It is extremely common in the fashion industry for an agent to carry a number of collections for different brand owners. It is also a commonly held view that this does not cause a problem.
This is not the case.
A brand owner has a right to prevent their agent from acting for competing brands. This is because an agent has a legal obligation to their “principal” (i.e. to the brand owner) not to put themselves in a position in which their personal interests or those of another principal (i.e. a competing brand owner) may conflict with the first principal’s interests (unless there is prior fully informed consent).
An agent owes these duties to their principal irrespective of whether there is a written or oral agency agreement. In addition, these duties are entirely separate from any non-compete restrictions on the agent in a written agency agreement.
A conflict will clearly arise if an agent takes on a competing brand. An agent will often try to justify taking on another collection by arguing that there is no risk of a conflict of interest arising because the products do not compete, or even because the products complement each other. Yet whether or not a product competes with another product can be a difficult question to determine. It depends on how the market is defined. The more narrowly the relevant market is defined, the less likely it is that the products compete.
Provided that prompt action is taken, a principal who has not consented to an agent acting for another principal is entitled to terminate the agency agreement immediately. As a result the agent will lose the right to compensation or indemnity payable under the Commercial Agents Regulations. Further, the principal may claim damages or even an account of profits from the agent, who will have no defence.
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