadening scope suggests that the CCI is looking at the entire advertising value chain, from agencies to platforms to major advertisers.

The response from the industry has been notably muted, with CEOs and senior executives of the involved agencies unreachable since the raids began. This silence is telling, as it suggests a cautious approach from industry leaders who are likely consulting with legal teams and strategizing their responses. Behind closed doors, however, the advertising world is abuzz with speculation about the potential outcomes and implications of this investigation.

The probe comes at a time when the advertising industry is already grappling with significant changes. The rise of digital advertising, the increasing role of data in targeting and measurement, and the growing influence of social media platforms have all been reshaping the landscape. This CCI investigation adds another layer of complexity and uncertainty to an already evolving industry.

As the CCI sifts through the gathered evidence, the advertising industry is in a state of suspense. The outcome of this investigation could establish new precedents for how media buying is conducted in India, potentially reshaping trust, competition, and pricing practices in one of the world's fastest-growing advertising markets. It may lead to new regulations or guidelines for the industry, affecting everything from how deals are structured to how pricing is determined.

"Beyond monetary fines, the agencies could also face operational repercussions, including possible debarment from working with certain broadcasters," says Suhael Buttan, Counsel, SKV Law Offices, adding, "It is important to note that the investigation is currently ongoing. No conclusions have been drawn, and the CCI has not issued any official findings or public statements at this stage."

The investigation also raises questions about the future role of industry bodies. These organizations, which have traditionally played a key role in setting standards and representing the industry's interests, now find themselves under scrutiny. Their future influence and operations may be significantly impacted by the outcome of this probe.

For global advertising networks, the CCI's action in India could have ripple effects. Many of these networks operate similar structures and practices across different markets. If the Indian investigation leads to significant changes or penalties, it could prompt reviews and potentially preemptive changes in other markets.

All in all, this is a watershed moment for Indian advertising, and the impact of these raids could lead to seismic shifts across the landscape of Big Ad.