On 29 September 2016, the French Competition Authority (l’Autorité de la concurrence – the “Autorité”) imposed a fine of EUR 2.4 million on 37 model agencies and their main trade association, the SYNAM, in relation to price-fixing practices that occurred within the framework of the SYNAM.
Model agencies’ practices are in the spotlight of competition authorities not only in France but in other jurisdictions too, as investigations for similar practices are also on-going in other EU countries.
A directorate of the French Ministry of the Economy for the protection of the consumers and competition (the “DGCCRF”) found pricing schedules on the websites of fashion-modelling trade unions. The DGCCRF reported the case to the Autorité which initiated an investigation on 27 June 2011. Formal statements of objection were sent to model agencies on 8 April 2014. Three agencies decided not to challenge the findings and to cooperate with the Autorité as per its settlement procedure.
The Autorité found significant evidence of price-fixing practices by model agencies and the SYNAM (formerly UNAM and SAM) with respect to the prices charged for fashion shoots, filming, advertising images or catwalk shows for instance. Model agencies, large and small, sought to achieve higher prices in negotiations with their customers by colluding, and the trade association was used as a vehicle for cartelisation.
Pricing schedules were drawn up and then distributed every year by the SYNAM from 2000 to 2010 as a guide to modelling agencies’ commercial policy – providing indicative overall pricing for modelling services. Such pricing schedules not only included the minimum wages paid to models resulting from the annual collective bargaining on models’ minimum salaries under French law, but in particular, also took into account the agencies’ commercial margin.
Although the pricing schedules were not formally compulsory for the SYNAM members, the Autorité considered that they were anti-competitive by object since the price schedules provided a strong incentive for agencies to use the recommended prices and align their prices with those circulated by the trade association.
As a result, the pricing schedules system impacted the starting point for negotiations between modelling agencies and their clients and supported price alignment. In practice, the agencies all charged the same commission rates and invoiced the same amounts in compliance with the rates circulated by the SYNAM.
37 model agencies have also been fined along with the SYNAM, for having participated in members’ meetings relating to union pricing schedules. The total amount of the fines imposed was nearly EUR 2.4 million. The three agencies that have not challenged the findings benefited from a 10% reduction in their fines as part of a settlement with the Autorité.
Beyond meeting their legal duties1 , trade associations should not depart from their primary task of providing information, advice and the defence of their members’ professional interests. In this way, a trade association must not directly or indirectly affect its members’ commercial autonomy vis-à-vis their clients, in particular with regards to pricing.
Special care should be taken in relation to information exchanges between competitors via trade associations. In particular, members should not use trade associations as a vehicle for sharing commercially sensitive information, or exchanging information regarding their pricing strategies. Any information exchanges involving competitors should be considered carefully from a competition law perspective to ensure they do not fall foul of antitrust law.
In the SYNAM case, the main victims of these practices were the customers of the model agencies, such as communications agencies and fashion groups (maisons de couture) seeking to showcase their collections, or companies (such as Renault, Peugeot, Orange, etc.) using models for their advertising campaigns. Investigation has shown that clients were using the pricing schedules published by the SYNAM trade association themselves to prepare their own budgets for their shows or advertising campaigns. Consequently, the clients of the model agencies will need to take a different approach in future, relying on individual negotiations, rather than the price schedules that SYNAM used to circulate.
On the basis of the decision of the Autorité, clients may seek damages from the agencies and SYNAM before the commercial Courts (so-called “follow-on actions”). Indeed, if the agencies’ clients have been over-charged as a consequence of the anti-competitive practices they may seek compensation. In France, such damages actions would be governed by French legislation that will be adopted by end of 2017, implementing European Directive 2014/104/EU on antitrust damages actions.
The Autorité is not the only competition authority that is concerned about price-fixing practices implemented by trade associations in the modelling sector. The Italian Competition Authority imposed fines totalling EUR 4.5 million on nine model agencies along with their trade association, the ASSEM2 . The agencies held meetings both inside and outside the umbrella of the ASSEM concerning the exchange of commercially sensitive information and fixing common prices in order to induce customers to increase their spending budgets for specific modelling events.
Meanwhile, in the UK, on 25 May 2016, the Competition and Markets Authority (“CMA”) served a statement of objections on five modelling agencies and trade association, the Association of Model Agents (“AMA”). According to the CMA, from April 2013 to March 2015 these modeling agencies agreed to exchange confidential, competitively sensitive information, including future pricing information, and in some instances agreed a common approach to pricing. The AMA was found to have acted as a vehicle for coordination of prices. According to the CMA, it circulated regular emails to its members, known as ‘AMA Alerts’, encouraging agencies to reject the fees being offered by specific customers and to negotiate higher fees3 .
Luxury and creative industries have been spared from antitrust enforcement activity in the recent past. More recently, the Autorité has imposed fines for anti-competitive practices in the French luxury perfume sector (for retail price maintenance) and in the luxury hotel sector (for sensitive information exchange). The fashion industry has not specifically been targeted to date. The decision made by the Autorité in the SYNAM case, along with investigations by other national competition authorities, reiterates that competition law applies to all sectors, in particular where illegal information exchanges and price-fixing practices are concerned.