The Office of Fair Trading has formally accused eight construction recruitment firms of price fixing and anti-competitive behaviour.
The OFT has alleged that the firms took part in the boycott of an intermediary firm, understood to be recruitment firm Parc, from late 2004 to early 2006.
Parc is an Irish company with offices in Dublin, London, Hampshire and Glasgow. Its clients include Taylor Woodrow and Hyder Consulting.
The eight accused firms are A Warwick Associates, Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment and Hill McGlynn & Associates.
At least one of the firms, Hays, has pleaded leniency, which means it can expect a reduced fine in exchange for co-operating with the OFT. Another, AndersElite, has said it expects to be fined.
One of the eight companies named by the OFT, A Warwick Associates, has gone into liquidation but the others continue to operate. AndersElite, Hays and Hill McGlynn are three of the biggest in the sector.
Tom Hadley, director of external relations at trade body the Recruitment and Employment Confederation, said: “Some recruitment firms might not understand that if you refuse to work with someone, that can be seen as anti-competitive behaviour.”
If you refuse to work with someone, that can be anti-competitive behaviour.
A recruitment source said if a boycott had been conducted, then contractors hired by Parc would have lost out. He said: “They would have suffered big time, because they wouldn’t have been able to get staff quickly unless they paid extra for them.”
Legal sources said contractors could potentially seek damages if any of the eight are found guilty, but that they would be unlikely to do so.
David Myerscough, senior HR manager at Bouygues UK, said: “I don’t think this will make a huge difference to what contractors pay to recruitment agencies. We make sure we keep a tight rein on fees, but would imagine that smaller firms have more of an issue with high fees and to be honest I can’t see this changing.”
The firms have 55 working days to respond before the OFT decides whether to levy fines.
As with the OFT inquiry into the construction industry, fines can be up to 10% of global turnover.
Parc did not wish to comment.