Photo/Illutration Nissan Motor Co. headquarters in Yokohama’s Nishi Ward (Asahi Shimbun file photo)

The Fair Trade Commission plans to warn Nissan Motor Co. for unfairly slashing payments to its subcontractors, according to sources.

At least for several years, the auto giant has been unilaterally reducing payments to more than 30 suppliers by several percent from the initially agreed-upon amounts, in an apparent violation of the Subcontract Law, the sources said.

The illegal reductions are estimated to total 3 billion yen ($19.9 million), making it the highest amount ever identified by the competition watchdog since the law’s enactment in 1956.

Nissan is believed to have cut payments to its suppliers, despite finding no fault on their part, to achieve its annual cost-cutting targets. 

The FTC suspects that the manipulative tactics have been in place for as long as decades as part of Nissan's business model. 

Nissan said it is waiting for the final result of the FTC’s investigation. The company has already made additional payments to the subcontractors, fulfilling the original agreements.

The competition regulator is expected to urge the automaker to take measures to prevent a recurrence. Failure to comply could result in further action under the Anti-Monopoly Law, including an order or a fine.

The FTC's latest action is seen as part of its ongoing efforts to protect subcontractors, particularly smaller businesses, who are most vulnerable to the impact of rising prices. 

The FTC recently named and shamed companies that failed to engage in fair price negotiations with their subcontractors. 

 

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