Six recruitment agencies fined £39m for price-fixing

Six recruitment agencies have been fined a total of £39m by the Office of Fair Trading for price-fixing and working together to boycott another company in the supply of candidates to the construction industry.

The companies which have been fined are A Warwick Associates, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment and Henry Recruitment. Two other companies were also involved, Beresford Blake Thomas and Hill McGlynn & Associates, but have been granted immunity from fines after providing the OFT with evidence of the cartel.

They have been found guilty of collective boycott after an agreement not to enter into contracts with an intermediary company, Parc UK - a firm which set up in 2003 to act as an intermediary between construction companies and recruitment agencies - and price fixing after agreeing to fix target fee rates for the supply of candidates to construction companies in the UK.

The agencies decided that, instead of competing with Parc, they would form a cartel referred to as the construction recruitment forum. This group met five times between 2004 and 2006 and agreed to boycott Parc and fix the fee rates they would charge to intermediaries, such as Parc.

Each of the agencies applied for and were granted leniency, apart from A Warwick Associates, which is in liquidation. The total level of fines before reductions for leniency were taken into account was £173 million.

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.”