In an open letter published shortly before the opening of the London Fashion week on September 12, 2017 (see here), the UK Competition and Market Authority (CMA) sent a strong reminder to creative industries that they are prohibited from engaging into price coordination and information sharing between competitors.

The CMA Letter: What’s In It?

The letter draws on the 2016 model agencies cartel case, in which the CMA fined five businesses and their trade association over £1.5 million for breaking competition law. According to the CMA, the agencies: (1) discussed prices for modeling services, and, in certain cases, agreed to fix minimum prices or to adopt a common approach to pricing, and (2) systematically exchanged sensitive information. As to the trade association, it circulated confidential information to the model agencies.

The case is currently under appeal. But, for the CMA, the take-away is already clear: creative industries must be reminded that the CMA takes price collusion very seriously and will not hesitate to take action if businesses operating in this sector break competition law.

A Serious Warning for Creative Industries

The CMA letter is a serious warning to the creative industry.

In its May 2017 decision regarding resale price maintenance in the light fitting sector, the CMA considered for the first time that failure to comply with competition law following receipt of a warning letter was an aggravating factor. Therefore, the regulator increased one of the investigated parties’ fines by 25%. The CMA justified this approach as follows:

“It is important that warning letters are taken seriously and that recipients read any such letters carefully […] the CMA considers that it is appropriate and proportionate to increase the penalty for the Endon infringement by 25% in this case for failure to comply with competition law following receipt of a warning letter”.

Based on this precedent, the CMA letter to those active in the creative industries should be taken very seriously, as any price collusion practices in the sector could well generate increased fines, due to the existence of a prior warning letter.

The CMA letter refers to the model agencies case. However, we assume that any business, engaged in the creative sector should be deemed included within the scope of the letter, given that it refers to the UK’s creative industries in very general terms. Also, given the timing of publication of the letter, we conclude that fashion industries are among the prime targets of the CMA.

On the Use of Open Letters to Ensure Compliance with Competition Law

This is not the first time that the CMA has sent an open letter to a wide range of industry participants. For instance, in June 2016, it published an open letter to retailers and suppliers regarding a particular practice, namely online resale price restrictions (see here). In December 2015, it warned medical practitioners about their obligations under competition law (see here).

The use of these letters is designed to achieve a greater level of UK awareness regarding the scope of competition law. The use of open letters allows the CMA to deal with an economic sector, in a didactic way and without first engaging in expensive sector-wide antitrust investigations, whilst at the same exposing those businesses who persist with non-compliant strategies to the risk of enhanced fines. Following Brexit, we expect the CMA to make increased use of this tool, in order to conserve its limited resources and given that it will face an increased workload in dealing with matters that might otherwise have been addressed by EU regulators.

On September 12, Andrew Finch, the Acting Assistant Attorney General for Antitrust in the U.S. Department of Justice, confirmed the Trump Administration’s commitment to the criminalization of agreements among companies not to “poach” each other’s employees and agreements on employees’ wages, policies advanced significantly during the Obama Administration.

Continue Reading Trump DOJ Confirms Criminal Enforcement against Employee No-Poaching and Wage-Fixing Agreements

Steptoe partners Jonathan B. Sallet, Anthony J. LaRocca & Yves Botteman authored an article titled “Turning The Corner: The Internet Of (Moving) Things” for Competition Policy International. The article explores the intersection between the development of the Internet of Things and competition law, both from a US and a EU perspective. The article is available here.

The European Court of Justice (CoJ) just came back to business with a bang. On September 6, 2017, it delivered its long-awaited judgment in the Intel case. The CoJ refers the case back to the General Court (GC), with the instruction to review the economic arguments put forward by Intel in its defense against the European Commission’s (Commission) findings that its exclusivity rebates were anticompetitive.

The Intel judgment is significant insofar as it marks a major departure with previous case-law, which considered that exclusivity rebates are, by their very nature, anticompetitive. From now on, all rebates, whether exclusive or loyalty-enhancing, must be examined in light of all of the relevant circumstances, including their economic effects. In that respect, it must be ascertained whether the rebates are capable of excluding an as efficient competitor as the dominant company.

Arguably, this new approach is a – probably small – opening for dominant businesses willing to offer exclusivity rebates: under certain circumstances, such rebates might well withstand close antitrust scrutiny.

Click here to read our detailed briefing on the judgment.

As part of its “aggressive agenda” of enforcement and outreach regarding the professional licensing systems that regulate an FTC-estimated 25%-30% of jobs nationally, the Economic Liberty Task Force held a public roundtable on July 27 in Washington, DC. The Task Force, which was launched by Maureen K. Ohlhausen shortly after she took over as Acting Chairman early this year, was created—in part—to identify unnecessary and overbroad occupational licensing and prioritize the roll back of such regulations.

Continue Reading FTC’s Economic Liberty Task Force Employs Roundtable on Occupational Licensing Reform

The Steptoe EU Competition team is pleased to invite you to the webinar “Staying Clear of Online Pricing Pitfalls” on September 20, which will provide practical insights on the antitrust pitfalls and risks raised by price restraints imposed on online distributors, including resale price maintenance and minimum advertised prices. To register, please click here.

This webinar is the third in a series of webinars focused on the distribution of goods and services in Europe.  Our first event in May was dedicated to achieving a successful product launch, whilst the second one in June provided an update on online resale restrictions and what suppliers may do with their distributors to protect their brands in the online space.

We hope that you will enjoy the webinar and look forward to hearing from you!

 

 

On September 15, Steptoe and Japanese law firm Iwata Godo will conduct a joint antitrust seminar in Tokyo addressing the international management of antitrust risks for Japanese companies.

The speakers (Ken Ewing, Pat Linehan and Jean-Nicolas Maillard from Steptoe and Akira Matsuda and Takaki Sato from Iwata Godo) will provide to the audience an overview of recent enforcement trends in the US, the EU and Japan, with a specific focus on international civil and criminal antitrust litigation strategies.

If you would like to participate in this seminar, we invite you to register ‎through the link in the invitation here.