Model agencies fined for price collusion

The Competition and Markets Authority has found five top UK model agencies and their trade association guilty for breaking competition law by colluding on prices and has fined them a total of 1,533,500 pounds.

The authority stated that model agencies FM Models, Models 1 Premier, Storm and Viva, along with trade association Association of Model Agents (AMA), colluded instead of competition on prices for modelling services, from at least April 2013 until March 2015.

Of the agencies Storm Model Management received the highest fine at 491,000 pounds, followed by Models 1 with a fine of 394,000 pounds.

In its findings the Competition and Markets Authority said that the model agencies had “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.”

Model agencies including Storm, Models One and Premier fined for price-fixing

In addition, the Association of Model Agents was also found to have attempted to influence other 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 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 pounds. The conduct did not, however, extend to the services of so-called ‘top models’.

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.”

Model agencies to appeal Competition and Markets Authority findings

Three of the leading model agencies involved Models 1, Premier and Storm, are to appeal the findings and have issued a joint statement stating: “The CMA's statement does not reflect a thorough understanding of the market for modelling agencies in the UK, notably the role which agencies play in protecting the interests of models. Modelling agencies act to serve two clients: models and the customers who use their images.”

The agencies went on to say that they were not “colluding with the aim of forcing up or fixing prices to the detriment of consumers, acting instead to protect the interests of models and also ensure a sustainable market which benefits customers, the economy and society”.

It also added that the Competition and Markets Authority didn’t take into what it calls “fundamental market characteristics” such as intense competition, there are more than 10,000 models and 58 modelling agencies in the UK, and those fined represents less than a 15 percent market share. It added that buyers, generally large retailers and fashion houses, are very powerful, as well as contracts being complex due to syndication, channels and coverage, as well as the fact that models’ fees are either flat or falling.

Commenting on findings on behalf of the Agencies, John Horner, managing director of Models 1, said: "We reached our decision to appeal the CMA's findings without hesitation. It is clear that even after a 20-month investigation the CMA has failed to understand our complex industry.

“The CMA is penalising modelling agencies for seeking to maintain professional standards within the industry whilst also protecting the interests of young and vulnerable people. They are not improving the competitive environment but are damaging a small but important UK industry which is recognised as successful internationally.”

Horner added: “The disproportionate level of fines imposed is out of line with the CMA's own guidance and penalties imposed in other, far more serious cases in France and Italy."

The Competition and Markets Authority 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.

Images: Models 1, Premier and Storm websites