Model agencies fined £1.5 million for price collusion
The CMA has imposed fines totalling £1,533,500 on 5 model agencies and their trade association for breaking competition law by colluding on prices.
The Competition and Markets Authority (CMA) has found that the agencies – FM Models, Models 1, Premier, Storm and Viva – and their trade association, the Association of Model Agents (AMA), colluded instead of competing on prices for modelling services. This took place from at least April 2013 until March 2015.
The parties regularly and systematically exchanged information and discussed prices in the context of negotiations with particular customers. In some cases, the agencies agreed to fix minimum prices or agreed a common approach to pricing.
In addition, the AMA and the agencies sought to influence other AMA members by regularly issuing email circulars, known as ‘AMA Alerts’, urging AMA members to resist the prices offered by customers on the grounds they were too low.
The CMA’s investigation concerned a wide range of modelling assignments – from fashion magazine shoots offering model fees of a few hundred pounds to advertising campaigns offering over £10,000. The conduct did not, however, extend to the services of so-called ‘top models’.
The conduct occurred in the context of negotiations with a range of customers, including well-known high-street chains, online fashion retailers and consumer goods brands.
John Wotton, Chair of the Case Decision Group responsible for making the decision, said:
Strong competition benefits consumers, the economy and society. When businesses collude rather than compete the ultimate losers are customers.
In this case the agencies and the AMA colluded with each other over their approach to pricing and, in some instances, the agencies agreed to fix minimum prices. This type of behaviour harms the economy and deprives businesses and consumers of the benefits of competition.
It is the CMA’s responsibility to ensure that markets are competitive, and to take action when businesses fail to comply with competition law. This applies to all businesses and all industries.
Notes for editors
1. The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. For more information see the CMA’s homepage. For CMA updates, follow us on Twitter @CMAgovuk, Flickr, LinkedIn and Facebook.
2. The Competition Act 1998 prohibits agreements, practices and conduct that may have a damaging effect on competition in the UK. The Chapter I prohibition covers anti-competitive agreements and concerted practices between businesses which have as their object or effect the prevention, restriction or distortion of competition within the UK. Article 101 of the Treaty on the Functioning of the European Union (TFEU) covers equivalent agreements or practices which may affect trade between EU member states. Any business found to have infringed the prohibitions in the Competition Act 1998 or Article 101 TFEU can be fined up to 10% of its annual worldwide group turnover.
3. The addressees of the CMA’s infringement decision and the fines imposed are:
|FM Model Agency Limited (‘FM Models’)||£251,000|
|Models One Limited, One Worldwide Limited and Models 1 New Co Limited (together ‘Models 1’)||£394,000|
|Premier Model Management Limited (‘Premier’)||£150,000|
|Storm Model Management Limited and Storm Models Limited (together ‘Storm’)||£491,000|
|Viva Model Management London Limited and Viva Model Management Sarl (together ‘Viva’)||£245,000|
|The Association of Model Agents Limited (‘AMA’)||£2,500|
4. The CMA’s investigation was opened on 24 March 2015. A statement of objections was issued on 25 May 2016, and draft penalty statements were issued on 27 September 2016. More information about the case can be found on the case page.
5. During the period of the infringement, the AMA’s business was managed by a Council composed of representatives of FM Models, Models 1, Premier, Storm and Viva. At the start of the CMA’s investigation, the AMA had 17 members, including many of the larger UK model agencies.
6. Top models are those individuals whose fame plays a part in the customer’s decision to contract for their services and who, as a consequence of this, usually pay significantly lower commission to the model agency and earn higher fees than other models.
7. The French and the Italian national competition authorities have recently announced penalties following investigations into the modelling services sector. The CMA has liaised with both authorities throughout its investigation. The CMA’s case concerns separate conduct, however, carried out by model agencies active in the UK and by the UK trade association.
8. Case Decision Groups (CDGs) are used by the CMA in Competition Act cases and are separate from the case team responsible for investigating the case and issuing a statement of objections. The role of the CDG is to decide whether, based on the facts and evidence before them, including the parties’ representations, the legal test for establishing an infringement has been met, and on the appropriate amount of any penalty. CDGs can include CMA panel members and will usually be chaired by a CMA inquiry chair.
9. The non-confidential version of today’s infringement decision, including the basis for the calculation of the fine, will be published on the case page in due course following the redaction of commercially sensitive information.
10. Any individual or business affected by the anti-competitive behaviour in this case can rely on the CMA’s infringement decision if making a claim in the courts for damages against the companies concerned. It will be for the court to determine the level of any damages.
11. Anyone who has information about a cartel is encouraged to call the CMA cartels hotline on 020 3738 6888 or email firstname.lastname@example.org.
12. Under the CMA’s leniency policy, a business that has been involved in a cartel may be granted immunity from penalties or a significant reduction in penalty in return for reporting cartel activity and assisting the CMA with its investigation. Individuals involved in cartel activity may also be granted immunity from criminal prosecution for the cartel offence under the Enterprise Act 2002. The CMA also operates a rewards policy under which it may pay a financial reward of up to £100,000 in return for information which helps it to identify and take action against illegal cartels. For more information on the CMA’s leniency and informant reward policies, go to leniency and rewards.
13. The CMA has produced guidance to help businesses understand more about competition law, including what businesses can do to make sure they comply. There is also specific guidance to help small businesses.
14. Media enquiries should be directed to Simon Belgard (email@example.com), 020 3738 6472).