Winstone Wallboards axing plasterboard rebates to customers

Winstone Wallboards makes various types of Gib including Aqualine. Photo / Supplied

Fletcher Building’s Winstone Wallboards has moved on today’s Commerce Commission report, announcing it will axe plasterboard rebates for customers buying its products.

For years, it has been giving rebates to customers buying wallboard in volume.

But under threats the commission would probe this area, that practice will now stop, even though the company indicated there was nothing wrong with what it was doing and a 2014 investigation found nothing to see.

“Winstone Wallboards has already informed its merchant customers that it will discontinue use of that type of rebate and will move to a tailored, flat pricing model based on volume,” the company announced today.

Winstone has around 94 per cent of New Zealand’s wallboard market, is New Zealand’s only plasterboard manufacturer and is finishing a new $400 million plant in Tauranga which will open next year.

The company indicated it moved ahead of a further probe into the business.

Fletcher Building said the commission would release its final report into the building products market study today.

“We also note that the commission has previously expressed views about the continued use of certain types of rebates,” the company said in a statement.

“We have been advised that the commission has opened another investigation into the use of tiered retroactive rebates by Winstone Wallboards.

“These rebates are essentially a volume incentive, where a customer receives a better rebate, measured over all their purchases if they buy pre-agreed volumes of a product over a period of time.”

Such rebates were very common, not just across the building supplies industry but other parts of the economy as well, the company said.

“As we said in our submission, rebates are simply one aspect of competing. Winstone Wallboards was the subject of some focus in the market study, including the nature and impact of its rebates,” the company added.

“Merchants told the commission that their commercial decisions are not materially influenced by rebates. We also note that the commission has previously investigated Winstone Wallboards on this topic, concluding that there was no issue,” the company said.

That was a reference back to a 2014 study which found the wallboard was popular because it was good and Winstone did a good job communicating with customers.

The commission, which began its probe in 2013 said it looked into three areas of activity by Winstone - alleged exclusive agreements with merchants, the rebates paid to merchants and an alleged practice of undercutting other plasterboard suppliers on jobs.

“Winstone’s supply contracts with merchants do not contain contractual provisions that require the merchants to purchase all their plasterboard from Winstone,” commission chairman Mark Berry said at that time.

Today, Winstone said it did not see any need for another probe into that matter.

“We are therefore surprised by the commission’s conclusion that it needs a third investigation to collect information about Winstone Wallboards and its rebates.

“We note the commission has made no adverse comment about Winstone Wallboards - just that it needs more time to collect more information,” Winstone added.

Winstone said it would show leadership and has taken time over several months to consider the commission’s preference that it not use quantity-rewarding rebates.

“Consequently, Winstone Wallboards has already informed its merchant customers that it will discontinue use of that type of rebate and will move to a tailored, flat pricing model based on volume.”