Antitrust Alert: UK Fines Modeling Agencies for Breach of Competition Law
The UK's Competition and Markets Authority (CMA) has fined five fashion modeling agencies and their trade association, the Association of Model Agents (AMA), for colluding on prices for modeling services in the fashion industry between 2013 and 2015. Totaling £1.5 million (US$1.9 million), the fines follow similar penalties imposed on modeling agencies by the French and Italian authorities earlier this year.
The CMA found that leading agencies (Premier, Storm, Viva, Models 1, and FM Models) systematically discussed prices and exchanged information when negotiating fashion models' services with high street chains, online retailers, and consumer brands. The agencies colluded on prices for modeling jobs ranging from magazine shoots worth a few hundred pounds to advertising campaigns for over £10,000. At times the agencies also fixed minimum prices for the models' services and agreed on pricing strategies among themselves. The collusion did not extend to fees for top models, who usually pay a lower commission to agencies on account of their celebrity profile.
AMA participated in the cartel by encouraging its members to resist lower prices. The association was found to have regularly issued circulars known as "AMA Alerts" to its members urging agencies to resist prices offered by clients that AMA considered were too low.
In September 2016, France's Autorité de la concurrence fined 37 agencies (representing almost the entire market) and trade association SYNAM a total of €2.4 million (US$2.5 million) after finding that SYNAM distributed pricing schedules for agencies to use as a point of reference in negotiations with clients. These schedules included minimum salaries for models as well as suggested commissions. The Autorité found that during Paris Fashion Week the prices were usually systematically applied to clients.
In November, the Italian Autorità Garante della Concorrenza e del Mercato fined eight modelling agencies (representing 80% of the market) and their trade association (Associazione Servizi Moda or Assem) at total of €4.5 million (US$4.7 million) for coordinating prices relating to models' salaries, transfer costs, image rights and agency commissions between 2007 and 2015, after leading agency IMG successfully filed for immunity. Assem played an instrumental role in the coordination, by requiring final customers not to directly contact the agencies but to address their requests to Assem. Moreover, the meetings among agencies within Assem's context were used for agreeing on common commercial conduct. Customers targeted were primarily fashion houses and magazines participating in the Milan fashion weeks.
Although the CMA's case was separate from those in France and Italy, the three agencies exchanged information to assist in understanding the sector and typical pricing conduct.
Within Europe in particular, an investigation in one EU member state can trigger another member state's interest in a particular sector and subsequent investigations. The national competition agencies communicate regularly and systematically with one another about their cases, and the modeling sector is the latest example of this. It may well be the case that further investigations into the modeling industry follow in other EU jurisdictions. The investigations serve as a reminder that trade associations can – deliberately or inadvertently – become implicated in unlawful price fixing by its members and that the association itself can be fined for conduct such as encouraging a particular pricing strategy among its members or offering a platform for the exchange of information between competitors.
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Eric Barbier de La Serre
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