The Commerce Commission today filed proceedings in the High Court against Graeme Hart's forest products group, Carter Holt Harvey (CHH), for price fixing in the Auckland timber market.
CHH entered into an understanding with Fletcher Distribution, which is part of Fletcher Building, 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 said.
Proceedings had also been filed against a CHH manager, Dean Dodds, for his involvement.
The Commission said it had not filed proceedings against Fletcher Distribution because it had been granted immunity in accordance with its "cartel leniency policy".
"Fletcher Distribution discovered its involvement in the understanding earlier this year, made the Commission aware of the situation, and cooperated with the Commission's investigation," the Commission said.
CHH and Dodds had also cooperated with the Commission's investigation, and both had entered settlements with the Commission in which they admit that their conduct breached the Commerce Act, it said.
A penalty hearing before the High Court will take place "in due course".
Section 30 of the Commerce Act makes price-fixing agreements between competitors unlawful. A company contravenes section 30 may be ordered to pay penalties under section 80 of the Commerce Act. The penalty can reach up to $10 million.
Fletcher Building said this afternoon it had came aware of "price-fixing" activity during a regular audit early this year. The activity involved some people at two Auckland stores, PlaceMakers Cook Street and Mount Wellington.
"Pricing understandings for timber quotes in the Auckland commercial construction market were in place with Carter Holt Harvey," the company said.
Fletcher Building said it immediately launched an investigation and advised the commission.
"Fletcher Building then notified the Commerce Commission and was granted immunity from prosecution. As a result, the Commission will not be taking any enforcement action against the company or any of its subsidiaries," the company said.
Fletcher Building said a review found the arrangements benefited PlaceMakers' pre-tax earnings by just under $100,000.
"PlaceMakers is compensating affected customers supplied with timber against these irregular quotes."
The company said it was "confident" that this issue only came up in the Auckland market and not in other regions.