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Current as of 26/05/17 02:40PM NZST
Property editor of the NZ Herald

Plasterboard war heating up as regulator investigates

Commerce Commission investigates as Fletcher Building rival complains of incentives

David Thomas.
David Thomas.

Building supply merchants are reluctant to stock products of Winstone Wallboards' rivals and are squeezing alternative goods, claims the chief of a competing business who supplied documents to the Commerce Commission.

Kevin van Hest, managing director of Elephant Plasterboard, which has only 3 per cent of the national market, said suppliers were shy about stocking or selling alternatives to Winstone's Gib because they had strong financial reasons not to.

They got personal rewards including entertainment such as invitations to sporting and other events, overseas trips and financial payments, van Hest claimed.

The commission announced last September that it was looking into this area and Winstone parent Fletcher Building's Rick Osborne said at the time his business was advised the commission intended to inquire into its plasterboard supply arrangements with building supplies merchants.

"The company will fully co-operate with the Commerce Commission, and is confident that its supply arrangements comply with the Commerce Act," Osborne said.

This week, a commission spokesman said the investigation had not been concluded and he could not say when it would be.

A spokesman for Fletcher Building said the system in operation actively rewarded those building supply merchants who sold the Winstone board, but there was nothing wrong with that deal.

"Rebate structures are prevalent in most industries, not just building materials, and in reality amount to price competition, with supply terms being based on volume and the duration of contractual relationships," he said.

"Fletcher Building is confident that its arrangements are not anti-competitive and do not breach the Commerce Act, and in that regard we aim to prevent any potential anti-competitive conduct through our internal compliance programmes," he said.

David Thomas, Winstone general manager, said the business had a 94 per cent market share because it manufactured and delivered the best product to customers.

"People do have other options and they have had for the last 20 years," Thomas said, citing Elephant Plasterboard and other products including Chinese board.

But van Hest said a combination of incentives and commercial pressure on merchants meant he couldn't get any more than 3 per cent of the wallboard market, despite being in business since the 1980s.

Lack of competition and arrangements with merchants was one of the big factors forcing New Zealanders to pay 70 per cent more for plasterboard than Australians and 40 per cent more to build a house here than in Australia, he said.

Big chains will sell Elephant Plasterboard, but not necessarily from their shop floors, van Hest said.

Instead, if they sold it at all, they took a builder's order and arranged delivery from van Hest's Glendene warehouse to the construction site, he said. Very few big chains would stock Elephant Board, he complained.

"Stores are reluctant to trade too much in Elephant Plasterboard because of the financial and other incentives."

Last year, the Government limited Fletcher's plasterboard power by giving German company Knauf a chunk of a $40 million plasterboard supply deal for the Christchurch rebuild.

The probe

• Announced plasterboard probe in September.

• Investigation is still active.

• No date given for conclusion.

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