Hays handed £30m fine for price-fixing

Hays plc, the FTSE-listed recruiter growing its presence in the IT sector, is among six agencies reeling from fines totalling £39.3million for anti-competitive conduct and price-fixing.



In a two-part ruling, the Office of Fair Trading said the company conspired with rival agencies to fix the fees they each charged for supplying candidates to clients in the construction sector.



One victim - Parc UK - an intermediary firm, was also hit by an agreement Hays made with the agencies between October 2004 and November 2005 to boycott Parc's contracts.



The OFT found that these actions breached the Competition Act 1998, resulting in a fine for Hays of £30.3million for its property and construction's unit hand in the fix.



But out of the seven other offending agents, only five were left to shoulder fines totalling £8.9million, after two won immunity from the OFT in return for revealing the cartel. One of these five - Warwick Associates - is now in liquidation.



In contrast, the whistleblowers, Hill McGlynn & Associates and Beresford Blake Thomas, won 100% leniency for exposing the 'Construction Recruitment Forum', which met five times between 2004-06.



Hays also won leniency, albeit at a lower rate of 40%, for fully co-operating with the OFT enquiry, but last night said that its penalty of £30m was still "wholly disproportionate."



Chief executive Alistair Cox also claimed: "The OFT's investigation related to an isolated matter arising from the conduct of a single employee who is no longer with the company and affected only a small part of our UK construction & property business."



Mr Cox said the board at Hays had already taken steps to strengthen compliance and training in the relevant area of the group, and that it took the OFT's findings "seriously."



However, he believes the size of the fine is unprecedented when compared with similar cases the OFT has dealt with in the past, partly explaining why Hays is now considering an appeal.



Though in its ruling the OFT sounded unapologetic. Its senior director Heather Clayton said: "This [was] 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."



The total fine before reductions for leniency, which the OFT also granted to CDI AndersElite, Eden Brown, Fusion People and Henry Recruitment, were factored in was £173million.