Building giants 'squeeze' small firms

Kevin van Hest of Elephant Plasterboard says suppliers have financial reasons not to stock alternatives to Gib board. Photo / Brett Phibbs

Ex-worker says pricing tactics used against plasterboard makers.

Claims about anti-competitive practices in New Zealand's plasterboard market have been added to by a former Christchurch building sector worker who says he has first-hand experience of it.

Coen Willemse said he had seen the ramifications if merchants sold too much non-Gib branded wallboard product when he worked on the construction of houses.

"It's always interesting to see how big companies have been able to squeeze the smaller outfits in this way," Willemse said.

"Back in my building days, probably six to seven years ago, we used to get Thai Gypsum ...

"At the time, the stories doing the rounds were that if you were a tiny player in imported plasterboard, Gib left you alone," he said.

"However, if you started to acquire too much of the market, they'd do everything in their power to shut you down, including providing incentives for retailers and massive price drops in the local area. Once the competition had been squeezed out, their prices obviously went back up." The Commerce Commission said in September it was investigating the building sector but has yet to reveal the outcome.

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 Win stone's Gib because they had strong financial reasons not to.

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

Philip King, general manager investor relations and capital markets at Winstone's parent company 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.

"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," King said.

"Fletcher Building is confident its arrangements are not anti-competitive and do not breach the Commerce Act and ... we aim to prevent any potential anti-competitive conduct."