Takefuji Corp. dropped its lawsuit against a freelance journalist and a major magazine publisher Friday, withdrawing its demand for 200 million yen in damages over reporting of the company's alleged collusion with police.

The consumer lender abandoned the lawsuit it filed with the Tokyo District Court against freelance journalist Yu Terasawa and Shueisha Inc., which carried an article by Terasawa on an alleged scandal involving Takefuji in a May edition of Weekly Playboy.

The move came after Terasawa and Shueisha refused to comply with Takefuji's request for a court-mediated settlement.

Takefuji founder and former Chairman Yasuo Takei, 74, owned up in December to having ordered the wiretapping of two journalists.

Terasawa said later in the day that Takefuji's one-sided abandonment of the suit was hardly acceptable.

He said he would file a countersuit against the firm, demanding 600 million yen for disgracing him via the legal action, along with the allegation that his reports were groundless.

Last month, Takefuji posted an official apology to two journalists and publishing firms for "thoughtlessly" accusing them in damages suits and on its Web site.