Dragons' Den star in the spotlight

Dragons' Den star James Caan has found himself in the news today after a recruitment agency owned by the Dragon, was fined by regulators over a price-fixing scandal.

Eden Brown, which is owned by Caan's HB Human Capital investment fund, is one of six companies hit with Office of Fair Trading penalties totalling GBP£39 million.

The companies, were also accused of a collective boycott of another company in the supply of candidates to the construction industry.

These actions though, happened before HB Human Capital's acquisition of Eden Brown in 2007.

Also affected, was FTSE 250 firm, Hays, which was fined GBP£30 million.

According to AFP, Hays described the punishment as "wholly disproportionate" and said it was considering an appeal.

The OFT said in a statement that it has "imposed fines totalling 39.27 million pounds on six recruitment agencies for price-fixing and the collective boycott of another company in the supply of candidates to the construction industry."

"This is a serious breach of competition law and the level of fines reflects this," OFT Senior Director Heather Clayton said in the statement.

After their investigation, the OFT concluded that the companies involved all breached the Competition Act 1998 in their treatment of rival agencyParc.

Parc entered the market in 2003 to act as an intermediary between construction companies and different recruitment agencies. Some recruitment agencies saw Parc as a threat to their margins.

Instead of competing with Parc - and each other - on price and quality, the companies formed a cartel, referred to as 'the Construction Recruitment Forum', which met five times between 2004 and 2006.

It was in this forum, that they agreed to boycott Parc, and also co-operated to fix the fee rates they would charge to intermediaries, such as Parc, and also certain construction companies.

Heather Clayton, senior director of OFT, 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 therefore preventing firms from driving down costs. Ultimately it is the consumer and the wider economy that loses out."

The OFT concluded that A Warwick Associates, Beresford Blake Thomas, CDI AndersElite, Eden Brown, Fusion People, Hays Specialist Recruitment, Henry Recruitment and Hill McGlynn & Associates had all breached Britain's 1998 Competition Act.

30/09/2009

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