Watchdog finds Dentsu and other Japanese firms reluctant to accept price hikes

Advertising giant Dentsu and two other Japanese companies have been found to be reluctant to accept price hikes by their business partners, the Japan Fair Trade Commission said Friday.

Dentsu, transportation service company Nippon Express and home center operator Kohnan Shoji have kept their transaction prices with their partners unchanged without consultation despite rising raw materials and other costs, the antitrust watchdog said.

The FTC will urge the three to improve their practices, including by holding talks on prices with their business partners. The commission hopes to help companies pass rising costs on to their clients appropriately to make it easier for them to raise the salaries of their workers.

The commission investigated transactions between June 2023 and May 2024. Through on-site inspections and mandatory reports from companies under investigation, the commission confirmed that the three firms kept transaction prices unchanged with "a considerable number of business partners" without consultation.

The watchdog disclosed the names of the three based on the antimonopoly law.

The FTC does not recognize any violation of the law this time. Still, the act of keeping transaction prices unchanged despite rises in labor, raw materials, energy and other costs without consultation may constitute abuse of dominant position, which is banned under the law.

The commission will ask the three to report the status of improvements to ensure proper transaction prices.

The watchdog was making such a disclosure for the third time. The number of companies whose names were released over their reluctance to accept price hikes by business partners stood at 13 in 2022 and 10 in 2024.

"Moves to raise prices reflecting rising costs are progressing," an FTC official said. "But the situation gets worse as transactions go to secondary and tertiary levels of supply chains."

In response to the disclosure, Dentsu said in a statement, "We take this announcement seriously," while Nippon Express said that it would "work to prevent a recurrence and build good partnership relations with our business partners."