Commission commences proceedings in relation to Auckland timber cartel

The Commerce Commission has today filed proceedings in the High Court against Carter Holt Harvey Limited for price fixing in the Auckland timber market.

Carter Holt Harvey entered into an understanding with Fletcher Distribution Limited to fix prices in respect of the supply of structural timber to commercial customers in Auckland, in breach of Part 2 of the Commerce Act. The understanding operated during the latter part of 2012 and early 2013.

The Commission has also filed proceedings against a Carter Holt Harvey manager, Mr Dean Dodds, for his involvement in the understanding.

The Commission has not filed proceedings against Fletcher Distribution Limited as it has been granted immunity in accordance with the Commission’s Cartel Leniency Policy. Fletcher Distribution Limited discovered its involvement in the understanding earlier this year, made the Commission aware of the situation, and cooperated with the Commission’s investigation.

Carter Holt Harvey and Mr Dodds have also cooperated with the Commission’s investigation, and both have now entered settlements with the Commission in which they admit that their conduct breached the Commerce Act.

A penalty hearing before the High Court will take place in due course. The Commission will be making no further comment at this time.

Background

Price-fixing

Section 30 of the Commerce Act makes price-fixing agreements between competitors unlawful.
A company that contravenes section 30 may be ordered to pay penalties under section 80 of the Commerce Act. The penalty must not exceed the greater of:

$10 million

or, if it can be readily ascertained and if the Court is satisfied that the contravention occurred in the course of producing commercial gain, three times the value of any commercial gain resulting from the contravention

or, if the commercial gain cannot be readily ascertained, 10% of the turnover of the body corporate and all of its interconnected bodies corporate (if any).

Enforcement options open to the Commerce Commission

The Commerce Commission uses a range of enforcement tools to resolve issues under the Commerce Act ranging from warnings and settlements through to litigation.  The Commission’s Enforcement Response Guidelines explain what enforcement responses are available to the Commission, and what factors are taken into account when deciding which response to use.  The Commission’s Enforcement Response Guidelines can be viewed at http://www.comcom.govt.nz/the-commission/commission-policies/enforcement-response-guidelines/

Cartel Leniency Policy

The Commission operates a Cartel Leniency Policy, which offers individuals or businesses involved in a cartel the opportunity to be granted conditional immunity from Commission prosecution. The Commission’s Cartel Leniency Policy can be viewed at www.comcom.govt.nz/the-commission/commission-policies/cartel-leniency-policy/cartel-leniency-policy-and-process-guidelines/