A £30m fine imposed on international recruiter Hays for its part in a cartel of construction recruitment agencies was calculated on the basis of “pure assumption” by the Office of Fair Trading (OFT), a court has heard.

In the final day of proceedings at a Competition Appeal Tribunal in London yesterday, Lord Pannick QC, counsel for Hays, told the court that the 15% of Hays worldwide turnover used by the OFT to calculate the fine was “pure assumption” that this was the level required to deter Hays and other companies from future anti-completive practices.

Lord Pannick said that the 15% figure — the OFT’s minimum deterrence threshold (MDT), which then has 9% applied to it to arrive at the final figure — had increased Hays’ fine from £15m to £41m. (The OFT subsequently reduced this by 30% on leniency grounds to £30.4m.)

Lord Pannick added that in arriving at the MDT, the OFT should also have taken into account other financial measures, including profits.

However, David Unterhalter, senior counsel for the OFT, defended its actions. He argued that worldwide turnover was the best indicator of a firm’s size because it took account of situations, where a firm only did a relatively small proportion of its business in the jurisdiction in which the offences took place. He said that the 15% MDT was “a serious incentive” for firms not to engage in cartels and anti-competitive behaviour.

Three recruitment firms — Hays, CDI AndersElite and Eden Brown — are appealing against the size of their fines, imposed by the OFT after they were found guilty of participating in a price-fixing cartel in 2004-05. 

A total of six recruitment agencies were fined, with one receiving immunity for whistle blowing. A decision from the Tribunal is expected later this year, according to Hays’ advisers.