Recruitment agencies fined for price fixing in construction
The Office of Fair Trading has fined six recruitment agencies a total of £39.27 million for boycotting another company supplying candidates for the construction industry.
Eight agencies formed a cartel called the Construction Recruitment Forum and met five times between 2004 and 2006 to boycott a new company to the market.
The firm fined the most was Hays Specialist Recruitment, which is heading the search for 26 ‘fresh blood’ tenants for the 50-member national tenant council before the end of the year.
It has had to pay out £30.36 million, with CDI AndersElite and Eden Brown behind it being fined just over £7.6 million and £1 million respectively. A Warwick Associates, Fusion People and Henry Recruitment also had to pay damages.
Beresford Blake Thomas and Hill McGlynn & Associates were granted immunity because they gave information to the OFT about the cartel.
The cartel boycotted Parc UK, a business set up in 2003 to act as an intermediary between construction companies and different recruitment agencies for construction industry candidates. Its members also set prices at an agreed level, to prevent them undercutting each other.
The OFT concluded this, and the collective boycott of the new company, breached the Competition Act 1998, which prohibits agreements and conduct that may have a damaging effect on competition in the UK.
Heather Clayton, OFT senior director, said: ‘This is a serious breach of competition law and the level of fines reflects this.
‘Cartels such as these can impact on other businesses, in this case construction companies, by distorting competition and driving up staff costs. Ultimately it is the consumer and the wider economy that loses out from such behaviour.’
Alistair Cox, chief executive of Hays, said: ‘We take the findings of the OFT investigation seriously. However, it is important to recognise that the OFT’s investigation related to an isolated matter arising from the conduct of a single employee who is no longer with the company and affected only a small part of our UK Construction & Property business.’
He believed the fine was ‘wholly disproportionate’ and explained Hays was considering an appeal.
All parties applied to the OFT for and were granted leniency apart from A Warwick Associates, which is in liquidation. The level of fines before reductions for leniency was £173 million.
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