Recruitment firms fined for boycotting rival (By Bieke Demeester)

The Office of Fair Trading (OFT) in the United Kingdom, announced at the end of September, that six companies breached the competition law.

The Office said that these six companies, which are recruitment companies, formed a cartel and refused to deal with the new rival ‘Parc UK’. They got a fine of £39 million in total for this serious breach of competition law. The new firm ‘Park UK’ wanted to act as an intermediary between recruitment companies and constrution firms. The six recruitment companies didn’t compete fairly: they formed a cartel, named the ‘Construction Recruitment Forum’. The OFT confirmed that between 2004 and 2006, this forum agreed to boycott ‘Park’. Therefor, they agreed upon fixed fee rates, which the intermediary firms (such as Park) would have to pay. This distorted competition and drived up staff costs, a director of the OFT said.

The company which got the greatest fine, was considering an appeal, although they admitted the charge. They said there was only one guilty employee and they already fired him. On the day of the judgment, the shares of this particular company fell be 3,5%.

Remarkable is that the Office of Fair Trading gives high fines. The construction industry in the UK had to pay in September a fine of £130 million for illegal price-fixing.

I think the OFT is necessary to investigate breaches of competition law, because consumers are always the dupe. Some companies are sentenced, but I think a lot of companies aren’t discovered yet. Although is it verbidden to breach competition law, this article shows that some companies don’t care about it and just want to raise their benefits. In Belgium, there is a similar council which has to investigate breaches on competition regulations.

Sources:
WEARDEN, G. (September 30, 2009). Recruitment firms fined boycotting rival. Retrieved from http://www.guardian.co.uk/business/2009/sep/30/oft-fines-recruitment-firms