The UK’s national competition authority, the Competition and Markets Authority (CMA), announced on 30 October 2015 that it intends to proceed with a full investigation into suspected anti-competitive behaviour by certain modelling agencies in the UK’s fashion, clothing and footwear sector.
The investigation centres on possible cartel conduct between competitors that is alleged to have driven up the prices charged by modelling agencies. If substantiated, such behaviour could be in breach of both UK and EU Competition law, specifically Chapter I of the Competition Act 1998 and Article 101 of the TFEU, respectively.
Fashion retailers have become increasingly sensitive to the prices charged by modelling agencies in recent years, particularly as a result of the recent surge in online retail that has seen retailers requiring a far greater range and number of photographs on an ongoing basis.
The CMA first announced that it was looking into suspected anti-competitive arrangements in the modelling sector in March this year. Since then, the authority has conducted an initial investigation, gathering and reviewing substantial amounts of evidence in order to reach the view last week that sufficient grounds exist for the authority to proceed with a detailed investigation. The initial investigation process typically sees the CMA issuing information requests and fact finding questionnaires to specific companies within the sector, as well as to relevant trade associations, before reviewing their responses.
The CMA has not officially disclosed the names of any of the agencies under investigation, though it is understood that 'dawn raids' were carried out earlier this year at the premises of several leading UK modelling agencies, suspected of being involved in the alleged anti-competitive behaviour. Nevertheless, the CMA has said that as the case is still at an early stage, no assumption should yet be made that competition law has been breached.
If a company or association of undertakings is found to have committed an infringement of Article 101 TFEU and/or Chapter I of the Competition Act, considerable financial penalties may be imposed, up to a maximum of 10% of global turnover. An infringement decision may also give rise to potentially expensive damages claims from affected clients.
The CMA expects to conclude its main investigation and decide whether any further investigatory steps are required by March 2016.