Murray & Roberts advertising board. Murray & Roberts advertising board.
Murray & Roberts (M&R) has for a number of years been quite open about its stance on anti-competitive behaviour by individuals and companies in the group. It undertook to report all anti-competitive behaviour it uncovered to the Competition Commission with the objective of being the “first through the door” to qualify for immunity in terms of the leniency policy.
More details of anti-competitive practices within the group were revealed on Monday when M&R disclosed it had filed a fast-track settlement application with the commission related to unlawful acts primarily within its Concor subsidiary.
The fast-track process was available to firms in the construction industry that had been party to collusive practices in bidding for projects in the public and private sector. When it was launched, the commission said South Africa’s major listed construction companies had been implicated in anti-competitive practices involving more than 70 projects valued at R29 billion.
Shan Ramburuth, the competition commissioner, said its investigation had uncovered “widespread anti-competitive conduct” through various arrangements, including major companies in the sector, for example, holding meetings to allocate tenders and police each other’s behaviour through a structure referred to as “The Party”.
This provided more substance to Ramburuth’s statement in September 2009 that corrupt practices were a norm in the construction sector when reporting that the commission had launched an industry-wide investigation into collusive practices by at least 19 companies, including M&R and other listed companies. M&R denied these allegations and lodged a formal objection.
This now seems to be a case of M&R protesting too much. Several companies within the group have admitted guilt for being involved in anti-competitive practices spanning many years with other leading players, including listed groups.
The almost pious emphasis by M&R in its admission that the unlawful actions in Concor took place prior to its acquisition and “seem to have ceased at some time subsequent to Concor being incorporated into the group” seem somewhat misplaced.
Pension funds
When energy giant Enron collapsed in October 2001, the world woke up to the danger of allowing pension funds to invest in members’ own employer companies. Enron staff had 100 percent exposure to its shares, said Roland Gräbe, the chief investment officer of Symmetry multimanager.
Regulators worldwide have taken action to prevent a recurrence. In South Africa this is incorporated in the amendments to Regulation 28 of the Pension Funds Act.
Changes are wide ranging and Gräbe said people with retirement annuities (RAs) should be aware that amendments will affect individual investors as well as pension funds. And he explains the implications for investors young enough to want greater exposure to risk.
The amendments are designed to limit risk – which means also limiting returns. While the safeguards are important for pension funds they can prove a hindrance to people who can afford to take risks. Regulation 28 applies to all pension funds except those excluded by law – such as the Government Employees Pension Fund – as well as preservation funds and RAs.
And the main goal is “to force diversification by limiting a fund’s exposure per asset class and issuer”. The catch is that the rules around diversification apply at the individual level as well as to funds. While the amendments, which come into force in July, will not affect existing arrangements, investors will have to comply when they change their arrangements. Gräbe said investors happy with their risk exposure should leave existing arrangements intact rather than add to them.
While the amendments create safeguards through diversification of portfolios, the new dispensation will give pension funds greater access to alternative forms of investment such as private equity funds and hedge funds, and commodities. And the limits on foreign exposure and listed property will be lifted, in both cases from 15 percent to 25 percent.
Pick n Pay
Pick n Pay has signed on 2.2 million customers to its new loyalty programme Smart Shopper, which is not inconsiderable given that it only launched the programme last month and its target for the first year of the programme is 3 million.
With a customer base that is estimated to be up to 8 million, Pick n Pay could soon exceed its annual target in the next few months. Pick n Pay’s aim is to get more people into its stores, get them to spend more in a bid to boost sales and market share. An increase in basket or unit size was already evident, but it was too early to say if this was a consistent trend.
The programme is not only about the number of cardholders, its about how many people actually use the card and purchase more items than they would have. Some have scoffed at the programme saying it lacks the wow factor. Others welcome the little bit extra that they will get back.
But the card will not address all Pick n Pay’s woes, which are evident from the poor results for the year to February that it released earlier this week. Syd Vianello, an analyst at Nedbank Capital, points out that on the front end of its business Pick n Pay has been losing market share, partly because it has not rolled out space as fast as competitors. There are other reasons, and Smart Shopper is designed to help Pick n Pay figure these out. Vianello says the loyalty programme will not bring back the customers Pick n Pay has lost, unless it addresses the reasons they left.
Smart Shopper is a starting point in regaining lost shoppers, but the hard work is to ensure they keep coming back. Certainly a hard task given the diversity of its customer base with some who have a penchant for red roses and tea at the Mount Nelson, while others are just trying to get by.
Edited by Peter DeIonno. With contributions by Roy Cokayne, Ethel Hazelhurst and Samantha Enslin-Payne.