A trio of subsidiaries owned by ad/PR holding company WPP have been issued subpoenas by the U.S. Department of Justice’s Antitrust Division in connection with an ongoing investigation into price-fixing practices occurring within the ad industry.
The British conglomerate in a December 19 statement confirmed that three of its subsidiaries had received DOJ writs, and said it is fully cooperating with the inquiries. The world’s largest advertising group, WPP owns ad giants Young & Rubicam, Ogilvy & Mather and J. Walter Thompson, as well as PR agencies Ogilvy Public Relations, Cohn & Wolfe, Burson-Marsteller, Finsbury, Hill+Knowlton Strategies and Prime Policy Group. WPP did not disclose which units had received the subpoenas.
The Justice Department is allegedly investigating agencies’ use of in-house video production and post-production divisions, and whether agencies are rigging the bidding process by steering clients to award contracts to their own production and post production units as opposed to hiring independent companies. The Wall Street Journal first reported on the probe on December 6.
WPP is the last of the “big four” ad/PR holding companies whose units have received DOJ subpoenas this month: The Wall Street Journal in December reported that ad/PR holding conglomerates Omnicom Group, Publicis Groupe and Interpublic Group had also received Justice Department subpoenas.
All three companies said they were cooperating with the DOJ’s investigation. French PR/ad combine Publicis — which owns Publicis Worldwide, MSL, Saatchi & Saatchi, BBH, Leo Burnett and Razorfish — on December 16 issued a statement claiming that one of its unnamed subsidiaries had received a DOJ subpoena two days prior.
Omnicom — which owns creative agency BBDO Worldwide, as well as PR giants FleishmanHillard, Ketchum, Porter Novelli, CLS Strategies, Cone and Marina Maher Communications — in a December 16 statement said its outside legal counsel has contacted Antitrust Division representatives.
Interpublic — which owns ad networks McCann Worldwide, Lowe and Partners and FCB, as well as PR firms Weber Shandwick, Golin, DeVries, Powell Tate and Rogers & Cowan — in a December statement confirmed that it was contacted by the DOJ “for documents regarding video production practices.”
The video production and postproduction industry within the advertising world — which includes everything from sound editing to video directing to special effects — is a $5 billion market. An eight-month study of media transparency issues in the U.S. ad industry, conducted by marketing trade group the Association of National Advertisers, found that non-transparent business practices were “pervasive” in the U.S. media ad-buying climate.
The ANA report, which was released in June, cited “inconsistent and questionable media management practices” that were often treated as a “regular course of business” and were not limited to a specific type of media or agency, including “poor contract stewardship,” “pervasive receipt of non-disclosed rebates not returned to advertisers” and “potentially problematic agency conduct” hidden by principal transactions, which often resulted in "media agencies sometimes acting on their own account and not always in the best interests of advertisers.”
The ANA report also stated that in some cases, agencies’ and holding companies’ senior executives “were aware of and even mandated” these practices. The ANA report concluded that its findings accounted for “a serious wake-up call for the industry.”