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Carter Holt Harvey fined for “classic” price fixing breaches

Carter Holt Harvey fined for “classic” price fixing breaches

26 March 2014

Commerce Commission General Manager Competition, Kate Morrison says the High Court’s decision to fine Carter Holt Harvey $1.85 million for price fixing in the Auckland commercial timber market highlights the potential impact of price fixing on consumers.

A former manager of the company, Dean Dodds, has also been fined $5,000 for his involvement.

The High Court today ordered Carter Holt Harvey to pay the penalty after it entered into an understanding with Fletcher Distribution Limited, in late 2012, to fix prices for the supply of structural timber to commercial customers in Auckland. The understanding was that both parties would price MSG8 timber at cost plus an 8% margin. This was in breach of Part 2 of the Commerce Act. Justice Venning described this as a “classic case of price fixing,” but recognises this was not the most serious price fixing conduct.

The Commission became aware of the understanding in January 2013 through its cartel leniency programme, when Fletcher Distribution, operating as Placemakers, applied for leniency. The cartel ran for six months before breaking down. During that time it was applied in about 10% of the jobs priced by Carter Holt Harvey, through its building supply merchants, Carters.

Ms Morrison says price fixing harms competition and penalties such as this are a necessary deterrent.

“This case reinforces that price fixing can attract high penalties even where the commercial gains are relatively modest and the conduct continues for a relatively short period. Cartels have the potential to cause real harm to consumers by increasing prices and creating fewer choices. We are pleased that Carter Holt and Mr Dodds accepted their role in the conduct early,” said Ms Morrison.

“The Auckland market for commercial timber is an important New Zealand market. The Commission gave this case priority because of that and is pleased to have resolved it so quickly.”

Background
The Commission’s cartel leniency programme allows a party to obtain immunity from proceedings commenced by the Commission, when the party is the first to report cartel conduct to the Commission and provide assistance throughout an investigation and any enforcement action.

ENDS

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