As you can see from The Wall Street Journal Report above, the US Justice Department are investigating advertising agencies as to whether the bidding process for production and post production is rigged. The concern of the Justice Department is that agencies are soliciting higher bids from independent production companies and post production companies, to justifying awarding work to their in house units.
As you know, we have advocated not bidding against in house production and post production- and asking up front if in house is bidding. Some agencies in the UK are clear that they won’t ask independent production and post production companies to bid against them because they consider such practices unfair. Some do seek bids from independent production and post production companies though.
The bid from an independent company wastes that company's time and resources and gives credibility to the in house bid and price. An inflated bid does not have to be sought- it could be more subtle than that, with the independent company simply given less information as to the client’s budget, so it naturally comes in at a higher price than the in house bid or the in house bid can be changed in the light of the independent bids.
Ultimately, it is up to clients how they spend their money but the message we take to them is that if they are advised by their agency to use their in house production company or other facilities, they should question why that will be better for them than accessing the hugely competitive open market, generating great competition on expertise and price- which in our view will always deliver the best value because that is how a competitive market operates.