Dentsu has filed a leniency petition with the Competition Commission of India (CCI), unveiling an alleged cartel operating within the sector.
The move has sent ripples through the industry, as Dentsu, a leading global advertising agency, steps forward as a whistleblower.
According to industry insiders, Dentsu’s decision was not entirely voluntary but rather influenced by directives from its global headquarters in Tokyo, BW reported. Over the past year, the agency had been gradually distancing itself from major industry bodies, such as the Advertising Agencies Association of India (AAAI), signaling an impending shift away from entrenched industry practices.
CCI’s leniency program, which provides incentives for entities involved in anti-competitive activities to come forward in exchange for reduced penalties, has played a crucial role in encouraging such disclosures. By leveraging this program, CCI aims to dismantle price-fixing and collusion within the media advertising landscape.
Dentsu’s decision to file for leniency comes in the wake of major financial losses. In 2023, the agency lost two high-value accounts: an automobile giant worth Rs 1000 crore ($120 million USD) and an FMCG leader worth Rs 1600 crore ($192 million USD). This cumulative loss of $312 million USD in billings dealt a significant blow to the company. The agency’s business model, which had long relied on aggressive discounting and commission-driven pricing, was put under strain, prompting a reassessment of its position in the market.
A source close to the matter stated, “This wasn’t just about ethics. Dentsu was wounded. Losing those accounts made them question the system—and their place in it. They had to fight back.”
As CCI intensified its probe into cartelization within the media sector in early 2024, Dentsu faced a crucial decision—remain silent and risk being implicated, or break ranks and seek immunity. With mounting pressure and limited strategic options, the agency chose the latter.
The agency’s leadership, already under financial duress, saw no alternative but to turn informant, a move that may come at the cost of its long-standing industry relationships. While the leniency program offers potential legal protection, the backlash from industry peers could be severe and long-lasting.
Dentsu’s legal troubles extend beyond cartelization. The agency previously faced an Income Tax Department raid in 2022, followed by an Enforcement Directorate investigation in 2024 over alleged fund mismanagement linked to a ‘Need to Feed’ program.
Furthermore, sources indicate that investigators may have uncovered digital evidence pointing to the involvement of major technology firms in digital media-buying deals. Preliminary findings suggest that tech giants may have influenced ad pricing, digital media spending, and long-term media-buying agreements, potentially exposing a broader network of anti-competitive practices in the digital advertising ecosystem.
Antitrust Intelligence wrote about the impact of this investigation on the companies involved, highlighting that WPP’s high revenues in the country, could put the company in a more complicated situation than rivals.
