Today the ad industry's second and third-largest holding companies revealed that the federal government had contacted unspecified subsidiaries within their networks regarding an investigation into "bid rigging" by ad agencies.
"On Dec. 14, 2016, two subsidiaries within Omnicom Group Inc. (NYSE: OMC) received subpoenas from the U.S. Department of Justice Antitrust Division concerning its ongoing investigation of video production and post-production practices in the advertising industry," a holding company representative said in a statement provided to Adweek and other news organizations this morning. "Omnicom's outside legal counsel has contacted representatives of the Antitrust Division, and the company is fully cooperating with the investigation."
The representative declined to provide further information.
UPDATE: Publicis Groupe also released a statement regarding the investigation today. "As part of the investigation led by the U.S. Department of Justice Antitrust Division concerning video production and post-production practices in the advertising industry, one of the subsidiaries of Publicis Groupe received a subpoena dated December 14, 2016," it read. "Publicis Groupe, supported by external counsel, will fully and productively collaborate with the investigation."
Last week, news of an investigation into the allegedly longstanding practice of ad agencies rigging production contracts shook the industry. Adweek later spoke to several longtime veterans of creative shops and production companies, who described scenarios in which agencies either misled production partners about the rates clients will pay for their work or asked them to offer artificially inflated rates as "favors." The agencies do so in order to send the often lucrative contracts to their own holding companies. According to all sources, these incidents are extremely common and even begrudgingly accepted as standard operating procedure.
The practices, if proven, could violate federal antitrust laws created to allow for fair competition within the market. One production industry veteran said, "It would only take one of our large agency partners dropping us to put us out of business."
Omnicom and Publicis are the second and third holding companies to publicly respond to the investigation. Last Wednesday, Interpublic Group confirmed in a release that the Department of Justice requested documents related to the video production practices of one of its "standalone domestic agencies."
Neither holding company's statement clarifies which stateside agencies were subpoenaed in the investigation.