The French Competition Authority fines modelling agencies and their professional union

The French Competition Authority (FCA) has fined 37 modelling agencies, representing almost the entire French market, and their main professional union for anti-competitive practices regarding pricing schedules of models in France.

Background

Modelling agencies recruit, train and promote models, and negotiate their services contracts with advertisers, communication agencies or couture houses.

French regulation requires that the agencies hold a licence issued by the French State in order to be allowed to negotiate models’ service contracts with their end-clients. To obtain the renewal of their licence each year, modelling agencies must respect minimum wages for their models, calculated according to the prices they charge to their end-clients and to minimum wages negotiated annually by the union.

What were the facts?

Between 2009 and 2010, 37 agencies were accused by the FCA of participating in meetings during which they voted on increasing union prices and discussed a rule regarding the ban on distributing their own pricing schedules.

According to the FCA, the modelling professional union, the SYNAM, used the complexity of the minimum wage calculation to create confusion between the mandatory minimum wage schedules (agreed in annual union negotiations) and the more detailed pricing schedules that the union in fact distributed to its members (including not only the models’ remuneration, but also the agency’s margin) so that the agencies could use the latter as a basis for negotiation.

While there was potentially justification for collectively setting an indicative minimum wage, by circulating these pricing schedules, the union facilitated anti-competitive information exchange between its members and influenced the way in which members set their own pricing.

What were the FCA’s findings?

For the FCA, the fact that pricing schedules were distributed by the professional union shortly after the mandatory annual union negotiations has increased the confusion between these pricing schedules and the mandatory minimum wages. Furthermore, pricing schedules were classified by types of services (photos, filming, or media) and therefore confused with the collective agreement.

Several agencies reported that “the agencies all charge the same commission rates and same invoice amounts“, namely the pricing schedules distributed by the union. In the FCA’s view, these practices therefore “distorted the starting point for negotiations between modelling agencies and their clients and supported price alignment“. In this context, the FCA fined not only the modelling agencies but also their union for having conducted such practice between 2000 and 2009.

What are the key findings?

Besides the fact that the decision of the FCA was issued during the Paris Fashion Week and thus was frequently relayed in the news, we would also note that:

• It did not matter that the pricing schedules only had an indicative nature. The sole fact that those schedules were drawn up and distributed by the professional union that then influenced its members regarding the determination of their prices was sufficient in the FCA’s opinion to characterise an anti-competitive conduct by object.
• The FCA seems also to have changed its standard of proof for anti-competitive conduct, by considering that the participation in only one meeting with anti-competitive content is sufficient to characterise anti-competitive conduct.

This case is also an important reminder of the risks associated with professional unions.  While there are clear justifications for some industry collaboration, this should never involve the exchange of confidential or strategic information between members.