Leading Japan advertising firm confesses to illicit bidding for Tokyo Games test events

The Yomiuri Shimbun
Investigators of the Tokyo District Public Prosecutors Office enter a building that contains the headquarters of Hakuhodo Inc. in Minato Ward, Tokyo, on Nov. 28.

Major advertising company Hakuhodo Inc. has admitted to participating in bid-rigging for contracts to plan test events for the Tokyo Olympics and Paralympics, The Yomiuri Shimbun has learned.

According to sources, a Hakuhodo official told the Tokyo District Public Prosecutors Office that Hakuhodo won its bids unopposed after the company told Dentsu Inc. which contracts it wanted to secure.

The special investigation squad of the prosecutors office believes the bid-rigging was led by the Tokyo Games organizing committee and Dentsu. It is also questioning executives of other companies that allegedly participated in the bidding process to determine what occurred.

The suspected collusion involves 26 contracts to plan test events conducted by the organizing committee in 2018. Nine companies, including Dentsu, and one joint venture won the contracts, which were worth a total of more than ¥500 million.

Dentsu allegedly shared with the organizing committee a list that detailed which potential bidders wanted which contracts, and asked those companies to bid only for the venues they wanted. As a result, most of the 26 contracts were only bid on by a single company.

According to sources close to the case, Hakuhodo won two contracts worth a total of about ¥40 million, including one for Oi Hockey Stadium. A Hakuhodo official told the special investigation squad on a voluntary basis that the company had told Dentsu which contracts they wanted to win.

Based on Hakuhodo’s request, Dentsu allegedly arranged for them to be the sole bidders on their desired contracts. The Hakuhodo official also said the company did not participate in any other bids and served as a subcontractor on other contracts.

In late November, the special investigation squad and the Japan Fair Trade Commission raided eight of the nine companies suspected of involvement in the bid-rigging, including Japan’s three leading advertising agencies — Dentsu, Hakuhodo, and ADK Marketing Solutions Inc. — on suspicion of violating the Antimonopoly Law.

Certain subcontracting companies were also raided.

Dentsu executives are said to have denied they were aware of any collusion, while ADK officials have voluntarily confessed violating the law to the commission.