Hays caught up in OFT price-fixing inquiry

The Office of Fair Trading has launched an inquiry into the recruitment market for construction workers, to investigate allegations of price fixing and an organised industry boycott.

News of the investigation emerged yesterday morning, as the recruitment consultants Hays revealed that its offices had been "visited" by the OFT last month. The company said it had been co-operating with the regulator in accordance with its leniency programme, under which companies are promised smaller penalties if they are found in breach of competition laws.

The US recruitment firm CDI, which owns AndersElite in the UK, said it was also being investigated by the OFT.

In a statement to the US market on Thursday, the company said the allegations being investigated included "competitors agreeing to minimum fees in their contracts with UK intermediary recruitment companies, and declining to work with one particular ... intermediary".

Shares in CDI, which said it is also co-operating with the OFT under its leniency programme, plummeted more than 30 per cent on the back of the news. "It is likely that the OFT will ultimately impose a fine on Anders. However, it is too early in the process to determine with any reliability the amount or materiality of that fine," it said.

In a short statement, the OFT said: "The OFT can confirm that it has visited several business premises in England as part of a Competition Act investigation into allegations of anti-competitive behaviour in the provision of recruitment services for the construction industry.

"No assumption should be made at this stage that there has been an infringement of competition law. The OFT will not be in a position to decide if the law has been breached until it has completed its investigations and assessed the available evidence."

It also confirmed it was looking into allegations of price fixing and a collective boycott of an intermediary.

Commenting on the investigation, Paul Venables, the finance director of Hays, stressed that construction represented less than 1 per cent of the group's business. "In our company it's a fairly narrow investigation ... a lot less than 1 per cent of our overall business," he said. "We are confident enough to specifically state that any financial impact will be non material to the group.

"No formal charges have been made but ... any impact will be de minimis."