9 May 2013
Modelling agencies' price fixing had adverse effect on market
MONDAY'S report ("Agencies which fixed prices had 'noble goals'") raises several points about the price-fixing case by modelling agencies that were members of the Association of Modelling Industry Professionals (Amip) with Mr Calvin Cheng as president. Many of these points have been dealt with by the Competition Appeal Board in its published decision.
The Competition Commission of Singapore is very active in engaging the business community to explain to small and medium-sized enterprises the Competition Act and the sort of compliance programmes they should put in place, so that management and staff do not inadvertently commit illegal anti-competitive activities.
There are many educational and outreach activities with trade associations and businesses to promote awareness of competition law compliance as part of good corporate governance.
We will continue to be active on this front, and we invite any interested association or party to approach us if they need more information.
The Competition Act was enacted in 2004. When the Section 34 prohibition in the Act came into force on Jan 1, 2006, companies were given an additional six-month transitional period to get up to speed on the Act, put in place compliance programmes and terminate their unlawful conduct. The transitional period also allowed businesses sufficient time to discontinue any existing anti-competitive practices. They had immunity from any penalty for infringing activities during the transitional period.
In fact, we did not impose any penalty on a particular modelling agency as it had exited the cartel before June 30, 2006, which fell within the transitional period. The other cartel members under Amip did not make use of the transitional period and ended their anti-competitive practices only in July 2009, which was more than three years after the period.
Mr Cheng stated that the intent of the modelling agencies was to raise the rates paid to models. However, the price-fixing agreement increased the prices that customers paid, which also increased the amount of commission due to the modelling agencies. The agencies' actions were found by the Competition Appeal Board to have an appreciable adverse effect on the market.
Price fixing is one of the most serious forms of infringement of competition law, and companies should take proactive steps to ensure that their management and staff understand and comply with the law.