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Eden Brown could appeal cartel fine, says Dragons’ Den star James Caan

October 4th, 2009

Dragons’ Den star James Caan has revealed his recruitment agency Eden Brown is likely to appeal a £1.07 million fine against it, after the firm was yesterday found guilty of participating in a cartel that set fee rates for certain construction companies.

Eden Brown, which is owned by Mr Caan’s HB Human Capital investment fund, was one of six construction labour suppliers to be hit with a total fine of almost £40 million by the Office of Fair Trading. The cartel was found to have fixed prices, and collectively boycotted a new competitor in the market, between 2004 and 2006.

Speaking to Construction News, Mr Caan – whose company purchased Eden Brown in 2007, after the actions for which the firms were penalised took place – said he believed the level of the fine was “unfair”.

The dragon added: “The fine relates to activities prior to the purchasing of the company. We were made aware of the situation when we invested in it and we have co-operated [with the OFT].

“I can’t comment further, but I think Eden Brown will appeal the decision.”

Asked whether he had a message for contractors concerned about the price-fixing scandal Mr Caan again declined to comment, reiterating his group had not owned the firm when the activity occurred.

The competition watchdog – which last week fined 103 construction companies almost £130m for anti-competitive behaviour – said the recruitment agencies established a cartel known as the Construction Recruitment Forum in a bid to set prices for some contractors and push Parc, a new entry to the labour market in 2003, out of business.

The companies involved in the cartel were Hays Specialist Recruitment, A Warwick Associates, CDI AndersElite, Eden Brown, Fusion People, Henry Recruitment, Beresford Blake Thomas and Hill McGlynn & Associates.

Beresford Blake Thomas and Hill McGlynn & Associates were granted immunity from fines as they were part of the group that first provided the OFT with evidence of the cartel activity.

The OFT, which said the “forum” met five times between 2004 and 2006, named Vinci, Taylor Woodrow – prior to its purchase by Vinci last year – and Atkins as some of the biggest victims of the cartel.

Hays Recruitment said it was actively considering an appeal after it was hit hardest with a whopping £30m penalty. It claimed the fine followed “an isolated matter arising from the conduct of a single employee”.

Chief executive officer Alistair Cox described the penalty as “wholly disproportionate” to its breaches.

The OFT said all parties applied for, and were granted, leniency – except A Warwick Associates which is in liquidation. The total level of fines before reductions for leniency were taken into account was £173m.

Eden Brown was granted 35 per cent leniency.

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