JM Kelly faces price-fixing probe

CONSTRUCTION giant JM Kelly will “offer every assistance” to authorities investigating it for allegedly colluding to fix a tender price for the $8.46m upgrade of the Rockhampton Airport.

The Australian Competition and Consumer Commission is alleging T.F. Woollam and Son Pty Ltd, JM Kelly (Project Builders) and Carmichael Builders Pty were involved in a practice known within the building industry as “cover pricing”.

The consumer watchdog said the three companies engaged in price-fixing and misleading or deceptive conduct in tendering for the 2005 Rockhampton Airport refurbishment.

JM Kelly construction manager John Geoffrey Murphy said yesterday the Rockhampton-based company had entered into discussions with the ACCC to address concerns about the allegations, two-and-a-half years before the legal proceedings began.

“We will continue to offer every assistance to the ACCC,” Mr Murphy said.

When asked if the company would fight the action, he declined to comment as the matter was before the courts.

The ACCC alleges the three companies discussed tender prices by phone before bidding for the Rockhampton City Council airport job.

It alleged JM Kelly agreed to keep its airport upgrade tender price higher than Woollam's $8.46m "cover price" with an $8.75m bid while Carmichael then agreed to submit its $8.91m offer.

The ACCC also alleged that Woollam and JM Kelly discussed tender prices before bidding for work on Queensland Rail's Jilalan and Callemondah depots in Central Queensland late 2004 and early 2005.

Woollam secured both construction contracts worth $2.64 million and $1.37 million respectively.

Cover pricing involves one company colluding with another during the tender process to obtain a price that is intended to be too high to win the contract for the project on price alone.

The company then submits this price as a genuine tender.

In documents submitted to the Federal Court in Brisbane on Friday, it's alleged that John Geoffrey Murphy and senior manager from T.F. Woollam, George Bogiatzis , aided, abetted or were otherwise knowingly concerned in some of the alleged price-fixing conduct.

The JM Kelly Group of Companies is the largest and most diversified privately owned construction group in Australia, with construction, manufacturing and building supply businesses throughout Queensland and was established in 1962.

The JM Kelly Group has offices in Brisbane, Gladstone and Rockhampton.

JM Kelly's managing director is high-profile Rockhampton businessman Geoff Murphy, who also heads CQ's bid for an NRL team.

Mr Bogiatzis of Brisbane-based Woollam that also has an office in Rockhampton, yesterday declined to comment on the matter before the proceedings go to court.

Meanwhile several attempts to contact Carmichael, which has an office in Emerald and is based in Brisbane, were yesterday unsuccessful.

Kelly also faces claims it consulted with another bidder during the tender process for work at the West Pacific Pines State School on the Gold Coast in 2007.

The matter has been listed for a directions hearing before Justice Logan in the Federal Court, Brisbane, on October 16.

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