OFT fines recruiters £39.27m for price fixing

The Office of Fair Trading (OFT) has issued fines totalling £39.27million to six recruitment companies for price-fixing and the collective boycott of another company in supplying candidates to the construction industry.Beresford Blake Thomas and Hill McGlynn & Associates, were granted immunity from fines in return for exposing the cartel.

The OFT found that Warwick Associates, Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment and Hill McGlynn & Associates all breached the Competition Act 1998.

The breaches to the Act were as follows:
1.Collective boycott: the companies in question refrained from entering into contracts with an intermediary company, Parc UK, for the supply of candidates to construction companies in the UK.
2. Price-fixing: The companies an agreed to fix target fee rates for the supply of candidates to intermediaries and certain construction companies in the UK.

Between 2004 and 2006 the parties formed a cartel, referred to as 'the Construction Recruitment Forum', in which the firms agreed to boycott Parc, an imtermeiary firm and also co-operated to fix the fee rates they would charge to intermediaries, such as Parc, and also certain construction companies.

The total amount of fines before reductions for leniency were taken into account was £173m.
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."