The 2015 suicide of an employee due to overwork at advertising giant Dentsu is also starting to affect its lucrative government business in Japan. The agency, that possesses close to a monopoly in publicly procured government advertising business, is being hit by regulations that require government institutions to suspend their suppliers if they are under criminal investigation. The Tokyo Labor Bureau has recently referred the company and officials to prosecutors.

Following the Japan Racing Association (JRA) decision to bar Dentsu from bidding for its projects, Shiga Prefectural government announced (J) that it would block the company from participation in tendering for the prefecture’s contracts for the coming three months. Given that many Japanese government institutions have similar regulations in place, where companies under criminal investigation are excluded from bidding for public contracts, one would expect that more organizations will announce similar measures.

Dentsu Inc. has had a dominant position in the Public Relations for Japanese government organizations for many years. In fact, many of the larger advertising contracts are the exclusive territory of the company, guaranteed in limited single tender procedures. It is likely that the measures barring the company from tendering will be kept as short as possible, due to the high dependence of many large government organizations on the ad-giant and important projects such as the Tokyo Olympics underway.

Update January 20: Nara, Kyoto and Wakayama Prefectures also consider suspension

Update January 30: Kyoto formally hands down one month suspension of Dentsu, various ministries are also considering suspension