Dossier of WhatsApp chats shows how ad agencies aligned to fix prices in India
The attempt to woo the client violated the agencies' agreement, Omnicom Media's India CEO Kartik Sharma wrote in a WhatsApp group comprising a who's who of advertising, according to excerpts of the discussion documented by antitrust investigators.
"This kind of practice is not in the spirit of what we are collectively trying to achieve," Sharma wrote, without identifying the parties.
Shashi Sinha, then India CEO of New York-based IPG Mediabrands, suggested an industry group should "admonish the agency."
The exchanges form part of a confidential dossier compiled by India's antitrust watchdog that chronicles how global advertising companies, including leading U.S. and European firms, coordinated to rig prices in the world's most populous nation.
Evidence from the Competition Commission of India (CCI) investigation includes a 10-page document with messages and records of meetings between top advertising executives, and two industry agreements are under scrutiny for antitrust violations. Two people familiar with the probe have spoken about it.
The key details, which haven't been previously reported, center on WhatsApp interactions involving 11 industry executives. They include the top India or South Asia executives of WPP's GroupM; U.S.-based Omnicom Media and Interpublic's IPG Mediabrands; France's Publicis and Havas Media; Japan's Dentsu and India's Madison World.
Over WhatsApp and in meetings, the executives coordinated responses to clients, which "resulted in alignment of competing advertising agencies," CCI officials said in the Aug. 9 dossier, determining on an initial basis that the conduct contravened competition law.
The firms agreed to cooperate on pricing, including not to undercut each other; colluded with broadcasters to deny business to agencies that didn't comply; and discussed financial terms involving at least four Indian clients over conference calls, according to the investigation documents.
The documents don't indicate whether the agencies' foreign headquarters were aware of the executives' actions.
A spokesperson for WPP Media, which until May was known as GroupM, said it was aware of the investigation but declined to comment further. A Dentsu India spokesperson confirmed reporting that it had disclosed industry practices to the CCI in February 2024 under the regulator's leniency program, which enables lesser penalties for firms that share evidence of malpractice. The spokesperson didn't address specific evidence raised in the dossier but said the firm had implemented stricter audits and controls.
The other agencies and their executives didn't respond to questions about the antitrust probe and information in the dossier. The regulator also didn't respond to queries.
In March, as part of the continuing investigation, the regulator raided the Indian offices of many advertising firms and an industry group that represents broadcasters, including the Reliance-Disney venture and Sony.
CCI investigations typically take several months. The regulator can't press criminal charges, but can impose financial penalties on the media agencies of up to three times their profit or 10% of an Indian entity's global turnover, whichever is higher, for each year of wrongdoing.
Secret pacts
WPP Media, the world's largest media-buying agency, last year — when it was still known as GroupM — won new India business worth $447 million, followed by Omnicom's $183 million, according to research firm COMvergence.
But India's near-$30 billion media and entertainment sector is grappling with weak consumer sentiment. Ad spending will rise 7% to $19 billion in 2025, the slowest growth in three years, according to GroupM estimates.
The CCI is investigating the role of two industry bodies, the Advertising Agencies Association of India (AAAI) and the Indian Broadcasting & Digital Foundation (IBDF), in orchestrating the suspected cartel.
The former group is led by WPP Media India head Prasanth Kumar, while the broadcasting body's president is Kevin Vaz, a top Reliance-Disney venture executive. Neither industry group responded to requests for comment.
The dossier shows the AAAI circulated guidelines to ad agencies in August 2023: They must charge clients whose annual spending exceeds $29 million a minimum 3% commission for digital ads and 2.5% for traditional media. Lower-spending clients would pay higher minimum commissions of up to 8%.
A month later, the industry associations entered a joint pact, agreeing no agency would "unilaterally offer any discount" on rates while pitching for business. The pact declared its aim was to eliminate "lower pricing as a reason to award a pitch."
The advertising firms began coordinating their activities at least as early as August 2023, according to the CCI documents.
Ad executives who met on Dec. 1 that year hailed their collaboration as a "great success" and resolved to continue, according to meeting minutes cited in the CCI's evidence.
'All aligned'
In the U.S., the Federal Trade Commission this month sought information from advertising agencies as part of a probe into whether they coordinated boycotts of certain sites.
The Justice Department in 2016 probed agencies it suspected of rigging bids to favor in-house units, but eventually closed the case without bringing charges.
Brewer Anheuser-Busch InBev used CCI's leniency program to blow the whistle on an industry cartel in India in 2017.
In the case of the ad industry, Dentsu India said it filed its leniency application with the CCI not as a reaction to external pressure but out of a decision to "support reform from within."
Two people with knowledge of the matter said the evidence Dentsu submitted included a transcript of the WhatsApp group. The group, formed in August 2023, was named "AAAI media agencies" and contained scores of chat messages.
