Federal prosecutors subpoena holding groups in rebate probe

Lindsay Bennett
By Lindsay Bennett | 28 September 2018

Federal prosecutors in the US have opened an investigation into media-buying malpractices at Havas as well as the “big six” holding companies.

According to a report in the WSJ, Federal Bureau of Investigation (FBI) has begun issuing subpoenas as part of the probe based off interviews conducted within the past several months about ad-buying practices.

The investigation was partly driven by the findings of a 2016 report from the Association of National Advertisers (ANA) that reported media rebates and other non-transparent business practise were pervasive.

One of the biggest issues that surfaced as part of the study was the prevalence of cash rebates from media sellers for reaching thresholds and not returning those funds to clients. Ad agency groups, such as GroupM and IPG, slammed the report at the time for tainting the entire industry instead of the guilty agencies.

The report was a watershed moment for the global ad industry and kicked off a conversation in Australia about transparency standards in the region. 

It led to fragmenting trust within the industry and as a result, marketers begun demanding to see where their media dollars were being spent.

Representatives for Havas, Dentsu, Publicis, Interpublic and WPP declined to comment. Omnicom told WSJ the firm hasn’t received a subpoena from federal prosecutors.

This isn't the first time ad agencies have been put under pressure by government. In late 2016, the Justice Department began an investigation into whether ad agencies were rigging production pitches to favour their in-house production units.

While the investigation is currently confined to the US, the findings will have ramifications for the global industry.

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