Shares in Steel & Tube Holdings have taken a pounding today after the company was found to be selling earthquake reinforcing mesh that was wrongly certified as being approved by an independent organisation.
The NZX-listed steel supplier's shares plunged 8 per cent in early trading but have since regained some ground and recently traded less than one per cent down.
Confirmation has come from the Commerce Commission that it is investigating the case for potential breaches of the Fair Trading Act.
"Making misleading representations, such as claiming a product was tested by a company that has not tested it, is prohibited under the Fair Trading Act in New Zealand," a commission a spokeswoman said.
"As part of that investigation, we will be looking at whether other products in the market comply with the standard," she said. "As this is an active investigation we are unable to comment further."
The Commerce Commission spokeswoman said in-house testing wasn't in itself concerning, as it was commonplace in the industry "and, provided it is done properly, is a valid way of complying with the relevant standard."
Steel & Tube has confirmed that all strength-testing of the mesh product had been completed in-house, Radio NZ reported.
The company said the logo of Christchurch-based laboratory Holmes Solutions had been inadvertently left on certificates.
The lab helped Steel & Tube develop a testing regime for the steel mesh four years ago.
Steel & Tube chief executive Dave Taylor told Radio NZ the firm had made a mistake.
"We inadvertently continued to include their logo on these certificates ..." he said.
"I don't know the number off the top of my head but there would be many thousands of them [certificates] because there were many thousands of sheets of mesh. We only came across it last week ..."
Taylor said Steel & Tube had apologised to Holmes Solutions and the logo would not appear on certificates in the future.
Two of Steel & Tube's rivals, Euro Corp and Brilliance Steel, were ordered to stop selling their steel mesh products two weeks ago as the Commerce Commission investigates whether the products comply with building standards.
- with BusinessDesk