Using the full force of its powers, the Office of Fair Trading (OFT) on Wednesday made an example of the recruitment industry, slapping a £39.27m fine on six companies for engaging in anti-competitive behaviour. Hays Specialist Recruitment received the heaviest fine at £30.36 million. The company responded by saying it was actively considering an appeal against the fine, which it claimed was “wholly disproportionate”.
Other agencies that were exposed in the investigation were; A Warwick Associates (£3,303), Beresford Blake Thomas (£0), CDI AndersElite (£7.6m), Eden Brown (£1.07m), Fusion People (£125,021), Henry Recruitment (£108,043) and Hill McGlynn & Associates (£0). They were all found to have breached the Competition Act 1998. Beresford Blake Thomas (BBT) and Hill McGlynn & Associates were granted immunity from fines in return for exposing the cartel. Had they not revealed the cartel, BBT and Hill McGlynn would have received the largest fine of the lot according to the OFT.
In 2003, Parc entered the market as an intermediary between construction companies and different recruitment agencies for the supply of candidates, which placed pressure on the margins for recruitment agencies. Rather than compete, the recruiters formed a cartel, referred to as ‘the Construction Recruitment Forum’, which met five times between 2004 and 2006. In this forum, an agreement was made to boycott Parc and also co-operated to fix the fee rates they would charge to intermediaries, such as Parc, and also certain construction companies.
“This is a serious breach of competition law and the level of fines reflects this,” said Heather Clayton, a senior director of the OFT. “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.”
