Construction sector news

Recruitment agencies fined for construction cartel

7/10/2009
The Office of Fair Trading has imposed fines totalling £39 million on six recruitment agencies for price-fixing and the collective boycott of another company in the supply of candidates to the construction industry.

The OFT has concluded that A 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. Hays Specialist Recruitment has been hit with the biggest fine of £30 million and said it was 'actively considering' an appeal.

The price fixing began in 2003 when recruitment agency Parc entered the market with a new and innovative business model. It intended to act as an intermediary between construction companies and different recruitment agencies for the supply of candidates, which put pressure on the margins of recruitment agencies.
Instead of competing with Parc - and each other - on price and quality, the parties 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.

Two other recruitment agencies involved, Beresford Blake Thomas and Hill McGlynn & Associates, have been granted immunity from fines in return for exposing the cartel.