On November 25th, investigators prepare to enter Dentsu Inc.'s head office. Shigetaka Kodama investigators searched the offices of the advertising giant Dentsu Inc. and an event promotion company on November 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 conspired to decide which companies would win the test events for the Tokyo Olympics in advance of the Anti-Monopoly Law. These events are held in advance of the Games to evaluate the competition conditions and venue security.
Dentsu's offices were searched after the arrest of a former executive who served on the Tokyo Olympic organizing committee. Dentsu was previously only seen as being related to those under investigation, but now it has become a clear target of the investigation.
The Japan Fair Trade Commission entered an investigation on the precondition that it would file a criminal complaint with prosecutors in the year 2019 when it investigated bid rigging among pharmaceuticals.
Because the Fair Trade Commission has the sole authority in enforcing the Anti-Monopoly Law, prosecutors must work together with the commission to obtain the criminal complaint needed to file an indictment.
The commission normally only takes administrative actions, such as issuing cease- and- desist orders against companies that are in violation of the Anti-Monopoly Law.
It will also expand its investigations to cover individual executives or employees if they are found to be egregious enough to warrant criminal charges.
Between May and August 2018, the Tokyo 2020 organizing committee solicited bids for work related to 26 test events, including event planning. Nine companies, including Dentsu and Cerespo, as well as a joint venture company set up by Cerespo with another company, won the bidding.
Dentsu and Cerespo are suspected of coordinating which companies would win the bids for the various events, according to investigative sources. The sources said that some of the other companies are suspected of being involved in the bid rigging and investigators are expected to widen their nets.
The total price tag for the 26 contracts landed around 540 million yen $3.9 million with the contracts costing anywhere from 4 million yen to 60 million yen.
Dentsu won bids on five events, worth a total of around 80 million yen, while Cerespo won bids for five events, including athletics, worth about 120 million yen. The volleyball test event, set up by Cerespo, was worth about 10 million yen.
The games operation bureau of the Olympic committee was in charge of deciding which companies would win the contracts. Many of the people who were working on the committee came from companies that were making bids.
Sources said that investigators will look into whether these individuals were involved in bid rigging among the companies that won the contracts.