The government has removed Nissan Motor Co. from its list of companies eligible for a tax break to promote wage increases, after the antitrust watchdog issued a warning to the automaker for illegally reducing payments to dozens of subcontractors, a source familiar with the matter said Saturday.

Major companies such as Nissan are required to commit to appropriate business dealings with subcontractors on a government website when they apply for the tax break. Once delisted, companies cannot be listed again for at least a year.

The removal of Nissan from the list comes after the Japan Fair Trade Commission said last month that the automaker reduced payments to 36 subcontractors after contracts were signed, in violation of the subcontract law.

The reduced payments, considered as an abuse of its dominant position, totaled more than 3 billion yen ($20 million) over around two years.

The FTC's warning came at a sensitive time when the government was urging companies to increase wages to help consumers deal with rising prices.

Nissan agreed with its union on a 3.4 percent pay increase at wage negotiations last year and a 5.0 percent hike in talks with the union this year.

The corporate tax break system was implemented in fiscal 2013 and expanded in fiscal 2022, when the tax reduction amounted to a record 515 billion yen.

==Kyodo

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