Japanese regulator warns Dentsu over dealings with subcontractors

TOKYO, Dec 17 (Reuters) - Japan’s anti-trust watchdog said on Thursday it had issued a warning to advertising giant Dentsu Group over its action to pressure subcontractors not to work with a rival company.

The Japan Fair Trade Commission (JFTC) said it had found that a Dentsu employee had in May told subcontractors the company would stop dealing with them if they worked for the rival on a novel coronavirus aid programme.

Dentsu used “improper means” with the subcontractors, although the action was not found to have been a violation of anti-competition rules, Koji Mukai, a senior JFTC official in charge of the investigation, told reporters.

Following the warning, Dentsu apologised.

“We take this caution very seriously. We sincerely apologise for the inconvenience caused to our partner companies and related parties over concerns of leading to hindrance of fair competition,” the company said in a statement.

Dentsu had earlier come under public scrutiny over its involvement in running the coronavirus aid programme.

The trade ministry outsourced the $718 million project to a non-profit group co-founded by Dentsu, which in turn used various subcontractors, including Dentsu, on the job.

Critics said it was a waste of taxpayers’ money and showed opaque management of public work.

Of the case investigated by the Japan Fair Trade Commission, Dentsu said earlier it had reprimanded its employee for making “inappropriate remarks” to subcontractors.

Dentsu told the regulator it was concerned that its know-how in handling the job could be passed on to a rival, the commission said. (Reporting by Ju-min Park Editing by Robert Birsel)