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Agencies which fixed prices had 'noble goals'

Ex-NMP says move to raise models' rates meant to help them earn more. -ST
Janice Heng

Thu, May 09, 2013
The Straits Times

Former nominated MP Calvin Cheng is standing by his decision to get involved in a case that led to 11 modelling agencies being fined for price-fixing in 2011.

Although what the firms did - via an industry association which he led - was "technically wrong", their intentions were noble, said Mr Cheng in an interview with The Straits Times.

By agreeing to higher prices, they were trying to raise wages for models: "In this case, prices are wages. It's the same thing." This, he said, is because the rates which clients pay are what models get after the agency takes a cut.

The price-fixing case resurfaced last month when five of the agencies had their fines reduced on appeal.

The practice began in 2005, when the agencies formed the Association of Modelling Industry Professionals (Amip) with Mr Cheng as president. They came up with and agreed to price guidelines for modelling jobs. But when the Competition Act came into force the next year, their move was deemed anti-competitive.

But to Mr Cheng, the modelling industry has too much competition among agencies to begin with and too little among clients, such as large media firms.

"Too much competition on supply side, too little competition on demand side, what happens? Prices collapse."

He said this led to models being paid less than in other countries.

Before 2005, models here got about $250 for each catwalk show, compared to $850 in Hong Kong and China.

Amip wanted to close this gap. And after its guidelines were issued, rates did rise: to $400 for a show, and from $150 to $200 for editorial photo shoots. At Looque International, the increase went largely to models.

The agency, which Mr Cheng headed in 2005 but in which he is now only a minority shareholder, did not raise its commission. He does not know if other agencies took a larger cut, but he doubts it as they compete for models by keeping commissions low. In Mr Cheng's ideal world, what Amip did would not be illegal. The market would be left to its own devices, even if that meant anti-competitive behaviour.

But since the Competition Act is here to stay, the Government should at least have gone for "promotion, not punishment" in the first instance, said Mr Cheng.

"If an SME (small or medium- sized enterprise) is a first-time offender, give it a warning, counsel its management, work with it to create competition best practices. Don't resort to punishment straight away."

He said he has spoken to policymakers on the issue and wants to engage them further.

For now, one legacy of the affair remains: Models' rates are still at the Amip guideline levels.

In its decision, the Competition Commission of Singapore took that as evidence that the association has had an effect on the market. Mr Cheng claimed they "took this to be a bad thing".

But he looks at it differently: "If wages of models have been left higher and they have benefited permanently, it's a good thing."

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