OFT Issues SO Accusing Recruitment Agencies of Breaching Competition Act
On October 21, the UK’s Office of Fair Trading issued a Statement of Objections, alleging that eight recruitment agencies breached the Competition Act of 1998.
The agencies involved are: A Warwick Associates, Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment, and Hill McGlynn Associates.
The OFT found that the agencies had breached the Chapter 1 prohibition of the Competition Act. The Chapter 1 prohibition governs all anti-competitive agreements and practices that have the object or effect of preventing, restricting or distorting trade or competition in the UK.
Specifically, the OFT found that the recruiting agencies, many with offices in the north, engaged in a collective boycott by agreeing to withdraw from entering into contracts with a particular intermediary to supply employment candidates to UK construction companies. In addition, it found that the companies participated in price fixing by agreeing to fix fee rates for supplying employment candidates to intermediaries and UK construction companies. The OFT decided there was one overall infringement. The activities occurred from late 2004 until sometime between the end of 2005 and the beginning of 2006. The exact duration of each agency’s involvement varies. The OFT began investigating in May 2006.
The OFT will further investigate to decide if the law has been violated once it reviews each party’s responses to the SO. The parties involved have until January 9, 2009 to respond. One company representative spoke out, claiming the allegation indicated the occurrence of a purely technical breach of the law, that customers did not suffer and the company did not profit from the alleged actions taken.
Randstad, the world’s third largest staffing firm, acquired two of the recruiting agencies, Hill McGlynn Associates and Beresford Blake Thomas, this year as part of a £ 3 billion deal.
The OFT could choose to fine each of the agencies involved up to 10 percent of their global revenue in the affected market. The OFT’s chief executive, John Fingleton, showed that the OFT was taking the investigation very seriously, commenting that “for a market to work well, companies should compete to supply services and set prices independently. If we find evidence of anti-competitive activity we will use the appropriate powers to punish the companies involved. If proven, the alleged practices in this case would amount to a serious breach of the law.”
This investigation follows another large investigation by the OFT into the construction industry, which involved 112 builders and was focused on cover pricing, a practice in which construction firms secretly agreed on the prices they would submit during a tender process.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
The agencies involved are: A Warwick Associates, Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment, and Hill McGlynn Associates.
The OFT found that the agencies had breached the Chapter 1 prohibition of the Competition Act. The Chapter 1 prohibition governs all anti-competitive agreements and practices that have the object or effect of preventing, restricting or distorting trade or competition in the UK.
Specifically, the OFT found that the recruiting agencies, many with offices in the north, engaged in a collective boycott by agreeing to withdraw from entering into contracts with a particular intermediary to supply employment candidates to UK construction companies. In addition, it found that the companies participated in price fixing by agreeing to fix fee rates for supplying employment candidates to intermediaries and UK construction companies. The OFT decided there was one overall infringement. The activities occurred from late 2004 until sometime between the end of 2005 and the beginning of 2006. The exact duration of each agency’s involvement varies. The OFT began investigating in May 2006.
The OFT will further investigate to decide if the law has been violated once it reviews each party’s responses to the SO. The parties involved have until January 9, 2009 to respond. One company representative spoke out, claiming the allegation indicated the occurrence of a purely technical breach of the law, that customers did not suffer and the company did not profit from the alleged actions taken.
Randstad, the world’s third largest staffing firm, acquired two of the recruiting agencies, Hill McGlynn Associates and Beresford Blake Thomas, this year as part of a £ 3 billion deal.
The OFT could choose to fine each of the agencies involved up to 10 percent of their global revenue in the affected market. The OFT’s chief executive, John Fingleton, showed that the OFT was taking the investigation very seriously, commenting that “for a market to work well, companies should compete to supply services and set prices independently. If we find evidence of anti-competitive activity we will use the appropriate powers to punish the companies involved. If proven, the alleged practices in this case would amount to a serious breach of the law.”
This investigation follows another large investigation by the OFT into the construction industry, which involved 112 builders and was focused on cover pricing, a practice in which construction firms secretly agreed on the prices they would submit during a tender process.
About the author: Jason Hardy is an avid writer on legal issues, including international writing about many subjects including european antitrust lawsuits. Eu competition law interests Jason particularly. He resides in Seattle, Washington.
Labels: eu competition law, eu law, european antitrust lawsuits, recruitment agency
posted by European Antitrust Law at
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