The Commerce Commission and Carter Holt Harvey have agreed to a penalty of $1.85 million for the company's part in price fixing in the Auckland timber market.

The commission in December last year filed proceedings in the High Court against Carter Holt Harvey and one of the company's managers Dean Dodds.

According to the regulator, 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 the Commerce Act.

At the same time as announcing the action, 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, the regulator said at the end of last year.

A penalty hearing was held this morning before Justice Geoffrey Venning in the High Court at Auckland. He has reserved his decision.

Commerce Commission lawyer John Dixon said the parties had reached an agreement that the penalty for CHH should be $1.85 million and recommended this figure be the fine which the judge orders.

The $1.85 million included a discount given to the company for co-operating with the regulator and admitting the allegations, Dixon said.

For Dodds, Dixon said the man did not deliberately set out breach the Commerce Act and that this wasn't a case of meetings in a smoke-filled room or on a golf course to arrange a cartel.

But at some point Dodds must have known or ought to have known what he was doing was wrong, Dixon said.

Dixon submitted that Dodds personally should be penalised $5000.

Dodds should be entitled to a discount for his early admission of liability and co-operation with the commission, Dixon said.

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 last year said it had come aware of "price-fixing" activity during a regular audit. The activity involved some people at two Auckland stores, PlaceMakers Cook Street and Mount Wellington.