It has been reported this week that the Competition and Markets Authority (CMA) carried out “dawn raids” on three top modelling agencies (Storm Model Management, Premier Model Management and Models 1). The agencies have apparently been accused by some of their customers of colluding to fix prices charged to retailers and to brand owners.
The CMA launched an investigation into the fashion industry in March this year, and has now confirmed that the recent raids are part of that enquiry, which is now focused on the modelling sector. The CMA is seeking information from the companies in the sector but has not published details. The next step will be for the CMA to decide whether to proceed with a full formal investigation. A decision is expected by October.
What does this mean for customers of the modelling agencies?
We understand the CMA investigation is at a very early stage, and it may not proceed to a full enquiry, let alone an adverse finding. At this stage, the CMA has not launched a public consultation, although it may ask particular companies affected by the alleged anti-competitive conduct for information.
If the CMA finds there has been anti-competitive behaviour, it can levy significant fines. The maximum fine for anti-competitive behaviour is 10% of annual worldwide turnover, and individuals may face prison sentences.
Companies and individuals who have been harmed by the anti-competitive behaviour, for example by having to pay higher prices for products, can also claim compensation from the companies found liable. These are known as “follow-on claims”.
If you consider that your business has suffered as a result of anti-competitive behaviour, you are entitled to bring a claim at any time. If the CMA has already made a finding of anti-competitive behaviour, however, you can rely on these findings, and only need to prove your loss. Follow-on claims are therefore (relatively) easier to bring. Nevertheless, losses, such as over-paying, may well have accumulated over the entire duration of the illegal behaviour. It is therefore worth considering at an early stage whether you might have a claim, so that you can take appropriate advice and preserve the documents that you might need to rely on in the future.