Recruitment firms fined for boycotting rival

Six UK recruitment firms have been fined a total of £39m for operating a cartel that fixed fees and boycotted a new rival.

The Office of Fair Trading announced this morning that the companies breached competition law by collectively refusing to deal with another company, Parc UK, when supplying candidates to construction companies in the UK.
Parc was set up in 2003, and hoped to act as an intermediary between the recruitment sector and construction firms. But rather than compete fairly with Parc, the six companies formed a cartel called "the Construction Recruitment Forum", the OFT said.
"[The Forum] met five times between 2004 and 2006. In this forum, they agreed 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," ruled the OFT today.
The six companies named are A Warwick Associates (which is now in liquidation), Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment and Hill McGlynn & Associates.
Hays alone has been fined £30.4m. Its shares fell by 3.3% this morning, making it the biggest faller on the FTSE 250 index.
"This is a serious breach of competition law and the level of fines reflects this," said Heather Clayton, OFT Senior Director.
"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," Clayton added.
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