Dentsu searched by investigators in Olympics bid rigging scandal

Investigators searched the offices of the advertising giant Dentsu Inc. and an event promotion company on Nov. 25 in relation to the suspected bid rigging of Olympics test events.

The joint investigation by the Tokyo District Public Prosecutors Office and the Japan Fair Trade Commission targeted Dentsu and Cerespo Co., a Tokyo-based sports event promotion company.

Investigators are looking into whether the companies violated the Anti-Monopoly Law by conspiring to decide in advance which companies would win bids for planning the test events for the Tokyo Olympics. These events are held in advance of the Games to evaluate the competition conditions and venue security.

Dentsu’s offices were searched in the wake of the arrest of a former executive who served on the Tokyo Olympic organizing committee. Previously, Dentsu was only seen as being related to those under investigation, but now it has become the clear target of the investigation.

The last time the Japan Fair Trade Commission entered an investigation on the precondition that it would file a criminal complaint with prosecutors was in 2019, when it investigated bid rigging among pharmaceuticals.

Because the Fair Trade Commission has sole authority in enforcing the Anti-Monopoly Law, prosecutors must work in tandem with the commission to acquire the criminal complaint needed to proceed with an indictment.

The commission normally only takes administrative actions, such as issuing cease-and-desist orders against companies found to be violating the Anti-Monopoly Law.

But it will also broaden its investigations to cover individual executives or employees when unfair practices are found to be egregious enough to possibly warrant criminal charges.

The Tokyo 2020 organizing committee solicited bids for work related to 26 test events, including event planning, between May and August 2018. Nine companies, including Dentsu and Cerespo, as well as a joint venture company set up by Cerespo with another company, ultimately won the bidding.

According to investigative sources, Dentsu and Cerespo are suspected of coordinating which companies would win the bids for the various events. But some of the other companies are also suspected of participating in the bid rigging and investigators are expected to widen their nets, the sources said.

The total price tag for the 26 contracts landed around 540 million yen ($3.9 million), with the contracts costing anywhere from around 4 million yen to 60 million yen.

Dentsu won bids on five events, worth a total of about 80 million yen, while Cerespo won bids for five events, including athletics, worth about 120 million yen. The joint venture set up by Cerespo also handled the volleyball test event worth about 10 million yen.

The Olympic organizing committee’s games operation bureau was in charge of deciding which companies would win the contracts. But many of those working on that committee originally came from the companies that were making bids.

Sources said investigators will examine whether these individuals were involved in bid rigging among the companies that won the contracts.

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