When Ireland-based recruitment firm Parc U.K. Ltd. in 2003 began to offer British contractors outsourced worker staffing services, it was pioneering a new way of doing business in the U.K. construction market. Six competitors, who responded by forming a “cartel” against it, now face fines totalling $61.2 million.
As the biggest cartel member, Hays plc, London, was fined $48 million by the government’s Office of Fair Trading (OFT) late last month. That fine was discounted by 30% because the firm agreed to cooperate with investigators. Without the cooperation discounts the firms’ fines would have totaled $273 million, reflecting the “serious breach of competition law,” says Heather Clayton, OFT senior director. Two other firms escaped fines by whistle-blowing.
Parc was the first to offer “recruitment process outsourcing” to U.K. construction firms, says Darren Day, a director of Nuparc Solutions, Dublin. Parc became Nuparc last year for reasons unrelated to the cartel, he says. Nuparc is saying little as it prepares its response to the fines. OFT says Parc attempted to position itself between construction firms and recruitment agencies. “Instead of competing with Parc, and each other, on price and quality, the parties formed a cartel...to boycott Parc and also cooperated to fix fee rates,” says OFT.
Hays admits that one employee took part in the cartel. But the fine “is wholly disproportionate,” says CEO Alistair Cox, as it equates to nearly 20% of last year’s group sales in 28 countries. The firm will appeal the amount of the fine, says a spokeswoman.