Participants included Kumar of WPP's media company, Sharma of Omnicom Media, IPG Mediabrands' Sinha, Havas Media India CEO Mohit Joshi, Dentsu South Asia CEO Harsha Razdan and then-media business CEO Anita Kotwani, Publicis South Asia chief Anupriya Acharya and Madison boss Sam Balsara, the investigators' evidence shows.
Members of the group discussed advertising pitches and coordinated on interactions with clients such as food delivery giant Swiggy, drugmaker Cipla, SoftBank-backed e-commerce firm Meesho, and Kshema Insurance.
In Swiggy's case, the AAAI arranged a Zoom call with media agency heads to discuss the company's advertising pitch. Later, GroupM's Kumar, as AAAI president, suggested an email response to Swiggy explaining the industry's agreed position on rebates.
"Ok all aligned thanks," he wrote after a consensus emerged.
Kshema said the insurer was unaware of the matter. The other clients didn't respond to questions.
During another discussion on client rebates, an unspecified Dentsu executive told rivals over WhatsApp that "the lowest we go to is retain 30% and 70% we pass back to the client," according to the CCI dossier.
CCI officials noted in the document that advertisers and the broadcasters' group had sought to penalize enterprises that didn't comply with the pricing pacts.
In an email to Walt Disney in August 2023, Kumar wrote that broadcasters should refrain from granting business to a firm that had breached the pacts, ITW Consulting, though he said it had later agreed not to approach clients directly.
ITW didn't respond to questions.
Tensions heated up again over WhatsApp three months later.
Sharma, of Omnicom Media, learned that ITW had done another "direct deal with a client of ours" for advertising on streaming platform Hotstar, which was run by Disney.
This irked Sharma, as Hotstar had the rights for the cricket World Cup held in India at the time.
"This nuisance has to stop," he wrote in the group.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
NHK
2 hours ago
- NHK
Bank of Japan expected to stand pat on interest rates
The Bank of Japan is expected to leave its short-term interest rate unchanged at a two-day policy meeting that ends on Thursday. Analysts say the central bank is likely to remain cautious following the trade deal with the US and as consumer prices remain stubbornly high. The BOJ has stood pat on its policy rate for three consecutive meetings since March. This was amid uncertainties surrounding Japan-US tariff talks. BOJ Deputy Governor Uchida Shinichi said the trade agreement announced last week by Tokyo and Washington may help ease some of those concerns. But he added that the hard data is not yet available to measure how the deal will affect the Japanese and other economies. BOJ officials agree that more time is needed to gauge the real impact of the tariff agreement on corporate profits and personal consumption. In the meeting this week, the BOJ will also give its economic outlook through fiscal 2027. The bank has indicated it will consider raising interest rates if the economy and prices move in line with forecasts.
Japan Times
2 hours ago
- Japan Times
Toyota's internal inertia stifles digital transformation effort
Inside Toyota, a group of employees are worried about the company's future in an era when a car's software matters just as much as its sheet metal. The world's biggest automaker is known for churning out reliable cars like clockwork, but it's been struggling to keep up with Elon Musk's Tesla, China's BYD and other front-runners in the industry's shift toward electric vehicles (EVs) with sophisticated software. A somewhat obscure Toyota business unit called the Digital Transformation Promotion Department aims to change that. Established four years ago at the behest of then-Chief Executive Officer and now Chairman Akio Toyoda, the little known group's mandate is to bring the carmaker up to speed by modernizing it from within. The division's rank-and-file members are drawn from a wide cross-section of the corporate flow chart — everyone from R&D technicians to blue collar mechanics on factory floors. They all share a broad vision to introduce a more digitized future to a company with a stubbornly analog culture. While they've managed to foster some changes, Toyota's core competency remains very much in hardware — with one foot in the world of EVs and its other planted in gas-powered cars. That cautious approach has been key to the Japanese automaker's success so far. Yet it's also a source of frustration for some inside and outside the company who are pushing for quicker progress. "Toyota sees the importance of software, but it's still slow,' said Kani Munidasa, chief executive officer of Code Crysalis, a Tokyo-based startup that's working with Toyota to put workers through Silicon Valley-style coding boot camps. Lukewarm commitment Some advocates for a software-led rethink at Toyota have grown disillusioned by what they see as a lukewarm commitment to reform from within, according to people familiar with the matter. They point to a recent decision to fold the Digital Transformation Promotion Department into a larger business unit, threatening to short-circuit its mission as a change agent. The division, which previously reported directly to Chief Executive Officer Koji Sato, was absorbed by the Digital Information and Communication Group "to accelerate the internal promotion of digital transformation,' Toyota said in a statement. "We aim to create new value and transform business by accelerating collaboration among the various infrastructures and the use of AI,' it said. In some ways a similar fate befell Toyota's effort to create a digitally focused, quasi-independent subsidiary called Woven. Despite bold ambitions to usher in a "software-first' approach