By BRIAN FALLOW
The High Court has fined Carter Holt Harvey $525,000 for anti-competitive behaviour towards a small Nelson firm which in 1994 took it on in the home insulation market.
Carter Holt general counsel Nicolas Short said the company would appeal to the Court of Appeal because it did not believe its conduct breached the Commerce Act in any way.
In handing down their sentence yesterday, Justice Hugh Williams and the lay member of the court, Professor Ralph Lattimore, noted that the company's actions had applied only to parts of the South Island, lasted for no more than seven months and benefited merchants and consumers, at least in the short term.
Despite such mitigating factors, there was a warning in the fact that the court had still imposed a penalty of more than $500,000, said Commerce Commission chairman John Belgrave.
The maximum the court could have imposed was $5 million.
Justice Williams and Professor Lattimore cited an earlier judgment, against BP in 1992, which said that penalties "must be such as to amount to a real deterrent and not merely some sort of acceptable licence fee."
The court ruled in April that a Carter Holt unit, INZCO, breached section 36 of the Commerce Act in that it used its dominant position in the South Island insulation market for the purpose of preventing or deterring New Wool Products from engaging in competitive conduct in that market or eliminating it from that market.
In 1992, New Wool Products began competing with Pink Batts, produced by INZCO, which enjoyed between 75 and 85 per cent of the market.
New Wool Products' "Woolbloc" batts are made from wool in a resin-bonding process developed by its principal, Lindsay Newton.
By early 1994 it had captured between 30 and 40 per cent of the Nelson market and was making inroads elsewhere in the South Island.
INZCO responded in late 1993 with "me too" product, Wool Line, made from 60 per cent polyester and 40 per cent wool. But it was twice as expensive as Woolbloc.
Following complaints from its outlets, INZCO began supplying Wool Line on a "buy one, get one free basis" which the court found was 30 to 40 per cent below cost.
That lasted for seven months and ended on the order of Carter Holt chief executive David Oskin only after the Commerce Commission and the then Nelson MP John Blincoe started to put the heat on the company.
Carter Holt has since sold the business to Tasman Insulation NZ.
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