Monday, 19 April 2021

UK competition watchdog fines modelling agencies for price fixing

LONDON: Five of London’s leading modelling agencies and a major trade association have been fined more than £1.5m for price collusion by the UK competition watchdog, the third time the industry has faced a crackdown in Europe in the past three months. The Competitions and Markets Authority said on Friday that it had found the agencies – FM Models, Models 1, Premier, Storm and Viva – and the Association of Model Agents had colluded on setting prices for modelling services. “The parties regularly and systematically exchanged information and discussed prices in the context of negotiations with particular customers,” the watchdog said. “In some cases, the agencies agreed to fix minimum prices or agreed a common approach to pricing.” But the charges were slammed in a joint statement from Storm, Premier and Models 1 as “wholly mistaken” and based on a misunderstanding of the UK modelling market where, it said, agencies play a key role in protecting the interests of models, including “young and vulnerable” newcomers who often have to work for “very little or nothing in order to build a portfolio”.

The CMA’s probe did not target the work of supermodels but instead focused on models engaged in the lower to mid-end of the market, covering fashion magazine shoots that pay a few hundred pounds to advertising campaigns where they can earn more than £10,000, the CMA said. The CMA has been ramping up its enforcement work as it seeks to shed an image of being toothless after it was rapped this year by the National Audit Office for its low number of enforcement decisions between 2012 and 2014. It fined Pfizer a record £84m last week for charging unfair and excessive prices for a drug used to treat epilepsy, while GlaxoSmithKlinewas penalised £37m in February for paying off companies to delay the launch of a cheaper version of its antidepressant Seroxat. John Horner, managing director of Models 1, said the CMA’s actions were “disproportionate” and had “missed the point”. “They’ve left the model out of the equation,” he said.

The UK watchdog homed in on a system of “alerts” issued between the AMA and the agencies which called on members to resist prices offered by customers on the grounds they were too low. “It doesn’t seem to me the CMA has understood the raison d’être of the alerts in the first place. They are there to protect the models in an industry where powerful retailers and fashion houses could seek to impose ‘take-it or leave it’ offers.” Premier, Models 1, Storm and the AMA are to appeal against the decision, while Viva said it would soon decide what action to take. FM Models went into liquidation earlier this year and could not be reached for comment. The modelling agencies were being “penalised for seeking to maintain professional standards within the industry whilst also protecting the interests of young and vulnerable people”, Mr Horner said in a separate statement. “They are not improving the competitive environment but are damaging a small but important UK industry which is recognised as successful internationally.” Models 1 is Europe’s largest modelling agency and has represented such supermodels as Twiggy and Yasmin Le Bon. Storm, which was set up in 1987 with backing from Richard Branson, has represented Kate Moss and Alexa Chung, among others. Naomi Campbell and Claudia Schiffer have worked with Premier.

The CMA first opened an investigation into the UK modelling industry in March last year, and said in May this year that it had found evidence of collusion. In September, French competition authorities fined SYNAM, another trade association, €2.4m, for drawing up and distributing pricing guidelines for modelling agencies, which the French regulator said “distorted the starting point for negotiations between modelling agencies and their clients and supported price alignment”. In October, Italian competition authorities fined eight agencies in Italy and Assem, another trade association, €4.5m for alleged price collusion.

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