European Commission Turns the Spotlight on Fashion Houses, Antitrust Probe Underway

The European Commission (“EC” or “Commission”) announced this week that it has initiated unannounced inspections of—and issued formal requests for information from—multiple companies in the fashion industry in several European Union member states. Such raids and requests are the first steps in the Commission’s now-disclosed investigation into potential anticompetitive conduct in the fashion industry, specifically as to whether there have been violations of the cartel prohibition provision of Article 101 of the Treaty on the Functioning of the European Union and/or Article 53 of the European Economic Area Agreement, which prohibits other unfair business practices. In keeping with its regular practice, the EC did not disclose which companies were subject to these “dawn raids” and/or information requests, or which fashion types were the subject of its investigation.

Our European lawyers are highly regarded for their expertise in antitrust matters concerning the luxury and fashion industry. We assist a number of iconic brands in antitrust matters globally. With respect to Commission’s investigations, we are currently representing a fashion brand in an unrelated case before the Commission with respect to alleged anti-competitive conduct. Moreover, we have successfully represented several fashion brands in connection with the Russian Federal Anti-monopoly Service’s investigation in the luxury and fashion sector regarding potential pricing coordination, which was closed recently without any infringement decision. We are also representing a global fashion brand in the Commission’s investigation for an alleged abuse of dominant position.

Commission investigations often lead to coordinated investigations in other jurisdictions, including the United Kingdom and the United States. Despite Brexit, it is common for the United Kingdom’s Competition and Markets Authority (CMA) to collaborate closely with the Commission and other antitrust authorities. Similarly, the Deputy Assistant Attorney General of the Antitrust Division of the United States Department of Justice recently noted the Division’s “increased detection of cartels through engagement with the international community of enforcers.” And such investigations almost inevitably lead to civil class actions in the United States, which almost invariably name as defendants all market participants in an investigated industry, irrespective of whether a company has been directly investigated by a government enforcer.

K&L Gates has extensive experience in representing companies in response to antitrust investigations brought by the UK’s CMA, U.S. DOJ’s Antitrust Division, and other global competition enforcers. Likewise, our team of Chambers ranked litigators regularly defend clients against civil antitrust class actions brought in the United States.

Fashion brands should be alert to potential questions or parallel antitrust investigations being opened in the UK, the US and other jurisdictions as the industry is already under investigation by regulatory authorities for other issues. Cartel investigations often radiate out across the industry and it is wise to consult antitrust and competition counsel to assess and help mitigate your company’s risks.

By Michael E. Martinez and Brian J Smith

Copyright © 2023, K&L Gates LLP. All Rights Reserved.