US justice department investigates alleged price fixing and bid-rigging by ad agencies
The US justice department has stepped in to investigate alleged rigged bids by ad companies seeking to tilt the balance in favor of their own in-house production arms in contracts to produce commercials.
Suggestions of foul play have prompted the government to act to discern whether the agencies have engaged in any anti-competitive practices such as price fixing and bid-rigging – both of which are banned under federal law.
Nevertheless the temptation to overstep the line in a sector worth around $5bn a year in the US alone is real amid cut-throat competition from hundreds of independent production firms in areas such as editing, sound and lighting.
Nancy Hill, chief executive of the American Association of Advertising Agencies (4As) said: “It goes without saying that we require our member agencies and their staffs to follow the letter of the law.”
No specific businesses have been named as suspects in the investigation thus far but some of the biggest names in the ad industry such as WPP, Omnicom, Interpublic Group and Publicis Groupe, all maintain their own in-house production and post-production units.