Recruitment agencies fined £40m

The fines concern price-fixing over construction industry labour

Six recruitment agencies have been fined almost £40m by the Office of Fair Trading (OFT) for price-fixing in the construction industry.

They also formed a cartel to boycott a firm acting as an intermediary between recruiters and construction companies.

Two other firms involved were granted immunity for exposing the cartel.

A Warwick Associates, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment and Henry Recruitment received fines.

Beresford Blake Thomas and Hill McGlynn & Associates were the two firms that escaped a fine.

RECRUITMENT AGENCY FINES A Warwick Associates £3,303 CDI AndersElite £7,602,789 Eden Brown £1,072,069 Fusion People £125,021 Hays Specialist Recruitment £30,359,129 Henry Recruitment £108,043 Source: Office of Fair Trading

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Of fines totalling £39.3m, Hays was fined £30.4m and CDI AndersElite £7.6m.

Hays said the fine was "wholly disproportionate with the activities to which it relates", adding that it was actively considering an appeal.

"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," it added.

CDI AndersElite said it would examine the decision in detail and consider its options, including an appeal.

"Since becoming aware of these alleged violations, CDI has increased its focus on its compliance programme throughout all business units to ensure that ethical business practices remain at the core of all company conduct," it added.

'Distorting competition'

The OFT found that the agencies formed a cartel, referred to as the Construction Recruitment Forum, which met five times between 2004 and 2006.

They agreed to boycott Parc UK, a company set up specifically as an intermediary between building companies and recruitment agencies, which was putting pressure on the fees charged by the established recruiters.

They also agreed to fix the rates they charged to other intermediaries and construction firms.

All six firms fined applied for, and were granted, leniency by the OFT. Before leniency was granted, the fines stood at £173m.

"This is a serious breach of competition law and the level of fines reflect this," said Heather Clayton at the OFT.

"Cartels such as these can impact on other businesses by distorting competition and driving up staff costs. Ultimately it is the consumer and the wider economy that loses out from such behaviour."

Last week, the OFT fined 103 building companies a total of £129.5m for colluding with competitors on building contracts.