The Commerce Commission has today received judgment from the Supreme Court in relation to an issue of jurisdiction relating to individuals resident overseas who are alleged to have breached the Commerce Act.

The High Court in March 2007, and the Court of Appeal in March 2009, had each previously ruled that the Commission could pursue legal proceedings against three remaining defendants in the wood chemicals cartel case, who were living overseas when the cartel was operating. Andrew Poynter, one of the three defendants, appealed the Court of Appeal ruling to the Supreme Court. Of the other two defendants one, Neil Harris, did not appeal, and the Commission last year discontinued proceedings against the other, Elias Akle.

"Today's ruling which overturns those previous judgments will be studied by the Commission in order to consider the full implications of the judgment," said Commission Chair Dr Mark Berry.

Background

Elias Akle and Neil Harris were executives of the Osmose group of companies. Andrew Poynter was an executive with the Fernz Timber Protection Group. Akle was also a Fernz Timber Protection Group executive before Osmose purchased Fernz in February 2001. The Commission lodged proceedings against them because even though they lived outside of New Zealand and their alleged actions took place outside of New Zealand, the wood chemicals cartel affected New Zealand businesses and consumers.

Wood chemicals cartel civil action

In February 2008, three Nufarm companies, which operated the Fernz Timber Protection brand, were fined a total of $1.9 million for price-fixing and market sharing with competitor Koppers Arch. Terrence Mullen, formerly the Managing Director of Koppers Arch Investments Pty Limited, was also fined $35,000 after admitting his personal involvement in the cartel.

In April 2006, the High Court imposed $3.6 million in penalties on Koppers Arch Wood Protection (NZ) Limited and its Australian parent company, Koppers Arch Investments Pty Limited. In October 2006, Osmose New Zealand and Osmose Australia were fined a total of $1.8 million for their participation in the cartel. Two further executives have also been fined, in one case $100,000 for participation in the cartel.

The cartel operated in New Zealand's wood preservative chemicals industry from 1998 to 2002. The affected part of the industry was worth an estimated $35 million in 2002, and included the iconic Tanalised timber brand.

Criminal convictions for hindering investigation

The Commission's investigation was hindered by the defendants at various stages. In June 2005 Koppers Arch NZ and its former General Manager Roy Parish pleaded guilty to breaching the Commerce Act by not producing company documents when required to by the Commission. The company was convicted and fined $25,000 and Roy Parish was convicted and fined $8,000. In August 2006, Osmose New Zealand pleaded guilty to not providing documents required by the Commission's investigators, and was fined $13,000. Australian-based executive Mark Greenacre admitted he lied to Commission investigators when he denied involvement in the cartel. He was fined $7,000.