MRTPC to probe IBF role in ad rate hike row

Suspecting cartelisation by broadcasters against advertisers, Monopolies and Restrictive Trade Practices Commission (MRTPC) has directed its investigative unit, Director General of Investigation and Registration (DGIR), to probe the role of Indian Broadcasting Foundation (IBF).

According to sources, MRTPC has taken suo-moto action after the recent spat between advertisers and broadcasters following the latter's proposal to impose a 25% surcharge on existing television advertising rates.

MRTPC is of prima-facie view that by forming a cartel of broadcasters, IBF is distorting fair competition in the field, sources said.

The commission has granted 60 days to DGIR to complete its investigation. If DGIR finds evidences against IBF on distorting fair competition in the television advertising market, it would recommend the Commission to start judicial proceedings against it by issuing a notice of enquiry.

According to section 33 (1)(D), any agreement to buy or sell goods or to tender for sale or purchase of goods only at prices or on terms of condition agreed upon by sellers or purchasers are restrictive trade practice and banned under the MRTP Act, 1969.

IBF had recently threatened to blackout advertisers who refused to accept the new ad rates fixed by it but temporarily rolled back its decision. Some members of IBF, including Star India, Zee Network and SET India, had, in fact, dropped ads of some big advertisers like Hindustan Unilever and Marico.

The move was contested strongly by Indian Society of Advertisers saying ad rates should be fixed individually by the channel and advertiser, and no third party or an industry body should be a party to it.

Meanwhile, the broadcasters are planning to meet again after Diwali to discuss ways to implement its proposed hike of advertisement tariffs.

"We are now determined that surcharge is levied. It cannot be said whether that would be reduced or increased, but it is surely not a lost cause," Naresh Chahal, director (finance), IBF, said.