Multi-sector recruiter Hays has been fined £30m for price fixing.

Hays is among six recruitment firms fined £39.27m by the Office of Fair Trading (OFT) for price-fixing and the collective boycott of another company in supplying candidates to the construction industry.??

The OFT ruled that A Warwick Associates (£3,303), Beresford Blake Thomas (£0), CDI AndersElite (£7.6m), Eden Brown (£1.07m), Fusion People (£125,021), Hays Specialist Recruitment (£30.4m), Henry Recruitment (£108,043) and Hill McGlynn & Associates (£0) all breached the Competition Act 1998.

Beresford Blake Thomas and Hill McGlynn & Associates were granted immunity from fines in return for exposing the cartel.?

The firms were found to have engaged in the following anti-competitive conduct:

·     Collective boycott - an agreement to withdraw from and/or refrain from entering into contracts with an intermediary company, Parc UK, for the supply of candidates to construction companies in the UK.

·     Price-fixing - an agreement and/or concerted practice to fix target fee rates for the supply of candidates to intermediaries and certain construction companies in the UK.

The OFT concluded that this conduct forms one single overall infringement of the Competition Act 1998, which had as its object the prevention, restriction or distortion of competition in the market for the supply by recruitment agencies of professional, managerial, trade and labour skills required by the construction industry in the UK.??

In 2003, Parc entered the market as an intermediary between construction companies and different recruitment agencies for the supply of candidates, which placing 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.??

All firms applied for and were granted leniency, apart from A Warwick Associates which has entered liquidation.

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

Heather Clayton, OFT senior director, says:?”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.”

Beresford Blake Thomas and Hill McGlynn & Associates were part of Vedior before its acquistion by Randstad. Randstad issued a statement in which it said it takes all matters of business conduct and ethics very seriously.

The statement continued: “Our code of conduct, integrity code and competition law guide are implemented throughout the group of companies. In relation to this case clear commitments have been provided to prevent any infringement in the future.”

Guy Lougher, a partner at law firm Pinsent Masons, told Recruiter: “There is no link necessarily between the amount individual companies have been fined and the culpability of the parties involved.

“The OFT will have applied the minimum deterrent threshold (with the objective of deterring future misdemeanours) which links the fine to the overall turnover of the group, and it’s likely that this has led to Hays receiving such a large fine.”

Lougher adds that things could get even worse for the six recruiters involved as those companies who were the victims of price fixing may have a case for damages against them. 

Both Hays and AndersElite told Recruiter that they did not want to comment until they had read through the findings in detail. Recruiters have two months to appeal.