In what would bring relief to the directorate of advertising and visual publicity (DAVP), it has been established that the department is not a dominant entity dealing in the release of government’s advertising. In a recent order, the Competition appellate tribunal (Compat) dismissed an appeal made by the appellant ? the Advertising Agencies Guild (AAG) ? against an earlier order of the fair trade regulator stating so.
The appellant, AAG, is the body representing small and medium advertisers. It had taken the Competition Commission of India (CCI) and DAVP to Compat after CCI had ruled that as DAVP is not a dominant body in the advertising industry, the question of abuse of dominance did not arise.
The guild, however, was contesting the matter based on a circular issued by the government last year, which made it mandatory for government departments and central public sector undertakings to release their advertisements via DAVP, thereby denying opportunity to small and medium advertising agencies to service government ads.
However, on two days of hearing before Compat, the guild or its legal representatives did not show up, leading to dismissal of the matter. “On the last occasion, there was no appearance on behalf of the appellant. Today also there is no appearance. The matter is dismissed for non-prosecution,” the Compat order said.
The guild in its complaint to CCI last year had said that DAVP’s turnover was more than R700 crore, which made it a dominant player in the advertising market. The AAG talked about a government circular stating “The circular not only established the dominance of DAVP, but also created entry barriers for new entrants and foreclosed the market for existing competitors in violation of section 4 of the Act,” AAG alleged.
However, rejecting the guild’s allegations, the CCI on September 18 last year said there was no prima facie evidence to suggest that DAVP was a dominant player in the advertising services space. CCI said the total advertising market is worth R8,000 crore and, with a turnover of R700 crore, the share of DAVP in the market is not even 10%. CCI also said: “DAVP is one of many entities engaged in providing advertising services and there exist more than 500 agencies in the country.”
However, in the same order, the CCI had suggested that in order to save public money, the government should streamline its policies with regard to DAVP. If accepted by the government, doors to government advertisements may also open for private advertising agencies, who currently can not service ads released by central government departments, ministries and public sector undertakings.
“Introducing competition in DAVP may lead to best rates for advertisement released by government departments and public sector undertakings,” the CCI said in the order. However. CCI had given a clean chit to DAVP stating that it is not violating section 3 and 4 of the Competition Act, which is abuse of dominant position and indulging in anti-competitive agreements.
