CMA sends an open letter to the creative industries on competition law compliance
Author: Simon Barnes and Louisa Mottaz
Applies to: UK wide
After fining five modelling agencies for collusion on prices, the Competition and Markets Authority, CMA, is concerned that companies in the fashion, design and other creative industries do not have sufficient awareness of competition law.
To address these issues, the CMA has issued an open letter explaining what behaviours may breach competition law and what steps can be taken if anyone is aware of unlawful conduct within their company.
Last year the CMA issued a fine of £1.5 million on five modelling agencies and a trade association that were found to have colluded by sharing commercially sensitive information including pricing information for their models through the frequent exchange of email alerts.
Following the modelling agencies' decision and in the run up to London Fashion week that brings together some of the biggest names in fashion, the CMA has expressed concern that the creative industry is an important sector of the UK economy currently estimated at £84.1 billion and that there is less awareness of the parameters of competition law in this sector.
As the letter explains, it is not only fashion businesses that are affected: 'all businesses have a responsibility to make sure they comply with the law' and more importantly in order to achieve this, every individual within the business must play their part in ensuring compliance with the rules. Competition compliance is particularly important given that the consequences of breaching competition rules can be serious. Penalties for breaching the law include fines, director disqualifications, reputational damage, damage claims and in the worst cases imprisonment for up to five years.
The CMA concludes its letter with a list of steps to follow if you want to ensure your business is compliant and want to know more about competition law, or if you suspect or have been involved in any anti-competitive contacts with your competitors or customers:
- Seek independent legal advice;
- Ensure staff have received competition law training or are aware of the do's and don'ts for compliance;
- Check the CMA's websites for their 60-second guides on competition law and previous cases studies;
- Consider informing the CMA of any unlawful activities you have been involved in to obtain leniency from fines or bring a complaint to the CMA if you suspect others in your industry of breaking the law.
Training staff can be a highly effective way of ensuring your business remains compliant as exchanges of commercially sensitive information with competitors even in a social context can be considered unlawful. Furthermore, identifying and managing any competition law issues early can make a real difference to companies as blowing the whistle first can mean complete leniency from any fines for the business.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.