Cartelisation in Advertising: An Emerging Competition Law Challenge in India

Introduction

The Competition Commission of India’s (CCI) move to probe international advertising firms on the grounds that they are colluding on commission rates has created some ripples in the industry. At its core, this probe raises a critical question: can industry-wide standardisation in commission structures cross the line into cartelisation, and what does this mean for competition in India’s service economy? What may appear to be a niche dispute between a few agencies and the regulator, in fact, carries far-reaching implications. This is because advertising is not just a business, but the foundation of how modern commerce operates it determines how media houses survive and how consumers make their daily purchasing decisions. When some large players align their fee structures, it is not only the advertisers who are impacted, but also media houses, small businesses, and ultimately the consumers, who might end up paying more for goods and services.

Furthermore, it is reported that the CCI has revealed initial signs of agencies harmonizing their commission standards, a concerning aspect of cartelisation under Section 3 of the Competition Act, 2002 (Act). What was supposed to be healthy competition has been replaced with uniformity, thereby negating the process of competition itself. Players in the industry, though, have not been found guilty and have defended these similarities as part of global standard practices. This conflict between industry norms and competition law stands at the center of the present controversy.

This probe is even more important due to its timing and scope. Indian competition law has historically been sensitive to cartelisation in sectors like cement, airlines, or beer, where collusion is more visible. However, service-sector industries such as advertising are more difficult to detect and yet equally powerful, permeating every sector of the consumer economy. By examining global ad agencies, the CCI is not only studying a single market segment but also sending a broader message that service industries, too, are within the ambit of competition scrutiny. In doing so, the regulator sets an important precedent for addressing collusion in modern and dynamic markets.

This article aims to, firstly, analyse the investigation conducted by the CCI on the so-called cartelisation by global advertising agencies; secondly, to explore potential policy changes that can be implemented to address and rectify the competition concerns highlighted by the probe; and lastly, to evaluate the broader implications of the investigation on transparency, fairness, and accountability within India’s service markets.

The Legal Backbone: Section 3 of the Competition Act

Section 3 of the Act outlaws the anti-competitive agreements. This forms the basis upon which cartelisation and collusive practices shall be addressed. Some of their actions such as price-fixing, bid rigging and cartelisation are per se illegal among others. To prove the violation before CCI, two issues need to be established: (i) that an agreement (formal or informal, and potentially even implied by conduct) exists and (ii) the agreement has or is likely to have an appreciable adverse effect on competition (AAEC) in the market.

Substantial precedents have been achieved in the Indian enforcement. The Cement Cartel case highlighted that even the big manufacturers had aligned to coordinate their prices. However, investigations in the Airline Industry revealed that even the sharing of sensitive information would help plot a scheme. More recently the case of the Beer cartel has brought into the limelight the way that trade association meetings can help promote anti-competitive coordination. These instances underscore the fact that the CCI does not mandate the existence of smoking gun evidence, circumstantial evidence and parallel conduct might suffice to show that there exists a collusion.

Nevertheless, it is challenging to apply this framework in services such as advertising. Advertising services are intangible in comparison with commodities, which tend to be designed to order, and so, are more inimitable to gauge in terms of standardized prices. That makes it difficult to establish whether the resemblances in the fee structures are the consequences of an active market practice or collusion by regulators.

How Cartelisation Distorts India’s Advertising Ecosystem

The purported cartelisation of the advertising agencies in the world has trickle effects at various levels of the market. To advertisers, be it established large advertisers or digital first startups, the immediate effect is an artificially high structure of commissions and reduced bargaining room. Rather than competitive pricing reducing costs, standardized fee structures artificially increase the floor, requiring the advertisers to either incur the increased costs or recover them by charging higher product prices.

The media houses and publishers that are already struggling with revenue, are confronted with falling ad funds as advertisers cut spending, a trend that is similar to that of the India airline cartel investigation where exaggerated prices made demand sluggish. The end result is a negative impact on consumers in the form of increased product prices, decreased options, and non-transparent fee structures. The long-term aftermath is decreased productivity and creativity in the industry. Ironically, India has a competitive framework that is well-established to ensure transparency and fairness, which also causes it to become a flashpoint of cartelisation when international companies strive to unify the practices.

Comparative Perspective: How the U.S. and EU tackle Advertising Cartels

In assessing the CCI probe into perceived cartelisation among the ad agencies, it would be helpful to peer outwards. Such practices are not new to global competition agencies, especially in the United States and the European Union, and advertising and marketing services have not been left out of antitrust enforcement, and industry conventions can easily degenerate into collusion.

U.S. - Antitrust Enforcement in Services

In United States v. Apple, Apple and various publishers conspired to price-fix e-books which were harmful to consumers, and it was held by the court that how price-fixing directly harmed consumers, showing how coordinated practices in creative or content-driven industries can suppress competition. A more recent case was Cornish-Adebiyi v. Caesars Entertainment wherein hotel chains used algorithms to keep room rates aligned. The U.S. Federal Trade Commission (FTC) and Department of Justice (DOJ), went after them and the decision made it clear that collusion is still unlawful even if it is done through technology. On the same note, DOJ also intervened against professional associations that create standard fee guidelines, and this has strengthened the argument that collective fee-setting discourages competition.

