Six recruitment firms who formed a cartel to fix prices and freeze out competition were fined a total of £39.3 million by the Office of Fair Trading (OFT).
The OFT found that the companies blocked a new competitor from supplying labour to building firms and also set fee rates to charge certain builders.
They agreed to boycott a new company, Parc, which entered the market in 2003 as an "intermediary", supplying workers to construction firms from several recruitment firms. This hit the recruiters' margins and they formed a cartel to tackle Parc - known as the Construction Recruitment Forum - which met five times between 2004 and 2006.
The firms fined were Hays Specialist Recruitment, A Warwick Associates, CDI AndersElite, Eden Brown, Fusion People and Henry Recruitment. Hays suffered the biggest fine of £30.4 million.
All six firms applied for leniency from the OFT over the fines, which would have otherwise stood at £173 million.
Two whistleblowers who approached the watchdog - Hill McGlynn and Beresford Blake Thomas - were spared any penalty.
The whistleblowers came forward in December 2005 with a formal investigation being launched in May 2006. The watchdog issued a statement of objections against the firms in October last year.
The OFT's action comes a week after it imposed fines totalling £129.5 million on 103 construction firms for bid-rigging activities.
The OFT senior director Heather Clayton said:
"This is 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."
Industry estimates put the size of the recruitment market for construction, technical and engineering roles at around £4.6 billion in 2006/07.
Information Note
A separate but related report appears in this month's Building & Regeneration section.