to car manufacturing, in the end Woven was quietly folded back into the corporate mothership in September 2023 after its American executive departed and its portfolio was downsized. Toyota CEO Koji Sato | Bloomberg While Toyota's software team isn't directly involved in the development of the cars it sells, they've undertaken a number of projects focused on the company itself. That includes creating a database to keep track of the company's fleet of test cars, overhauling a system employees use to apply for time off, replacing white boards with touch screens on factory floors and deploying robots to deliver medicine inside Toyota's 527-bed company hospital in Aichi Prefecture, according to people familiar with the matter. Another project involved extending access for remote workers to computer assisted design software using a virtual desktop infrastructure in partnership with Nvidia. "Moving forward, our plan is to roll out similar systems not only to Toyota Motor but also to Toyota group companies,' Masanobu Takahisa, a Digital Transformation project general manager, was quoted as saying in a 2021 press release about the campaign. Those efforts might not be transformative, but they're notable in a company where scissors are banned in the office out of an abundance of safety-minded precaution, and erasable billboards are still used to keep employees informed at factories. Looming 'digital cliff' Toyota isn't unique among Japanese companies. While the country dominates in some high-tech fields such as industrial robots, its business culture is known for clinging to fax machines and other bygone technologies. The government in Tokyo has warned about failing to surmount what it terms a "digital cliff' separating Japan from other advanced economies. In March 2021, sitting across from union members during the final round of annual wage negotiations, Toyoda, scion of the founding family and then CEO, said he wanted to break down internal information silos and put the automaker's digital innovation on par with top global companies within three years. "Inside Toyota, it's still the case that only people 'in the know' are considered valuable, and that knowledge only belongs to a small group,' he said. "By moving forward with our digital transformation, we can rid ourselves of that inequity and build an environment where it's easier for everyone to focus on their work.' The carmaker based in Toyota, Aichi Prefecture, hatched the Digital Transformation division to heed that call with a team of innovative minds looking to break down antiquated systems and practices. The idea was that, if all went well, that reform agenda would rub off on other parts of the company, boosting resiliency and productivity. But the progress has been piecemeal and the division is far from achieving its long-term goals, the people familiar with the matter said. Former employees who spoke anonymously described a workplace bound by conformity, with a paternalistic bureaucracy that values harmony over new ideas. One ex-employee joined Toyota because they were interested in autonomous driving, but instead felt trapped for several years doing quality control on mundane electronic parts. Toyota's global success — its record as the world's biggest automaker for five consecutive years and its status as Japan's biggest and most important company — has arguably created a self-enforcing inertia. Talk among employees of transferring or quitting usually triggered the same reaction: Why would anyone want to leave? It's not the only legacy carmaker struggling to adapt to modern technology. Volkswagen's Cariad software unit has been downsized following glitches and delays, while Ford recently downgraded its next-generation advanced software project known as FNV4 by merging it with an existing architecture platform. That speaks to a larger issue involving the industry's ability to innovate fast enough to compete with the likes of Tesla and China's Xiaomi as well as Big Tech, which has moved aggressively into automotive dashboards with popular features such as Apple's CarPlay and Alphabet's Google Android operating system. Reinvention won't come easy for established automakers, said John Murphy, a senior automotive analyst at Bank of America. "It goes into structures, platforms, technology — sort of the whole integrated operating system of a vehicle, I think, needs to be done differently,' he said. "It's an uphill battle.'
Japan Times
a day ago
- Japan Times
Three online brokerages to cover half of damage from account hacking
Three major online brokerage firms have announced that they will compensate customers for half of damage caused by account hacking. SBI Securities and Rakuten Securities separately said Friday that they will cover 50% of realized or unrealized losses on stocks purchased in hacked accounts and fully refund commission fees for such transactions. Meanwhile, they will not compensate for cases in which stocks held in hacked accounts since before the hack were sold, since the proceeds remain in the accounts. Both SBI Securities and Rakuten Securities will pay ¥10,000 each to affected customers as consolation. Matsui Securities said the same day that it will compensate half of damage, including from sales of existing shareholdings. Meanwhile, Mitsubishi UFJ eSmart Securities, formerly au Kabucom Securities, said it will not set blanket compensation standards, but will decide compensation on a case-by-case basis, including fully restoring affected accounts. Nomura Securities and four other traditional brokerage firms plan to fully restore affected accounts. In early May, the Japan Securities Dealers Association said that 10 major online and other brokerage firms would provide certain compensation regardless of their existing policies.
