The Commerce Commission has agreed to a settlement with Carter Holt Harvey Limited (CHH) which ends civil proceedings brought by the Commission under the Fair Trading Act.

The Commission's proceedings related to the sale and marketing of Laserframe timber by CHH between 1998 and 2003. CHH claimed that its Laserframe timber had the structural characteristics of MGP10 timber, meaning it complied with the requirements of AS/NZS Standard 1748:1997. The Commission alleged some of the timber did not comply with the Standard.

In October 2006, CHH pleaded guilty to criminal charges brought by the Commission, and was fined $900,000. The Commission then filed civil proceedings to recover the losses that the Commission alleged had been suffered by competitors and customers who purchased the timber.

As a result of the settlement of the case CHH will make a voluntary ex gratia payment of $1.5 million to a project relating to the restoration and rebuilding of Christchurch following the earthquakes.

"To avoid the high cost and uncertainty of outcome associated with pursuing these long-standing proceedings, we have agreed to settle with CHH. We believe it is in the public interest to resolve this case now in a way that will produce a tangible benefit for New Zealanders," said Commerce Commission Competition Manager, Greg Allan.

"Settling this case is part of a wider effort by the Commission to resolve a number of long-standing cases, in order to focus on more current issues," said Mr Allan.

As well as the ex gratia payment to the Christchurch rebuild, CHH has agreed to contribute $100,000 towards the costs and inconvenience incurred by potential claimants, and $50,000 towards the Commission's costs.

CHH makes no admission that any person suffered loss or damage from the sale of Laserframe timber. Based on advice from industry experts, the Commission has no reason to believe the Laserframe timber poses any safety concerns.

"This case was purely about whether people had paid too much for Laserframe timber compared with other products on the market at the time, given that some of the timber was not of the grade claimed," said Mr Allan. "It has never been alleged that the timber was dangerous or unsuitable for sale."

"Consumers have a right to base their purchase decisions on correct information. This is particularly important where claims are not able to be easily verified by an ordinary consumer. When businesses provide inaccurate information to consumers it can not only harm consumers but also their business competitors," said Mr Allan.

The settlement agreement is available on the Commission's website at www.comcom.govt.nz/fair-trading-enforcement-outcomes

Background

MGP10 is a high-strength timber used for trusses and framing in homes and buildings.

Timber grading

Timber can be structurally graded in a number of ways, including visual stress grading and machine stress grading. Visual stress grading involves a trained grader examining each piece of timber. Machine stress grading involves a machine bending each piece of timber to measure its stiffness.