Price-fixing by major timber suppliers worries building industry

House prices are unlikely to be affected, say building industry leaders, because the price-fixing claims involve only commercial clients. Photo / APN

Legal action against Carter Holt Harvey for price fixing in the Auckland timber market is worrying industry heads, who believe revelations of the activity could tarnish the whole building trade.

The Commerce Commission filed proceedings in the High Court against Graeme Hart's forest products group yesterday after an investigation into price fixing of structural timber to commercial customers in Auckland with Fletcher Distribution, a part of Fletcher Building, from late last year until early this year.

A CHH manager, Dean Dodds, also faces proceedings.

Fletcher Distribution had been granted immunity under the commission's "cartel leniency policy" for its role in discovering and disclosing the arrangements.

Certified Builders Association chief executive Grant Florence said the case could affect the whole industry's reputation.

"We're still recovering in confidence from homeowners, particularly as a result of the watertight crisis ... and something like this, if it turns out to be true, will not look good."

Registered Master Builders Federation chief executive Warwick Quinn condemned the behaviour, and said he hoped it would not reflect badly on the wider industry.

"The past five years for the industry have been tough - prices have been sharp, builders have cut their margins and things like that so this is a one-off event that was done foolishly and hopefully it is the only one."

Mr Quinn and Mr Florence said they doubted the case would affect Auckland house prices as it involved commercial clients and did not appear to be on a large scale.

The commission said CHH and Dodds had co-operated with its investigation, and both had entered settlements admitting their conduct breached the Commerce Act.

"Fletcher Distribution discovered its involvement in the understanding this year, made the commission aware of the situation, and co-operated with the commission's investigation," the commission said.

A penalty hearing before the High Court will take place "in due course".

Price-fixing deals between competitors are illegal under Section 30 of the Commerce Act and carry a penalty of up to $10 million.

Fletcher Building said the "price-fixing" activity involved some people at PlaceMakers in Cook St and Mt Wellington.

Fletcher Building said a review found the arrangements benefited PlaceMakers' pre-tax earnings by just under $100,000. "PlaceMakers is compensating affected customers."