The Japan Fair Trade Commission announced Tuesday that it had issued a warning to publishing giant Kadokawa and its wholly owned subsidiary, Kadokawa LifeDesign, for unlawfully slashing payments to subcontractors, particularly freelancers, in violation of the subcontracting law.

According to the commission, Kadokawa notified 26 subcontractors — 21 of whom were freelance writers and photographers — in January 2023 that it would unilaterally cut compensation rates for content slated for Lettuce Club, a lifestyle and cooking magazine, from its April 2023 issue and beyond.

In the notice, Kadokawa attributed the rate cuts to slumping sales and advertising revenues for Lettuce Club, along with rising material and logistics costs. The new rates were enforced without consulting subcontractors.

The reductions ranged between 6.3% and 39.4%, with most cuts exceeding 10%. The commission’s probe determined these practices breached Article 4, Paragraph 1, Item 5 of the Subcontract Act, which bars setting unfairly low payment terms for subcontractors.

When Kadokawa LifeDesign took over Lettuce Club’s operations on April 1, it continued using the reduced rates without engaging in proper negotiations.

Freelancers were hesitant to speak out. One freelancer told the commission, “I couldn’t say anything because I feared I might not get more assignments,” as reported by Jiji Press. Another added, “The power imbalance was too great, so I felt that resisting wouldn’t change anything.”

The commission’s warning calls for Kadokawa to compensate subcontractors for the difference between the original rates and the reduced payments, dating back to April 2023, amounting to roughly ¥5.9 million as of the end of August, according to Jiji Press. It also directed Kadokawa to acknowledge its misconduct, provide internal training to prevent future violations, and report on these corrective actions.

In a joint statement issued Tuesday, Kadokawa and its subsidiary pledged to pay the outstanding amounts once calculations are complete. The company also committed to bolstering its compliance measures and conducting internal training on subcontracting laws.

“We will strengthen our commitment to compliance and take steps to prevent the same issue reoccurring, and ensure we adhere strictly to laws and regulations,” the company said.