On 16 December 2016, the UK CMA provided yet another example of the dangers of information exchange when it imposed fines in the model agencies sector. The case also shows that small companies are not immune from competition law enforcement and that the activities of trade associations must be monitored with care.
The CMA found that five 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. Total fines of GBP1.5 million were imposed (the relatively low level reflecting the small size of the companies involved).
The parties regularly and systematically exchanged information and discussed prices in the context of negotiations with particular customers. In some cases (but not all), the agencies agreed to fix minimum prices or agreed on 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 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.
It’s not clear what prompted the CMA to start this investigation. There was no whistleblower, so it seems likely that there was a complaint or the CMA decided to investigate of its own accord based, for example, on market monitoring.