Ad Agencies Probed Over Contracts to Produce Commercials
06 Dicembre 2016 - 8:20PM
Dow Jones News
The U.S. Justice Department is investigating whether advertising
agencies inappropriately steered business for producing commercials
to their in-house units over independent firms by rigging the
bidding process for those contracts, according to people familiar
with the matter.
Rebecca Meiklejohn, a government antitrust attorney based in New
York, has been interviewing ad industry executives about the issue
over the past few months, the people said.
The production and postproduction of commercials is a roughly $5
billion business in the U.S. that involves services such as
directing, sound editing, special effects and color correcting.
Hundreds of independent firms compete for those contracts. But the
giant ad agencies whose creative teams conceive commercials also
have been ramping up in these areas in the past several years,
eyeing a growing revenue stream.
The Justice Department is probing whether agencies are
manipulating the bidding process, urging independent firms to
inflate their prices so that contracts could be awarded to the
agencies' in-house production and postproduction outfits, according
to the people familiar with the matter.
Price-fixing and bid-rigging are prohibited under federal
antitrust law.
It is unclear which agencies are the subject of the government's
inquiry. Many of the big agency holding companies, including WPP
PLC, Omnicom Group Inc., Interpublic Group and Publicis Groupe SA,
have in-house production and post production divisions.
A spokesman for WPP declined to comment. Representatives of
Omnicom, Interpublic and Publicis didn't immediately respond to
requests for comment.
Nancy Hill, the chief executive of the American Association of
Advertising Agencies, a trade group that represents agencies, had
no immediate comment.
Write to Suzanne Vranica at suzanne.vranica@wsj.com and Brent
Kendall at brent.kendall@wsj.com
(END) Dow Jones Newswires
December 06, 2016 14:05 ET (19:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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