Japan FTC hits Dentsu, others with 3.3 billion yen penalty over Tokyo Olympics bid-rigging

Japan's Fair Trade Commission (FTC) has fined Dentsu Group Inc. and six other ad agencies and event organisers a total of ¥3.3 billion (US$ 22.8) for bid-rigging related to contracts for the Tokyo 2020 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 FTC 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. 

According to the commission, the companies rigged 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.

To break it down: Dentsu Group's subsidiary, Dentsu Inc., was fined ¥425.15 million (US$ 2.93 million), while the parent company received a surcharge of ¥495.56 million (US$ 3.42 million). 

In a statement, Dentsu "acknowledge[d] 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."

However, Dentsu disputed parts of the FTC's findings, highlighting "discrepancies" between the agency’s conclusions and the company’s understanding of the facts. As a result, the company announced it had "decided to file a lawsuit today to seek revocation of the administrative orders and to sincerely present our position in court, aiming for a fair judicial determination."

Despite the penalties, Dentsu stated that the financial impact of the fines on its consolidated results for the fiscal year would be minimal. This latest ruling adds to the series of corruption scandals tarnishing the reputation of the Tokyo 2020 Olympics.