Posts Tagged 'Office of Fair Trading'

Recruitment Cartels

Recruitment Cartels

The story which caught the eye of the Origin office last week was that of the Office of Fair Trading fining 6 recruitment companies a combined total of £39.27 million for price-fixing. With leading recruitment organisation Hays being fined a staggering amount of £30,359,129 for its part in the cartel.

The companies had formed a group called “The Construction Recruitment Forum” after  Parc UK, who were operating a managed service on behalf of a client, had placed downward pressure on the allied recruiters’ margins.

To think the result is a fine in this region, serves as a warning for other recruitment companies who are looking to artificially keep prices high.

However, we can’t help thinking that this fine seems a little over excessive and the fact that 2 of the 8 recruitment companies got off completely scott free for giving information against their own cartel beggars disbelief especially when you take in to account the recruitment companies that revealed the activities of the cartel were actually the worst offenders in the cartel and would’ve been fined more than the £30 million Hays were fined.

The crazy world we live in. To be honest we cannot see why Parc needed the other recruitment companies in the first place, if those companies chose not to work with Parc then Parc should have filled their vacancies without them.

A recruitment company has the choice to work with the clients they want to work with and not work with the companies they do not want to work with. If a particular client does not want to pay for the service you are delivering then you both have the option of walking away or doing business.

What surprises me is that Parc can offer a managed service solution but not have the manpower or expertise to deliver on their solution and needed the help of external parties. We are however commenting with the limited facts we have available  so as is often the case the information released is not the full picture.

Price-Fixing however is an unforgivable business act, which distorts competition and always results in the end customer losing out. The outcome of this episode is a lose lose situation for all parties involved, the recruitment companies, the managed service provider, the end client and the candidates who didn’t get the opportunity which isn’t exactly what our industry needs now or ever.

Which brings us to our last point, even though this all happened in the construction industry, don’t you wonder if something similar could be going on in the IT industry?

We’re under the same pricing pressures and providing a similar service. Lets hope not and if there were after the fines seen in last weeks incident they probably broke up their cartels rather quickly.

Lastly, a note to the accountant at Hays who has got the unenviable take of balancing their books.

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