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OFT names and shames eight recruiters

Eight recruitment agencies supplying staff to specialist contracting firms throughout the UK have been accused of breaching competition law. The accusation was made by the Office of Fair Trading in a Statement of Objection published earlier this week.

A Warwick Associates, Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment and Hill McGlynn Associates were charged with alleged price fixing and collectively boycotting an un-named intermediary, in contravention of the Competition Act 1998.

The objection was issued less than a week after Patrick Mc Fadden, minister of state for employment relations and postal affairs, warned that recruiters suspected of engaging in fraudulent activities should expect to be prosecuted under the Conduct of Employment Agencies and Employment Business Regulations 2003.

It comes at a difficult time for specialist recruiters struggling to place staff in an industry hard-hit by the economic downturn.

The OFT allegations relate to the firms’ activities in the construction sector on a number of contracts between November 2004 and February 2006. Firms found guilty of either offence could expect to be fined up to 10 per cent of worldwide turnover. For Hays, the only UK company listed, this equates to approximately £80 million.

Hays said it was taking the matter very seriously and was co-operating fully with the OFT under its leniency programme.

The company added: “Following an internal investigation, we are confident that the matter being investigated by the OFT was an isolated matter and that appropriate steps have been taken.”

Eden Brown said: “Eden Brown wishes to emphasise that the allegation indicates the occurrence of a purely technical breach of the relevant law. At no point has any customer suffered financial loss as a result of the alleged actions and Eden Brown did not itself benefit from the alleged actions.”

The other six companies listed either declined to comment or could not be contacted.
The Recruitment and Employment Confederation, the industry’s professional body, said it would be reminding its members of their obligations under the Competition Act 1998.

Andy Walker, the communications manager with the Association for Consultancy and Engineering, remained unimpressed. “This time last year we published our Skills Shortages and Recruitment Agency Behaviours report, which highlighted and criticised the unethical behaviours of some recruitment consultancies,” he said.

“Our report concluded that these behaviours were having a detrimental effect on the efforts of our consultancy and engineering members to filling vacancies. In that light, we await any conclusions of this investigation with interest.”

Rod Pettigrew, HVCA head of commercial and legal, said: “The Association firmly believes that companies should comply with the law and, if illegal activities are going on, then the OFT has to ensure that these practices don’t continue.

“However, we must remember that for some firms these are merely allegations at the moment. Naming and shaming is a device employed by the OFT to highlight anti-competitive behaviours.

“We also have to remember that the OFT has also got it wrong on a number of occasions, for instance with Morrison’s. Consequently, it is difficult to make the assumption at this stage that the allegations are in fact true.”