Two of the biggest media companies on the planet, Omnicom And Publicis, have been subpoenaed in the US for alleged price fixing and fraud.
Last Friday the US Justice Department issued subpoenas to the Omnicom Group and French-owned Publicis Groupe.
Fraud amongst US agencies is said to be on the rise and officials are keeping a keen eye on it. It has been reported that in the next decade ad fraud could represent the second-largest criminal enterprise globally unless the sector reforms.
The Wall Street Journal has reported that the Justice Department is investigating whether agencies inappropriately steered contracts for making ads to their in-house production units and in doing so disadvantaged independent agencies that could have also bid for the work.
Reports say that the production work is worth over $US5 billion and includes things such as directing, sound editing, colour editing and correcting. The work is said to be the lifeblood of the myriad of independents in the US.
Omnicom owns a number of the top agencies globally including BBDO Worldwide, DDB Worldwide, TBWA Worldwide and GSD&M. Publicis owns Leo Burnett, Saatchi & Saatchi and Publicis Worldwide.
In a statement Omnicom said “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. Omnicom’s outside legal counsel has contacted representatives of the Antitrust Division, and the company is fully cooperating with the investigation.”