Taken together, these cases reflect the United States’ unwavering stance that any form of coordination whether overt or algorithm-driven, formal or through trade associations amounts to cartelisation when it restricts independent market conduct or distorts pricing. U.S. antitrust enforcement is deeply deterrent in nature, combining rigorous investigation, heavy financial penalties, and even personal accountability for executives. The underlying philosophy is clear: competition, especially in dynamic and creative industries, must stem from innovation and market merit rather than from convenience-driven alignment or collective restraint.

EU - Strict Approach to Collusion

The European Union has taken a strict stand as well. The European Commission fined Google nearly 3 billion euros, saying the company abused its dominance in ad tech by overcharging advertisers and publishers. In T-Mobile Netherlands, the EU court held that even a single meeting where sensitive commercial information is shared may amount to cartelisation. This rule has big importance in advertising since fee benchmarks are often talked about there.

Collectively, these decisions underline the EU’s uncompromising approach toward preserving market integrity. The EU’s enforcement philosophy rests on the principle that even minimal coordination capable of distorting competition whether through information sharing or dominance abuse warrants intervention. The European Commission prioritizes deterrence through stringent penalties and transparency obligations, ensuring that firms compete on merit rather than mutual understanding. In sectors like advertising, where informal exchanges can easily blur into collusion, this strict stance reinforces accountability and cultivates a culture of compliance grounded in openness and fair rivalry.

Lessons for India

The experiences of the U.S. and EU show that collusion is not always open and obvious. It can be soft collusion, industry practices, or even coordination through algorithms. For India the warning is straight: something that looks like harmless standardisation may still fall under cartel behaviour. The CCI needs to keep itself in line with global enforcement to make sure fairness and accountability are maintained in this service sector. To address this, the CCI should strengthen its capacity for digital market surveillance and algorithmic audits to detect subtle coordination much like the European Commission’s use of data analytics units to monitor pricing algorithms and detect collusion in e-commerce markets. Additionally, developing sector-specific compliance frameworks as the UK’s Competition and Markets Authority (CMA) has done for digital advertising would help set clearer boundaries for permissible conduct. Implementing these mechanisms would align India’s enforcement toolkit with global best practices, ensuring that the CCI remains proactive, not reactive, in maintaining transparency, accountability, and fair competition in the service sector.

Impact on Indian Stakeholders & Compliance Dilemmas

The CCI investigation of potential cartelisation in advertising does not concern agencies alone but it impacts everyone involved. To advertisers and media purchasers, coordination of fees is a betrayal of trust and prices are astronomical. This harms healthy bidding and ultimately increases prices to consumers even in the advertising and technology sectors. Even the so-called silent or industry standards are considered as collusion in the U.S. and EU. This compels agencies to incur higher costs in compliance systems and train their employees. On the other side regulators have their issue. In contrast to such industries as cement or airlines, collusion in advertising is possible in a subtle form by imposing fees or minor adjustments, and it is more difficult to demonstrate intent. Another issue is that India does not have clear rules on what trade associations in services do. Using the U.S. and EU as a reference, the CCI can give guidance here and find a balance between strict enforcement and practical business needs.

However, regulators face a more complex challenge. Unlike sectors such as cement or airlines, collusion in advertising often operates subtly through uniform pricing patterns or shared business practices that make proving intent difficult. This challenge is compounded by India’s lack of clear guidelines defining permissible collaboration within trade associations in the service sector.

To address this, the CCI could issue sector-specific guidance notes or advisory opinions, similar to the European Commission’s Guidelines on Horizontal Cooperation Agreements, clarifying the line between legitimate coordination and anti-competitive behaviour. Furthermore, introducing a leniency-plus mechanism and organizing industry-level compliance workshops would help balance robust enforcement with practical business needs. This approach would promote fairness, encourage voluntary compliance, and foster a competitive yet innovation-friendly service ecosystem.

Conclusion

The ongoing CCI investigation into advertising cartelisation is a timely step. It can push India’s competition law system to grow by picking up best practices from the U.S. and EU. Both those jurisdictions show that in service markets, enforcement has to be fast and strong. The U.S. and EU are characterized by different antitrust enforcement strategies. The former focuses on lenient measures and negotiated compliance while the latter on heavy fines and strict application of the cartel conduct rules.

For India, the takeaway is simple. The CCI ought to provide more specific compliance guidelines for digital advertising and platform-based services like the publication of sector-specific advisories that would direct on legal data-sharing practices, algorithmic transparency standards, and acceptable partnership models. On top of that, the Commission could make periodic compliance audits systematic and create a specific digital markets unit that would be armed with the capability of forensic and data analytics in order to find out the anti-competitive conduct beforehand. The key is balance. If enforcement is too weak, advertisers and consumers suffer. If it is too harsh, global agencies may avoid investing here. With strong penalties on one hand and proactive advice on the other, India can send the right message: the market is open for business, but fair competition is non-negotiable.