UK model agencies found guilty of price-fixing

The names of a group of UK modeling agencies including Yasmin Le Bon, Sophie Dahl and Straatan Nant were fined £ 1.5 m for collusion to manipulate prices to retailers, fashion brands and other customers.

UK competition regulator fines FM model, model 1, Prime Minister Storm, Viva, together with the trade association model agency association (AMA), price modeling service for at least two years from March 2013.

The Competition and Markets Authority (CMA) found that the agencies and their association “systematically exchanged information and discussed prices”, in some cases agreeing to fix minimum prices or agree a common approach to pricing.

The price collusion affected customers including high street chains, online fashion retailers and consumer goods brands that use models to front their products and appear in ad campaigns.

The regulator’s investigation looked into pricing practices across a broad spectrum of modelling assignments, from fashion magazine shoots offering models fees of a few hundred pounds to ad campaigns offering more than £10,000.

The CMA said that the collusion and price fixing did not extend to the services of so-called “top models”.

The fine and ruling is hugely damaging to the reputation of the modelling agencies and their industry. Premier represented Naomi Campbell for 17 years, while Storm discovered Kate Moss and Cara Delevingne, although all three are now with other agencies. Models 1 represents Sophie Dahl and Yasmin Le Bon, while Viva’s models include Stella Tennant and Natalia Vodianova.

The two biggest fines were charged to Storm (£491,000) and Models One (£394,000). FM Models, which has been given a £251,00 fine, shut down earlier this year.

Models 1, Premier and Storm said in a joint statement that they intended to appeal against the ruling. “The CMA’s findings are wholly mistaken,” the agencies said.

The agencies said the CMA has failed to understand the role of the modelling agency, which is in part to protect the interests of models. They said their actions were not designed to force up or fix prices but to “protect the interests of models and also ensure a sustainable market which benefits customers, the economy and society”.

“We reached our decision to appeal the CMA’s findings without hesitation,” said John Horner, the managing director of Models 1. “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.”

Le Bon credited the AMA with “nurturing and protecting” her at the beginning of her career and said it “taught [me] how to become the model I am today”.

“Had it not been for the knowledge, experience and professionalism of the agency I would not have sustained a career in the industry,” she said. “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.”

Storm model Hannah Cassidy said the AMA’s guidance had been “essential because the pressure and dangers of exploitation are real”.

“I have benefited from their experience in negotiating rates, working conditions, terms and image use,” she said. “Agents promote but also protect models from unfair contract and exclusivity terms which could harm their careers. They also make sure I get paid on time.”

Viva, which was fined £245,000, also strenuously denies wrongdoing.

“Viva strongly denies it agreed to fix minimum prices or that it agreed a common approach to pricing,” said a spokeswoman for the agency. “To date, the CMA has produced no evidence to demonstrate that the conduct which is the subject of the CMA’s Decision had any effect on the rates models represented by Viva received for assignments; this is because it did not have any such effect.”

The American Medical Association and agencies are also trying to influence other members of the industry organization by sending regular e-mail alerts, called the AMA, to urge them to boycott customers because the prices they offer are too low, the CMA said.

“When the business collusion rather than the ultimate loser is customer competition,” says Wharton John, the chair of the case CMA, decided the group decided. “This type of behavior undermines the economy and deprives businesses and consumers of the benefits of competition.”