EXCLUSIVE: In October 2023, the British TV drama community was as confused as it was surprised to be told that some of the most well-known production companies in the country were being investigated by the Competition and Markets Authority (CMA) for “suspected anti-competitive behaviour.”
For those suddenly finding themselves in the proverbial dock, that feeling swiftly turned to fear as they were struck by the reality of being investigated by an authority that they knew little about.
More from Deadline
Now, with the CMA’s six-month-long initial investigation period drawing to a close, Deadline has spoken with those inside and outside of the investigation to assess the state of play.
We are told that those being probed are having to hand over troves of WhatsApps and emails to lawyers in order to prove innocence, are spending hours and hours dealing with CMA questions, and yet are still unsure as to why they in particular are under the microscope.
Furthermore, two connected sources estimate that those fighting the investigation will likely rack up collective legal bills in the millions of pounds, a serious hit to the coffers, especially for companies that have neither in-house lawyers nor deep-pocketed super-indie backers. If they are fined, the maximum punishment is a not insignificant 10% of global turnover.
With barely any information to go on and the indies under investigation having signed non-disclosure agreements, those outside its clutches fear they could be next. “Half the problem is that if you’re in it, you can’t talk about it, and if you’re out of it, you have no idea what is going on,” said one such producer. “The process is paralyzing.”
The investigation has also thrown up wider questions around the structures of an industry that generates billions for the UK each year.
The who and the why
BBC Studios, ITV Studios, Hartswood Films, Hat Trick Productions, Red Planet Pictures, Sister, and Tiger Aspect are under investigation, a collective that has produced some of the biggest British hits of past decades including Sherlock, Dracula, Derry Girls, Death in Paradise and Chernobyl.
As they contended with super-inflation in the drama market, a dearth of skilled freelance labor, and the U.S. sector not exactly firing on all cylinders, those now under investigation were blindsided when contacted by the CMA on October 11 — the same day it posted a notice of the investigation to its website. No one in the wider industry suspected it was coming either.
Filed under ‘Civil Cartels,’ the investigation is digging into whether production companies have been colluding by informally fixing freelancers’ wage rates. Under UK competition law, this behavior is forbidden and rates either need to be negotiated independently or fixed through formal collective bargaining processes. Other such open investigations include a probe into the recycling of end-of-life vehicles, and an examination of anti-competitive behavior in the fragrances industry.
The CMA says it has “reasonable grounds to suspect one or more breaches of competition law” in drama production but, for those under investigation, there is uncertainty over how they may have broken the law. Furthermore, there is a feeling that the CMA lacks an understanding of the informal structures that guide the industry.
Sources cite how informal WhatsApp groups sprung up during the Covid-19 pandemic, groups in which production companies shared information and discussed how to navigate lockdown restrictions and guidance, possibly even freelancer rates.
For those in these groups, the fear is that they have unknowingly engaged in the behavior the CMA is probing without even realizing it. During the brief post-Covid boom, rates shot up, which one indie source floats could have been a driving force behind possible discussions in these WhatsApp groups over freelancer wages.
The CMA has the power to demand the likes of WhatsApps and emails. Lawyers representing the companies are understood to therefore be trawling through messages and communications using software that homes in on certain search terms.
“We feel like the CMA has not issued guidance around this,” said another producer source. “You have to ask why they would use the blunt instrument of an investigation without first understanding the industry.”
Another source with knowledge of the investigation explained TV’s informal structures. “Agents are always talking about rates [to rivals],” he said. “We’re not lawyers, governors or doctors. People chat, exchange information and gossip.”
A different executive speculated that it is the lower-paid roles, governed even more informally, that are likely attracting the CMA’s attention. “There are line producers coming through who might ask the going rate of a costume designer or a make-up designer and then they all share the going rate in the [WhatsApp] group,” they said. “But I wouldn’t exactly call that collusion.”
Bectu and producer trade body Pact have some collective agreements in place for drama production, agreements that were negotiated somewhat messily in 2022, often spilling out into the open but eventually signed off. But even these agreements only guide on rates rather than setting them in stone, while advising in areas such as working hours, conditions, and wellbeing.
