Model agencies set to appeal CMA ruling on price collusion

Three top model agencies fined by the Competitions and Market Authority (CMA) for price collusion today have announced their intention to appeal the decision saying it demonstrates a lack of understanding of how the modelling industry works.

Key figures including models Yasmin Le Bon, Hannah Cassidy and the British Fashion Council’s former COO Simon Ward have also spoken out against the ruling.

Earlier today it was revealed that the CMA had fined five agencies, including Models 1, Premier, Storm, Viva and FM Models a total of £1.5m for price collusion saying they “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.”

John Wotton, chair of the Case Decision Group responsible for making the decision to to impose the fine, said strong competition benefited “consumers, the economy and society”. “When businesses collude rather than compete the ultimate losers are customers,” Wotton added.

Models 1, Premier and Storm, three of the industry’s leading agencies, have since issued a joint statement saying that the ruling “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 claim the CMA investigation found no evidence of “any discernible effect on competition in the UK” and in spite of this had issued fines that were out of line with their own guidance. “The Agencies did not collude 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,” they said.

They added that alerts sent by trade association AMA (Association of Model Agents) served not to encourage other agencies to collude on pricing but were instead intended to be warnings about inappropriate contract terms, mainly relating to image rights.

The agencies went on to say that the CMA did not take into consideration key market factors such as: the intense competition (there are 58 model agencies in the UK and those fined have a market share of less than 15%); buyers, generally large retailers and fashion houses, are very powerful; contracts are complex and terms vary significantly; models’ fees are either flat or falling; and there is a high turnover of models in the industry with significant differences in fees between models.

Models 1 managing director John Horner 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.

“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,” Horner said.

Meanwhile well-known models stepped in to defend their agencies. Yasmin Le Bon who is represented by Models 1 said the agency had been responsible for the longevity of her career.

“Modelling is a profession and it is hard work.  It takes time and commitment to build a career and the AMA, with its agents, have always sought to protect young models from exploitation, but also from clients who are under pressure to pay increasingly low fees. Regrettably models don’t work every day and a little has to go a very long way especially at the beginning of one’s career,” Le Bon said. “Responsible modelling agencies work to very high standards and protect young and inexperienced people from being exploited.”

Hannah Cassidy, represented by Storm added: “After five years with Storm I have benefitted from their experience in negotiating rates, working conditions, terms and image use. Their guidance is essential because the pressure and dangers of exploitation are real. Agents promote but also protect models from unfair contracts and exclusivity terms which could harm their careers. They also make sure I get paid on time.”

The British Fashion Council former chief operating officer Simon Ward called the CMA’s decision “regrettable” and that it misunderstood how the industry works. “Fashion is demonstrably a fast moving and competitive industry and the successful, reputable agencies survive only by ensuring they serve both of their client groups well: models and the industry clients who use them,” he said.