Japan's antitrust watchdog plans to warn major automaker Nissan Motor Co. for unilaterally reducing payments to over 30 subcontractors, a source familiar with the matter said Monday.
Nissan allegedly underpaid the companies by some 3 billion yen ($20 million) upon delivery of their services over an extended period, in violation of the subcontract law, the source said, with the Yokohama-based company admitting it was in the wrong.
Nissan's illegal cost-cutting could have taken place for decades, the source said, with subcontractors likely accepting it over fears they could lose business with the major automaker if they raised the issue.
The value of underpayments by Nissan is expected to be the largest of any company since the subcontract law took effect in 1956.
The Japan Fair Trade Commission plans to issue an advisory to prevent a repeat of the situation, the source said.
A Nissan official admitted Monday the automaker has been probed by the watchdog, claiming it "has returned the entire sum" that had been deducted from subcontractors, while declining to comment on details.
The FTC plans to hand down a finding that Nissan has been reducing the payments to certain component manufacturers by several percent from the previously determined amount, starting from a few years ago, the source said.
The automaker has been determining the size of the reduction to ensure the amount paid would be lower than the previous fiscal year, the source said.
The subcontract law prohibits companies from unilaterally deducting payments to subcontractors once they have been agreed upon, except for instances in which the subcontractors failed to meet their obligations.
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