M&R fined R64.14m for contravening Competition Act

MURRAY & Roberts (M&R) has been fined R64.14 million for four contraventions of the Competition Act including one involving collusive tendering related to fabricated steel for the roof of the Green Point Stadium in Cape Town.

This fine, which M&R agreed to pay in terms of a settlement agreement reached with the Competition Commission, was confirmed by the Competition Tribunal yesterday.

It is in addition to the R309m fine the listed construction and engineering group agreed to pay in July 2013 for 17 prohibited practices or contraventions of the Competition Act in terms of the construction fast-track settlement process.

The fast-track settlement process resulted in 15 companies concluding consent agreements with the commission in terms of which they agreed to pay penalties totalling R1.46 billion.

Layne Quilliam, the legal counsel for the commission, said yesterday the four implicated projects were the SishenSaldanha project, the Durban undersea tunnel project, the civil works for the Tati Nickel mine project in Botswana, and the fabricated steel for the Green Point Stadium.

Quilliam said the SishenSaldanha and Durban undersea tunnel projects were legacy cases that predated the fasttrack process.

He said this was relevant in calculating the settlement amount for each project because the commission used different formula for determining settlement amounts for legacy cases and phase-two fast-track process cases.

He said the probe found that M&R subsidiary Concor, Lennings DEC Rail Services and WBHO agreed that Lennings would submit an inflated cover price for the work to ensure that WBHO and Concor were awarded the tender.

In return, WBHO and Concor indicated they would sub-contract the actual track railway work to Lennings if they were awarded the contract.

In regard to the Durban undersea tunnel project Concor, in a joint venture with Hochtief in 2004, agreed with Stefanutti in a joint venture with Nishimatsu and a joint venture between Dura and Group Five that they would each add R3m to their bids for this project to enable the winner to pay R1m to each of the losing bidders.

Quilliam said that according to the commission’s investigation, only Aveng subsidiary Grinaker LTA received a loser’s fee of R1m.

He added that the companies did not rig the bid but only agreed to pay a loser’s fee to the losing bidders to try and cover the substantial tendering costs for each firm.

In regard to the Tati Nickel mine project, Stefanutti in a joint venture with Grinaker in February 2007 agreed with Murray & Roberts Botswana to submit a cover price for this tender to ensure M&R was awarded the tender.

Quilliam said the commission’s investigation into the Green Point Stadium project found that M&R subsidiary Genrec in 2007 provided its priced bills of quantity, which was essentially their tender price, for the steel fabrication portion of the work of the main roof to their competitor DSE Fabrication, a division of Aveng.

In consideration for this information, Genrec asked DSE to consider it as a sub-contractor should DSE be awarded the work.

Quilliam said that DSE was awarded the contract but did not sub-contract any of the work to M&R.

The City of Cape Town earlier this year instituted a more than R428m civil damages claim against listed construction groups WBHO, Aveng and Stefanutti Stocks for colluding on the tender for the construction of the Green Point Stadium for the soccer World Cup.

M&R shares on the JSE rose 1.9 percent to close at R8.05 yesterday, which valued the company at R3.6bn.