In an open letter [below], the production companies have called on UK ad agencies to avoid a "rigged" bidding system. It follows the Department of Justice in the US launching an investigation into whether ad agencies are intentionally rigging pitches for production work to favour their in-house divisions.
The companies said they "don’t want to be part of" a system in which agencies invite third-party production bids for contracts that they are considering pitching for themselves.
Last week, the IPA defended the practice of agencies competing with production companies. However, the letter argues that it is impossible for such a system to be operated fairly.
Bare, HunkyDory, Independent Films, MJZ, Outsider, Rogue, Serious Pictures, Smuggler, Sneezing Tree, Sonny and Speade are also behind the strongly worded letter.
It said: "The IPA has advised agencies to ‘ensure it does not use any information disclosed to it by a production company to enhance its own bid’. That is impossible to achieve in practice. A production company’s creative ideas and methodology are in its treatment and budget. It is impossible for an agency receiving those to un-know them when working on their own bid.
"It can’t be seriously suggested that an agency that wants its in-house production company to do the work is going to bid more than the independent bids it has seen.
"Even with the best of intentions, the process will be rigged against us and we don’t want to be part of it."
Steve Davies, chief executive of the Advertising Producers Association, has previously called for stricter guidelines that should advise agencies not to accept outside production bids if they are contemplating doing the work themselves.
The letter added that agreeing to such rules would ensure the UK advertising industry avoids "the murky waters that have brought about the US justice department’s investigation into bid-rigging".
*Update: more production companies have signed the letter as the row with the IPA gathers steam. Read more here.
Dear Campaign editor,
As production companies, we are used to and expect to fight hard to win work in the open and competitive market. That is what we expect. But a bidding system rigged against us isn’t – a system by which the agency inviting our bid is also contemplating bidding its own in-house production department for the work, or might do so when it has our bids in.
We don’t think such a system is capable of being operated fairly.
The IPA has advised agencies to "ensure it does not use any information disclosed to it by a production company to enhance its own bid". That is impossible to achieve in practice. A production company’s creative ideas and methodology are in its treatment and budget. It is impossible for an agency receiving those to un-know them when working on their own bid.
Further, it will have the details of the amount that each production company has bid and can tailor its bid to undercut them – it can’t be seriously suggested that an agency that wants its in-house production company to do the work is going to bid more than the independent bids it has seen.
So, even with the best of intentions, the process will be rigged against us and we don’t want to be part of it. We genuinely don’t believe it is in the interests of agencies either – a fair open and transparent process is what advertisers want – and any system that isn’t risks dragging the industry into the murky waters that have brought about the US Justice Department’s investigation into bid rigging – which would be illegal in the UK too of course.
Let’s put as much distance as possible between the way we work in the UK and what has gone on in the US by having an industry-wide agreement here that an agency will never bid independent production companies when it is contemplating doing a production itself or might do so once the independent production companies’ bids are in. By doing so we can stand united as production companies and agencies to protect the integrity of this great business.
Of course, all of this applies to production in the widest sense – post production and editing companies too.
James Bland & James Studholme, Blink Productions
Helen Hadfield, Bare Films
John Doris, Hunky Dory
Lizie Gower & Simon Cooper, Academy Films
Kai-Lu Hsiung, RSA Films
Jani Guest & Rupert Reynolds McLean, Independent Films
Brock Van Den Bogaerde, Sneezing Tree Films
Fergus Brown, Smuggler
Charlie Crompton, Rogue
Sam Sneade, Speade
Donnie Masters, Serious
Helen Kenny, Sonny and MJZ
Johnnie Frankel & Katie Keith, Rattling Stick
Richard Packer & Robert Campbell, Outsider