Japan’s FTC slaps Dentsu and five firms with 3.3 bn yen penalty over Tokyo Olympics bid-rigging

Japan’s Fair Trade Commission (FTC) has imposed a combined fine of ¥3.3 billion on six firms, including industry giants Dentsu, Hakuhodo, Tokyu Agency, and event company Cerespo for coordinated bid-rigging during the awarding process for the 2020 Tokyo Olympics and Paralympics.

The six are Dentsu Group’s Dentsu Inc. unit, Cerespo Co., Fuji Creative Corp., Hakuhodo Inc., Same Two Inc. and Tokyu Agency Inc. The watchdog also found an antimonopoly law violation by ADK Marketing Solutions, but avoided imposing fines because ADK had voluntarilty confessed its culpability before the probe officially began, as per media reports.

The verdict centers on allegations that these firms conspired to rig bids starting in April 2018 to decide winners for mega sporting event planning contracts, which also extended to operations during the Games. Of the eight companies, seven other than Dentsu Group have also received cease and desist orders.

The collusion reportedly skewed the competitive process for allocating contracts related to promotion, marketing, and event execution.

Under Japan’s competition law, companies found guilty of bid-rigging can be fined up to ¥500 million each, while individuals may face up to five years imprisonment and ¥5 million in fines.

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Dentsu Group's subsidiary, Dentsu Inc. was fined ¥425.15 million, while the parent company received a surcharge of ¥495.56 million.

Going by media reports, Dentsu "acknowledged the legal violations in relation to the planning and related operations for the test events, and have taken this matter seriously. The both companies have reflected deeply and implemented measures to prevent recurrence, including efforts to evolve its organisational culture to prioritise integrity."

The agency also noted that the financial impact of the fines on its consolidated results for the fiscal year would be minimal.

Dentsu reportedly has disputed parts of the FTC's findings, highlighting discrepancies between the agency’s conclusions and the company’s understanding of the facts. Following this, it has decided to file a lawsuit to seek revocation of the administrative orders and to present its position in court, aiming for a fair judicial determination.