Commission to charge CHH with breaching act

The Commerce Commission said today it would file criminal proceedings against Carter Holt Harvey and six current and former managers for alleged breaches of the Fair Trading Act.

The commission alleges that from 1999 to November 2003, Carter Holt Harvey made false and misleading representations that construction timber the company sold was of a particular specification, MGP10, when it was not

The commission also alleges that during the period, a number of Carter Holt senior managers were parties to the alleged conduct.

It said in its statement it could not name the current or former managers involved because they needed the chance to seek legal advice.

The commission was preparing its charges for filing in Manukau District Court.

The commission said it could not comment further because the matter would soon be before the court.

Carter Holt, controlled by US forest products giant International Paper, said it was surprised and disappointed by the commission's decision.

"Carter Holt Harvey will be vigorously defending all charges," Carter Holt general counsel Nicolas Short said.

The commission began its investigation into Carter Holt 2003. In December of that year Carter Holt conceded its Laserframe MGP10 Pine timber was sometimes weaker than advertised and that it had taken too long to rectify the problem.

Carter Holt said today that after the commission had raised the issue late in 2003, it had changed its grading to meet the commission's view of the relevant standard.

The company conducted its own internal review into the matter and concluded that, if there was a breach, it was of a technical nature.

"The relevant timber grading standard is unclear in a number of respects. For this reason, there is room for differing opinions as to whether the criteria are satisfied," Mr Short said.

"We consider that any breach would be technical in nature."

He said the company was confident purchasers and users of the product had not been disadvantaged and that there were no safety issues.

He said the company had led an industry wide review of the relevant standard to get more clarity for manufacturers and customers.

He said the company had been "proactively trying to discuss this issue with the commission for 18 months".

"Recent discussions had indicated that there would be an opportunity to meet to discuss this matter before any charges were laid."

All timber currently being supplied by Carter Holt met relevant standards as interpreted by the Commerce Commission, the company said.

Carter Holt shares had not traded in the first quarter of an hour's business on the sharemarket today, but were bid at $1.82 against yesterday's closing price of $1.88.

* MGP-grade pinewood is claimed by industry sources to be more effective in construction because of its reputation to be stronger, more durable, and to undergo less shrinkage than other grades of similar timber.

- NZPA