Hays in court to challenge £30m OFT fine
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Hays has launched the next stage in its challenge to a £30.4m fine imposed by the Office of Fair Trading for competition law breaches, according to sources close to the company.
The source told Recruiter that the court case, which began on Monday and is being held at the Competition Appeal Tribunal in London, was a continuation of Hays’ appeal against its fine, awarded for the company’s illegal involvement in a construction sector price-fixing cartel in 2005. Hays is arguing that the fine is excessive and disproportionate.
In December 2009, chief executive Alistair Cox told Recruiter that the fine reflected more than double the profit earned by Hays’ construction and property division in the year the division was involved in the cartel.
“We have been penalised on group-wide turnover,” said Cox (pictured left). “We are not guilty of financially disadvantaging anybody in the marketplace and I think that is a point that really needs to be reiterated.”
Two of the other companies fined by the OFT are also having their appeals heard at the Competition Appeal Tribunal. They are Eden Brown and CDI AndersElite, which were fined £1.07m and £7.6m respectively.
Five other recruitment firms also participated in the cartel during 2004-05. Six companies were fined and one received immunity for whistle-blowing.
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Readers' comments (7)
Sean Ryan | Tue, 27 Jul 2010 1:55 pm
Is this the Office of Fair Trading or the Office of Unfair Fines? Of course it is wrong to price fix, but a fine of £30.4m is likely to have an adverse effect on Hay's employees. And where does this money go? Into the government's pocket no doubt to waste on those who do not wish to work for a living. Be fair and give fair fines.
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ALLIED tECHNICAL SERVICES LTD | Tue, 27 Jul 2010 1:58 pm
These fines on Hays and others are not hefty enough. They should be locked up in a prison
on some hot desert and made shovel sand 20 hours a day. Why are they allowed to be members of the REC?
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Vic F | Tue, 27 Jul 2010 3:52 pm
Reading the article & the comments made by Alistair Cox it seems his point of view is that the fine should be in relation to the turnover of the offending division and not the whole company.
To my mind that opens a Pandora's box. If that argument was allowed to hold sway wouldn't all companies of a size divide themselves into many divisions to avoid fines? That would negate the disincentive purpose of the whole fines system.
Come on, Hays, you broke the rules, now you have to pay the penalty. If you can't afford the penalty, you should have made sure you didn't break the law in the first place. You were greedy, you got caught - so now shut up and pay up.
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Thonker | Tue, 27 Jul 2010 5:40 pm
If I were Hays I'd be grateful that they haven't been kicked off the many public sector frameworks they seem to be on, including, unbelievably, their status as preferred supplier to the Audit Commission!
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Norman Wright | Wed, 28 Jul 2010 2:01 pm
I have to completely disagree with Sean Ryan. If Hays were to simply return the profit that they had made during this illegal practice, how could it possibly be viewed as a punishment for their actions? Your suggestion that they should return the money they had made would be nothing more than returning money that should not rightfully have belonged to them in the first place and can hardly be seen as a punishment.
Of course it can be viewed as unfair on those it will indirectly affect. However, perhaps this will be the lesson that people who were involved within the company need - that the laws exist for a reason. Maybe Hays employees should not react against the OFT, as I have been hearing, and perhaps look internally first...
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Martin McDonald | Wed, 28 Jul 2010 3:56 pm
What has the REC done about these companies bringing the industry into disrepute? Absolutely nothing. The REC is toothless and pointless. They have failed for many years now to bring proper regulation and professionalism to the industry, to its great detriment. Time for the establishment of a regulatory body with real authority and an end to the REC.
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Rhino | Mon, 2 Aug 2010 9:28 am
"What has the REC done about these companies bringing the industry into disrepute?"
They didn't bring the industry into disrepute - they had -two- meetings to discuss the future of an account that Parc had taken over and essentially cut the fee structure by 50% - the plan being to gather thoughts on whether there should be a boycott.
This boycott didn't happen and no prices were ever fixed or adjusted - the judgement is wholly disproportionate and should be rescinded. The lost business caused by this runs into the tens of millions without the fine and affects people who have nothing to do with something that didn't ever occur, seven years ago.
Far worse occurred in the construction industry, where contractors were screwing money from clients left, right and centre to avoid the usual race to the bottom.
What did the OFT fine these companies - yes, that's right, nothing.
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