Spencer MacDonald, Bectu’s national secretary, said the CMA investigation proves the need for “rates agreements for all grades.” “This protects indies and Pact from any accusations of collusion because they are doing so in collaboration with the unions who then consult representatives,” he said. “It puts you in a stronger position to be able to say, ‘There can’t have been collusion, these have been negotiated’.”
But there is irony in MacDonald’s insistence. Rather than the CMA inspiring producers to come together to talk about rates formally with Pact, sources said that they are in fact retreating into themselves. Some are now understood to be unwilling to contribute to Pact or Bectu working groups until they are sure that what they are doing won’t be classed as collusion. A source at another union, Equity, which represents actors, said he “worries that ‘cartel-ism’ accusations will mean Pact takes a more distant approach to collective bargaining.”
“No one will negotiate because they’re scared,” said another of the execs quoted above. “Collaboration and goodwill from producers is what makes these agreements happen but this is going to affect the will of companies to potentially put themselves under the microscope by engaging in activities that could be seen as anti-competitive.”
The CMA, for what it’s worth, recently sought to clarify how it behaves when probing industries where freelancers and companies strike collective bargaining agreements.
“We want to provide reassurance that the CMA has no interest in interfering where self-employed workers and their employers come together to reach a genuine collective bargain and does not expect to stand in the way of such behaviour,” said a recent report titled Competition and Market Power in UK Labour Markets. “Our focus will remain on deterring cartel conduct, which by its nature is detrimental to well-functioning labour markets.”
Being at a disadvantage
Bar the BBC and ITV, four of the five indies being investigated are “true indies,” meaning they are not owned by a bigger entity. Only Tiger Aspect is part of a larger conglomerate in the shape of Banijay.
Information sharing between labels owned by the same super-indie is perfectly legal and a producer source who is not being investigated pointed out that this puts true indies at a major disadvantage, another point that they don’t believe the CMA has its head around.
“How does an indie drama producer who makes one or two shows per year have the market knowledge equal to a drama producer in a huge conglomerate?,” queried this source. “How do you stay competitive and avoid being f****d over when the broadcasters know more than you, the agents know more than you, and the super indies know more than you? Like everything else, this process benefits massive companies.”
A certain degree of paranoia surrounds the question of why these specific companies are being probed.
CMA investigations start off with a remit but that remit is easily expandable. Concurrent with this drama production investigation, there is another, that is further down the road, into sports production, which is also listed on the CMA website under ‘Civil Cartels.’ Sources suggest the two may be connected and query whether the CMA’s probe into the first proved the catalyst for the second. Other lower-budget genres, which often work under even less formal structures than drama, could therefore be vulnerable.
“The way the competition inquiry works is basically ‘go fish’,” said a person with knowledge of the CMA’s inner workings. “It’s a bummer for everyone.”
Pact is being urged by producers to do more to protect its hundreds-strong member base but the trade body stresses that it too needs to understand the legal lay of the land.
“We have issued clear guidance and updated policies to all members that are affected or may be in future,” said a Pact spokesperson. “As the investigation prohibits those companies that are part of it from discussing any of the details with third parties beyond their own legal representation, Pact is taking professional advice as to what it can and cannot do.”
The question now is what comes next.
No assumption should be made at present that the law has been broken and the CMA’s initial investigation stage will last until at least March, with wiggle room to go longer. Deadline understands the CMA will usually hold a so-called ‘state of play’ meeting with those under investigation once it has undertaken some investigatory steps, before inviting parties to a further meeting prior to the next step. At that point, the authority may issue what is known as a “statement of objections” if it is minded to decide that competition law may have been infringed.
If they are not cleared, producers will then be asked to make written and oral representations in response and the investigation will move to the final stage before the authority reaches a conclusion.
The situation could drag on, becoming more scary, laborious, and expensive as it proceeds. For drama producers trying to navigate an industry beset by a plethora of short and long-term obstacles, it is the last thing they need.
“Good people who spend time trying to make this industry good are being questioned,” said a source who is not being investigated. “If something has indeed gone wrong then that is not an individual problem or a company problem, it is an industry-wide, systematic problem.”
BBC Studios, ITV Studios, Hartswood Films, Red Planet, Sister and Tiger Aspect declined to comment further than saying they are co-operating with the CMA. Hat Trick couldn’t be reached for comment. The CMA declined to comment.
Best of Deadline