High Court orders Carter Holt Harvey to pay $525,000 for anti-competitive action against New Wool Products
Published31 Jul 2000
High Court orders Carter Holt Harvey to pay $525,000 for anti-competitive action against New Wool Products
The Auckland High Court today ordered Carter Holt Harvey Building Products Group Limited to pay a penalty of $525,000 for breaching the Commerce Act by trying to prevent or deter competition from a small Nelson company, New Wool Products Limited.
Commission Chair John Belgrave said that the Commission's case was that New Wool Products' invention an entirely woollen insulation called "Wool Bloc" had started to bite into the market share of Carter Holts' fibreglass insulation, Pink Batts, and Carter Holt had illegally used below cost pricing to stop that competition.
In April the Court had found that INZCO, which was the Carter Holt division that produced Pink Batts, had used its dominant position in the South Island insulation market to prevent or deter competition from New Wool Products, and so had breached section 36 or the Act.
A sentencing hearing was held at the beginning of July and Justice Williams and lay member of the Court, economist Professor Ralph Lattimore, released their sentencing decision today.
In their sentencing decision, they stated that in setting the penalty they had considered mitigating factors including that Carter Holt's anti-competitive behaviour related to only a restricted range of products, applied to a limited geographical area and was short-term.
"The warning here," Mr Belgrave said, "is that even after considering such factors, the Court has still ordered Carter Holt to pay a penalty of more than half-a-million dollars."
Background
During the trial in November last year, the Commission claimed that the availability of Wool Bloc had significantly reduced sales of Pink Batts in Nelson and other areas.
The Commission alleged that Carter Holt responded by launching a wool and polyester combination insulation product which it called "Wool Line". However, the price of Wool Line was about double that of Wool Bloc and sales of Wool Line, particularly in Nelson and Marlborough, were low.
The Commission claimed that as a result of New Wool Products' continued success, Carter Holt supplied Wool Line to outlets, mainly in the Nelson/Marlborough region, at below cost by the offer of two bales for the price of one.
In May, Justice Williams stated in his judgment that:
" in instituting and maintaining the "2 for 1" INZCO used its dominant position in the South Island insulation market for the purpose ie the object or aim of preventing or deterring New Wool Products from engaging in competitive conduct in that market or eliminating it from that market. Its actions were accordingly in breach of the Commerce Act 1986 s36(1)(b)(c)."
